Politics of whole milk: Dairies go bankrupt, Vilsack gets top pay

When it comes to ‘politics,’ DMI talks out of both sides of the mouth: Top paid executive Tom Vilsack shown here in June asking Senate Ag Committee for government ‘support’ to pay DMI’s ‘pilot farms’ to develop practices for ‘U.S. Dairy’ to reach Net Zero emissions. But ask if DMI can  support whole milk in schools and the response is: “Oh no, that is ‘political’ and we aren’t ‘allowed’ to be ‘political.'” Truth is, DMI’s current top-paid executive — Tom Vilsack — is the one who while serving as Ag Secretary, spearheaded the removal of whole milk from schools in the first place.

By Sherry Bunting, Farmshine, Friday, Dec. 6, 2019

The former Ag Secretary who was instrumental in removing Whole Milk from schools is now the highest-paid executive at Dairy Management Inc. (DMI) whose virtual $1 million/year in 2018 came from mandatory checkoff funds paid by dairy farmers who are going bankrupt. 

On Monday (Dec. 2), the Milwaukee Journal Sentinel reported that their early look at DMI’s IRS 990 forms for fiscal 2018 show that Tom Vilsack became the highest paid DMI executive earning $999,921 in 2018, which was his first full year as an executive vice president of DMI, president and CEO of DMI’s U.S. Dairy Export Council (USDEC), and defacto leader of the Net Zero Project and sustainability and innovation platforms of the Innovation Center for U.S. Dairy.

Let’s go back a decade. Think back to 2009. The bottom fell out of the dairy markets. It was arguably the worst of economic times in memory for dairy farmers as farm level milk prices fell to $10, and equity in the value of cow herds plummeted. 

As farmers were busy trying to save their farms, and the industry and lawmakers were busy outwardly debating National Milk’s version of “supply management” in the Farm Bill that year, dairy leaders and regulators holding overlapping former and current positions within USDA, DMI, NMPF, DFA and IDFA, began charting a future for dairy in terms of pursuing international dominance, developing “sustainability” frameworks, partnering for “innovation”, and focusing on the zone of investment for consolidating the milk production footprint with ultrafiltration technology as the way to move milk without the water.

It all fits together, like pieces of a puzzle — with no picture on the box to show outwardly what it will all look like when complete.

Back in 2010, the Innovation Center for U.S. Dairy was busy on “sustainability” and getting fairlife ‘the better milk’ up and going, with the DMI Innovation Center’s sustainability council leader being none other than Fair Oaks’ / fairlife’s Dr. Mike McCloskey. 

Then Secretary of Agriculture Tom Vilsack was busy too that year. In addition to restricting school milk to fat-free and 1% and promulgating rules that listed Whole Milk as “prohibited” on school grounds during school hours, Vilsack was signing Memorandums of Understanding (MOU’s) with National Dairy Council to create GENYOUth to promote that dogma, and with DMI to link the “sustainability” framework of Vilsack’s USDA to the “sustainability” framework of DMI’s fledgling Innovation Center for U.S. Dairy.

Dairy farmers were coming out of 2008-09 devastation — starved for good news — and were encouraged by all this talk of innovation and sustainability and international markets because they thought it meant the industry was looking to sell more milk and dairy products in such a way as to raise prices paid to them for their milk. 

Who could question this high pursuit of innovation and sustainability and exports – right? That’s the trifecta, the holy grail.

2014’s high milk prices seemed to validate that all was going to be right with the dairy world. But most were not paying attention to the USDA / DMI alliance that was formed and growing — and what it might mean for the future.

Quietly – without much fanfare or protest – USDA began tightening milk restrictions in the school lunch program during this time. In fact, so quiet was this shift that many parents to this day do not realize their kids are getting watered-down milk, cheese, imitation butter, and half-beef-half-soy patties at school.

As the 2010 Dietary Guidelines were implemented, a democrat-controlled Congress passed the Healthy Hunger-Free Kids Act – under the avid lobbying efforts of President Obama’s USDA Secretary Tom Vilsack for the legislation that would tighten school lunch screws even more.

The dairy checkoff had already been called “government speech” in its 2005 Supreme Court defense, so with USDA’s blessing and encouragement – under Vilsack – the low-fat and fat-free dogma became entrenched and proliferated through the GENYOUth alliance. 

And it set the stage for a new era in dairy that today’s leaders speak of. We are hearing it now. A recent DFA newsletter tells members “milk must evolve to remain relevant.” DFA / NMPF chairman Randy Mooney stated last month that the industry needs to consolidate plants to make new products. Northeast DFA leaders heard from a food science writer and DMI contractor about how dairy proteins will complete plant-based diets during their recent meeting in Syracuse. Dairy dilution is all around us. And the industry points to Dean Foods’ bankruptcy as proof that Real Whole Milk isn’t good enough, isn’t sustainable. (Well, of course not, no one is truly marketing it and the government thanks to Vilsack is prohibiting kids from having it. This is not rocket science folks.)

Yes, folks, hindsight is 20/20. And here we are on the eve of 2020 with former Ag Secretary Vilsack – who was paid a $999,421 salary in 2018 from mandatory dairy producer checkoff funds and is now the top-paid DMI executive — to thank for the removal of Whole Milk and whole dairy products from our schools.

And no one cares to ask him to testify to Congress about why Whole Milk should be allowed in schools, but he is politically involved endorsing presidential candidates and writing their rural platforms, testifying in so many other discussions, including climate change and sustainability and seeking Senate approval of funds for Net Zero pilot farms.

Yes, folks, the dairy industry had and has Tom Vilsack — or vice versa.

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The time has come to disrupt the disruptors

Opinion: Dean bankruptcy offers opportunity we should earnestly pursue

By Sherry Bunting, Farmshine, Friday, Nov. 29, 2019

If ever there was a time for state governments to sit down with their dairy farmers and agriculture infrastructure for a meeting of the minds… it is now.

The future is very much at stake with Dean Foods – the nation’s largest milk bottler – in Chapter 11 bankruptcy and sale proceedings, as the industry is largely signaling the buyer should be DFA.

But not so fast.

This could be an opportunity to look at the strength of Dean’s holdings and consider a different path forward, one that returns some of the regional branding power to farmers and consumers in the regions served by Dean’s 60 milk processing plants.

Dean Foods accounts for one-third of the milk bottled in the U.S., and the roots of its holdings go back to family operations with brands that were once – and some still are – household names.

In focus groups and shopper surveys, consumers demonstrate they understand what it means to buy local. They understand that buying local – especially fresh staples like milk – means keeping their dollars working in their communities. Consumers also say they want to help local farms. And they want to see clear labeling to know where their milk comes from.

Meanwhile, surveys show the gallon and half-gallon jug are still the most popular packaging among real milk buyers. Even though the category as a whole is declining, it is still a huge category and one that has not been tended or nurtured or cared for in more than a decade. In fact, the category has seen the deck stacked against it by government rules and government speech.

Taste is also important to consumers, as is nutrition. Where fluid milk is concerned, these two areas have also been lacking because checkoff-funded promotion became government speech that pushed fat-free and low-fat milk to the point where consumers have no idea what real milk tastes like – until they switch to whole milk, and they are.

Folks, this is an opportunity to chart a new path for fresh fluid milk, to breathe some life into it. We see it in whole milk sales that are rising. Just think what could be accomplished if significant resources were devoted to truly revitalizing milk.

As the dairy industry streamlines behind innovation and checkoff-funded partnerships to disrupt the dairy case — to be more like the plant-based non-dairy disruptors — there is still a majority of consumers choosing real milk, and more of them are choosing real whole milk as whole milk today is the top seller in the category, and whole flavored milk is growing by double-digits.

Can we disrupt all the disruption with a disruptive back-to-the-future original? I think so. But now is the time to hit it hard. A few years from now will be too late.

Dean Foods has the network and the facilities and the history a savvy consortium of buyers could tap into for going back to local or regional emphasis with brands. The DairyPure national branding experiment started out strong, but in the past few years has been squeezed-out by large retailers – and notably Walmart — pushing their own store brands with loss-leading strategies while hoisting the price of Dean DairyPure much higher.

And that’s part of the problem. Stores think it’s okay to loss-lead with milk, but they are not willing to eat that loss themselves. We need them at the regional dairy future table as well.

In the bankruptcy proceedings at hand, some of Dean Foods’ unsecured bondholders are protesting a rapid sale of assets to DFA in what they say equates to a “fire sale” that doesn’t maximize value. Did Dean receive a proposal from them too before filing bankruptcy? Sources indicate bondholders offered restructuring terms before the bankruptcy filing that would have changed the current picture for Dean Foods.

Will these bondholders that are opposing sale to DFA make an offer now? Can Dean Foods’ assets be sold piece by piece to be broken up more regionally? These questions don’t have clear answers at this time.

What is clear is that payments for milk by Dean to DFA are being delayed five business days as bondholders want to be sure they are truly ‘critical vendor’ payments and that there are no shenanigans between the would-be buyer and seller.

What is also clear is that Dean and DFA have a history, and that history includes the good, the bad, and yes, the ugly.

DFA was there every step of the way as mergers and acquisitions led Dean Foods on its path to become the nation’s largest milk bottler. DFA is Dean’s largest supplier of milk, and DFA leaders are on record stating that Dean Foods is the largest buyer of DFA milk.

If DFA purchases “substantially all” of Dean’s assets, we know more rapid consolidation of the fluid milk market will occur. DFA’s leaders — as well as the leaders of all the prominent organizations in the dairy industry, including the dairy checkoff — have been clear if we’re paying attention. The future they see is in moving away from investing in fresh fluid milk and moving toward ultrafiltration and aseptic packaging and blending and innovating for beverages that can be supplied to anywhere from anywhere without transporting milk’s water-volume by tanker.

Those are more of the ingredients for a monopolization of milk that may not even be considered by the Department of Justice. Without another offer or series of regional offers on the table, DFA would stand as the only option — other than complete failure of the firm under bankruptcy. This, alone, could put the sale to DFA on the fast track as sources talk about bankruptcy clauses that allow purchases to occur — without DOJ approval — when failure is the only other option.

So while consumers are consciously being pursued by the industry and dairy checkoff to move them away from their habit of reaching for that jug of milk and toward new beverages that contain milk — or are innovated new varieties of milk, or are blended and diluted with plant-based alternatives — what happens to the dairy producers in communities whose relevance is tied closely with retaining fresh fluid milk as a nurtured market and being a producer of a ‘local’ and fresh product? These producers are also forced to pay into the dairy checkoff that is developing these alternatives, not promoting or educating about fresh whole milk, and in effect funding their own demise.

Who will tend this store, nurture these customers, satisfy consumer desires to buy-local and ‘help farmers’ and their new-found eagerness to learn more about real fresh whole milk nutrition?

If states and regions don’t work to keep fresh milk facilities in their midst, the global message on ‘sustainability’, ‘carbon footprint’, ‘flexitarian diets,’ and ‘planetary boundaries’ will overtake the public consciousness, and the choices disrupting and diluting the dairy case will overtake fresh fluid milk.

In business today, that’s all we hear: Innovate and disrupt. Maybe it’s time to disrupt the disruptors, to put together a fresh fluid milk branding and packaging campaign that makes milk new again.

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DMI umbrella covers seen and unseen

New tax-exempt entities form — some with aliases — as checkoff funds flow to partnerships

By Sherry Bunting, Farmshine, Sept. 20, 2019

CHICAGO, Ill. — The Dairy Management Inc. (DMI) umbrella keeps expanding to include a growing number and assortment of tax-exempt 501c3 and 501c 6 organizations, all having addresses of record being either DMI headquarters at 10255 W. Higgins Road, Suite 900, Rosemont, Illinois, or National Milk Producers Federation (NMPF) headquarters at 2107 Wilson Blvd., Suite 600, Arlington, Virginia.

Several file their public IRS 990 forms under alias names, so these forms are a challenge to find. Some of the boards of these related organizations are not announced except on these IRS forms.

In reviewing IRS 990’s, many of these boards are comprised of the executive staff of prominent multinational dairy supply chain companies as well as executive staff and board chairs for prominent dairy cooperatives based in the U.S. and from other countries.

In addition to those IRS forms we could find for 2016-17, there are new organizations that are being formed since 2016-17, for which no IRS forms are yet publicly available.

One up-and-coming new organization is the so-called Center for Dairy Excellence, which is the product of the U.S. Dairy Export Council and the Innovation Center for U.S Dairy under their Dairy Sustainability Initiative and Dairy Sustainability Alliance.

At a recent dairy risk management seminar in Harrisburg, Pa., a panel of DMI staff mentioned the new “Center for Dairy Excellence”, which they said is unrelated to Pennsylvania’s Center for Dairy Excellence, it just happens to use the same name.

An internet search shows the information about this new center is available in the password-protected “members-only” area of USDEC’s website, but the word is that it will be a new hub for product innovation and sustainability.

One point the DMI panelists made really hit home: “We want to move consumers away from the ‘habit’ of reaching for the jug and get them to be looking for these new and innovative products.”

Products that are rooted in what is increasingly the very hands-on work of national dairy checkoff through these proprietary partnerships that are facilitated by this growing series of related tax-exempt organizations that are then able to push decisions about how checkoff funds are used further into the proprietary pre-competitive hands of the global dairy supply chain and multinational corporations that serve on these related boards.

The companies involved benefit from DMI’s ability to use tax-exempt status to conduct new product research and market testing paid for by dairy farmers under entities such as the Dairy Research Institute — a 501c3 organization that files under the alias name of Dairy Science Institute Inc. and includes several university laboratory sites, including Cornell, where the new fake butter made with water and 10% milkfat was recently discovered and paid for by New York dairy promotion dollars (reported in Farmshine Sept. 6, 2019).

The Dairy Research Institute is referenced at the websites for National Dairy Council and the Innovation Center for U.S. Dairy, but most of the links to their work are in a password-protected “members-only” area. Attempts to sign up to view this information were denied.

Yes, dairy farmers pay for the research, the market testing, and so forth, and the companies then bring these products into the marketplace via the national dairy checkoff funding stream via the tax-exempt status of the Innovation Center for U.S. Dairy.

Having gathered as many related IRS 990 forms as we could find (due to the confusing use of alias names), there are some interesting things to learn about how the vehicle of dairy industry consolidation and trends in promotion and research have been forming since 2008 — right under our noses — and how the mandatory dairy farmer checkoff continues to fuel the global supply chain engine.

IRS 990 forms show how executive staff for large multi-national companies – some of them based in other countries – are influential in charting this course under the mantra of “pre-competitive collaboration”, which of course makes it all confidential and proprietary.

These related organization boards include leaders of companies and cooperatives based not just in the U.S. but also in New Zealand, China, Netherlands, Canada and Denmark as they acquire assets and form joint ventures in the U.S.

The 2011 implementation of the 7.5-cent import promotion checkoff that perhaps gave entities like Fonterra the entitlement to help shape this direction, leading UDIA to transfer ownership of the Real Seal to NMPF, which now charges companies a licensing fee to use the Real Seal. (More on that another day.)

While a main focus of the USDEC and U.S. Dairy efforts is to increase exports, it is interesting to note that these gains have had a reverse effect on dairy farm milk price revenue, according to a recent study by dairy economist and supply chain expert Chuck Nicholson (more on that, too, another day).

Suffice it to say for now that export volumes were higher in 2016 and 2018 compared with 2017 and 2019, while dairy farm level milk prices were lower in 2016 and 2018 compared with 2017 and 2019. In fact, former Ag Secretary Tom Vilsack called 2018 “a banner year for exporters.” For dairy farmers, 2018 was anything but banner.

Meanwhile, Tom Vilsack, president and CEO of USDEC and a primary leader on the board of U.S. Dairy, is heavily promoting two of DMI’s new internal campaigns: 1) The “Next Five Percent” campaign wants to move exports from 15% of U.S. milk production to 20% within the next two years, and 2) The Net Zero Initiative wants the entire dairy supply chain at net zero emissions by 2050.

Let’s open the DMI umbrella with a short summary on some of the DMI-funded 501c3’s and 6’s by their known names and aliases. (We published a timeline for some of the major pieces under the umbrella in Keep in mind that NMPF is intrinsically involved in at least two: USDEC and Innovation Center for U.S. Dairy. These are the two organizations spawning a growing number of new tax-exempt organizations under DMI’s umbrella.

U.S. Dairy Export Council

USDEC and NMPF share offices at 2107 Wilson Blvd., Suite 600, Arlington, Virginia, just outside of Washington D.C., according to forms filed with the IRS. According to financial audits, DMI and NMPF trade and buy services from each other, and NMPF rented offices from DMI in Arlington until 2016 when these offices were sold.

In 2017, USDEC listed NMPF as an independent contractor paid $1.85 million for “trade services”.

USDEC paid DMI $6.5 million for management services in 2017, while also listing $6.4 million in salaries and employee compensation.

USDEC’s total revenue was $24.6 mil in 2017, of which $1.43 mil came from membership dues, $5.7 mil from government grants and $17.1 mil from DMI. This means that USDEC received 71% of its funding from national mandatory dairy checkoff and 23% from government grants with just 6% of its funding coming from the membership dues paid by the corporations and cooperatives that are significantly represented on the USDEC board of 140 directors.

The chief financial officer for USDEC in 2017 was Carolyn Gibbs, who was also listed as the CFO for the Innovation Center for U.S. Dairy. Halfway through 2017, she left this position to become a principal officer of Newtrient LLC, another related organization formed under the DMI umbrella in 2017. IRS forms for this organization are not yet publicly available.

Before coming to DMI, Gibbs spent 13 years at Kraft Foods, Inc. Her consulting work today with Newtrient LLC is described as “industry outreach, strategy, Net Zero Initiative, and project continuity.”

Innovation Center for U.S. Dairy

The Innovation Center for U.S. Dairy — a 501c6 formed in 2008 — is officially known to the IRS as Dairy Center for Strategic Innovation and Collaboration doing business as Innovation Center for U.S. Dairy. The national dairy checkoff organizations increasingly refer to this organization simply as “U.S. Dairy,” and the website for some of its activities is USDairy.com.

According to DMI’s IRS 990 form, this organization is directly controlled by DMI.

The “collaboration” has a small budget of around $115,000 for each of the past three years and no paid staff. But it is the hub of new tax-exempt organizations as well as trademarked initiatives.

Innovation Center for U.S. Dairy describes its reason for tax-exempt status on the 990 forms, as follows: “…to provide a forum for the dairy industry to identify opportunities to increase dairy sales through pre-competitive collaboration. It combines the collective resources of the dairy industry to provide consumers with nutritious dairy products and foster industry innovation for healthy people, healthy products and a healthy planet.”

On its 990 forms, U.S. Dairy lists its board of directors — a who’s who of chief executive officers and board chairs for prominent dairy cooperatives as well as multinational dairy processors. The board also includes DMI CEO Tom Gallagher and of course Vilsack.

The Dairy Sustainability Alliance

A key subset of The Innovation Center for U.S. Dairy is The Dairy Sustainability Alliance, trademarked by DMI in June 2017. A search for The Dairy Sustainability Alliance at guidestar.org, a database of non-profits, brings up Global Dairy Platform Inc.

Global Dairy Platform Inc.

Global Dairy Platform is a tax-exempt organization formed and incorporated as a 501c6 in 2012 and it lists its physical address as DMI headquarters in Rosemont, Illinois.

It describes its tax-exempt justification as follows: “A pre-competitive collaboration of dairy sector organizations, the Global Dairy Platform works with its global membership, scientific and academic leaders and other industry collaborators to align and support the international dairy industry to promote sustainable dairy nutrition.”

Chaired by Rick Smith, president and CEO of Dairy Farmers of America (DFA), the Global Dairy Platform (GDP), has a board of 12 executives representing the following corporations, cooperatives and organizations: Fonterra (New Zealand), Saputo (Canada-based multinational), Leprino (multinational), Land O’Lakes, Meiji Holdings Ltd. (China), FrielandCamprino (Dutch multinational), Arla (Denmark multinational), China Mengniu Dairy Company and the International Dairy Federation.

Donald Moore was paid nearly $600,000 as GDP executive director in 2016, the most recent IRS 990 form available. Moore currently also serves as chairman of the International Agri-Food Network and the Private Sector Mechanism to the United Nations Committee on World Food Security.

DMI senior vice president Dr. Greg Miller is listed as the research lead for the GDP, and he is currently also serving on a food and sustainability committee with the UN World Health Organization. He was the highest paid DMI executive in 2017 at $1.49 mil (including benefit package and deferments).

GDP had revenue of $3.74 million from DMI in 2017 — $2.6 mil for program services and $1.12 mil in the form of grants in 2016. According to the IRS 990, $583,329 of this revenue came from the import checkoff assessment. Research projects accounted for $1.85 million of expenses.

Newtrient LLC

Until July of 2017, Carolyn Gibbs was listed as chief financial officer of USDEC and the Innovation Center for U.S. Dairy, where she assisted with the launch of Newtrient LLC, another tax-exempt 501c6 formed in 2018, according to Gibbs’ bio at newtrient.com.

Newtrient falls under the Dairy Sustainability Alliance (Global Dairy Platform), which comes under the Dairy Sustainability Initiative.

No IRS 990 forms are available yet for Newtrient LLC.

Newtrient is described at its website (newtrient.com) as “an entity focused on turning waste into renewable energy and other commercially viable products, while reducing dairy’s environmental footprint and improving economic returns for dairy farmers.”

Dairy Research Institute

The Dairy Research Institute is a name trademarked by DMI, but the IRS recognizes this 501c3 as Dairy Science Institute Inc. doing business as Dairy Research Institute with a physical address at DMI headquarters in Rosemont, Ill.

The Institute describes its tax-exempt status to the IRS as “created to strengthen the dairy industry’s access to and investment in the technical research required to drive innovation and demand for dairy products and ingredients globally. The Institute works with and through industry, academic, government and commercial partners to drive pre-competitive research in nutrition, products and sustainability on behalf of the Innovation Center for U.S. Dairy, the National Dairy Council and other partners.”

The Institute is primarily funded by DMI with reported revenue of $1 million in 2016 and $785,935 in 2017. However, from 2013 through 2017, the Institute received a total of $24.3 million from DMI, including it’s first-year startup grant of $19.16 mil. in 2013.

Its officers are listed as Dr. Gregory Miller, president, Tom Gallagher, chairman and Carolyn Gibbs, CFO through July 2017 (before heading over to Newtrient and being replaced by Quinton Bailey).

Dr. Miller is also the research lead for Global Dairy Platform and chief science officer for the National Dairy Council (NDC), a 501c3 tax-exempt organization formed in 1969 and today controlled by United Dairy Industry Association (UDIA) and managed by DMI.

GENYOUth

While the sustainability organizational rollouts have been ongoing since 2009-10 memorandums were signed between USDA and DMI, another organization was simultaneously formed while Tom Vilsack was Ag Secretary in 2010 through a three-way memorandum of understanding between National Dairy Council, USDA and the National Foodball League.

This 501c3, of course, is Youth Improved Inc. doing business as GENYOUth, describing its tax-exempt status as “activating programs that create healthy, active students and schools, empowering youth as change-agents in their local communities, engaging a network of private and public partners that share our goal to create a healthy, successful future for students, schools and communities nationwide.”

DMI is listed as GENYOUth’s controlling organization and paid one of its partners, the NFL, $5.6 million for promotion in 2017, according to IRS filings. 

At the same time, in 2017, GENYOUth’s most expensive “charitable activity” was listed as Fuel Up to Play 60, costing $5.4 million and giving considerable advertising exposure to the NFL among future fans. That year, the NFL contributed less than $1 million to GENYOUth.

Alexis Glick, a television personality until 2009, has been GENYOUth’s CEO since its inception in 2010. In both 2016 and 2017, she was paid $259,584 as “compensation for services provided under an independent contractor agreement.”

Other employee compensation totaled $517,165, including vice president Mark Block, at $221,000. Pension plans and other employee benefits totaled $110,026 and other professional fees paid to contractors totaled $2.36 million.

Since 2010, the organization has brought donors to the table including some of the multinational dairy and foodservice corporations DMI is working with in other tax-exempt product innovation and ‘sustainability’ ventures.

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DMI’s innovation = secret projects with strategic partners

By Sherry Bunting, Farmshine, Friday, Sept. 13, 2019

CHICAGO, Ill. – ‘Proprietary’ describes much of what the Innovation Center for U.S. Dairy initiates as a checkoff-funded industry collaboration under the umbrella of Dairy Management Inc. (DMI).

Some of that work is so proprietary, even the 81 voting DMI board members don’t see details as they vote to approve partnerships, new product developments, promotion grants to launch new products, as well as the ‘sustainability’ initiatives and alliances that come from this collaboration and filter down as requirements for all dairy farms through their respective processor and cooperative milk buyers via the FARM program.

Board members are quick to point out that USDA and DMI attorneys are privy to proprietary details that are kept confidential. They point out that food industry partners and processors must show they are investing more than they are receiving, and that their “innovation” has potential to be a ‘catalyst’ for others to follow.

DMI describes program accomplishments in the IRS 990 form, specifying that, “DMI partners with foodservice industry leaders to help create dairy-based innovation to drive dairy sales and build trust in dairy products.”

The description details the way partnerships are boosting dairy use, especially cheese, by restaurant chains.

At the same time, DMI describes its strategy to revitalize fluid milk by ‘reinventing the consumer milk experience.’ (Reinventing milk was examined in a separate article in the August 23 edition of Farmshine.)

The Innovation Center for U.S. Dairy (under the official tax-exempt name of “Dairy Center for Strategic Innovation and Collaboration, doing business as Innovation Center for U.S. Dairy”) fuels these partnerships with mandatory checkoff funds and is the place where these partnerships are born from the board of DMI staff and processor / co-op chairs and CEOs. (See related article).

Here, we examine the mainly cheesey partnerships DMI has pursued since 2009-10. That is the year in which the Innovation Center for U.S. Dairy was formed under DMI.

In 2017, (DMI) had four domestic, U.S.-focused partners: Dominos, Pizza Hut, Taco Bell and McDonalds. Based upon the success of our U.S. partnerships with Yum! Brands, which includes Taco Bell, Pizza Hut and KFC, we expanded our partnership focus and added two pilot international partnerships in 2017 — KFC, focused on Latin America and Pizza Hut, focused on Southeast Asia.

“The goal of the international partnerships is to increase U.S. Dairy Exports to these markets,” the DMI 990 form states. “DMI partners with these large catalytic companies because they are industry leaders who have the potential to deliver incremental and sustainable dairy sales. Moreover, these partners are closely watched by others in foodservice. Their innovation, whether product-based or technology based, created a catalytic effect, where others follow their actions. These partners were chosen because they commit to invest in innovation and marketing in support of dairy-based products: and they are willing to partner on other dairy industry priorities.”

According to the report, DMI supports a range of programs and initiatives with these influential and global foodservice industry leaders. The programs focus on providing dairy expertise and investment in the areas of consumer insights, new product development, new store and new technology testing, consumer communications and corporate social responsibility. Further, DMI provides on-site scientists and/or culinary experts who lead product development of dairy-based food and beverage products.

The main agencies of DMI handling these proprietary partnerships are the Innovation Center for U.S. Dairy and the U.S. Dairy Export Council (USDEC), which are both listed under the control of DMI on the form and are both under the leadership of former Secretary of Agriculture Tom Vilsack.

DMI also “provides expertise and consultants in the areas of marketing, consumer insights and research, nutrition, sustainability, animal care, food safety, regulatory environment and dairy communications.”

As a signal of success, DMI states that dairy is represented in 70% of their collective menu items among these partners and that these partners spent $11.1 billion between 2012 and 2017, collectively, on advertising their menus, including items that are “dairy-based” like pizza, tacos, ice cream and coffee drinks. But there is no data on how much of the total $11.1 billion was spent on actually advertising the dairy-based menu items.

DMI states that since these partnerships began in 2009, the combined milk equivalent tonnage of these partners, collectively, “has grown by 2.2 billion milk pounds, averaging 4% growth per year (since 2009).”

This is close to the overall global trend of 3% growth in cheese consumption annually.

In the 990 discussion, specific menu items are noted as examples, as well as how ice cream and cheese are reformulated by in-house experts provided by DMI.

Working with Domino’s, DMI helped “create the ‘Smart Slice’ School Pizza, which was in more than 10,500 schools by 2017 and meets the USDA dietary guidelines for being fat-free or lower in fat than regular cheese pizza.”

Also in 2017, Dominos began promoting awareness of the Undeniably Dairy campaign by including “farmer messaging” on 7 million pizza boxes weekly nationwide. DMI states that this “helped Dominos grow milk equivalent tonnage by 8.5% in 2017.”

DMI also partnered with Pizza Hut on the “cheese in more places” products, including the Ultimate Cheesy Crust Pizza with 16 pockets stuffed with nearly one pound of cheese.

As for Taco Bell, DMI states that this partnership has helped the restaurant chain evolve in how they use dairy, from incorporating it as a garnish to being more of a key ingredient …growing their milk equivalent tonnage by 7% in 2017.

However, partners like Taco Bell have also initiated “stealth health” menu-boarding since 2017, to encourage customers to consider condiments other than cheese and sour cream, such as salsa and pico de gala. And partner McDonald’s removed the ‘cheeseburger’ option from the Happy Meal menu last year. A customer can ask for a slice of cheese on the burger, but that option does not appear on the menu board. It’s called “stealth health.”

As for the international partnerships, DMI states that U.S. cheese sales at Pizza Hut Asia Pacific increased 29% in 2017. In fact, DMI leaders communicate that consumers in China, for example, look to the U.S. with confidence in food safety. They say their market research shows that the larger and more technologically progressive our farms are here, the happier moms are to buy U.S. dairy there. In fact, dairy checkoff leaders note in communications that small farms with older facilities conger-up images of concern for consumers in China who have not forgotten their 2014 melamine scare, which the Chinese government ultimately blamed on milk handlers for the network of small farms in China.

While cheese sales increased through these partnerships from 2009 through 2017, according to DMI, fluid milk sales declined even faster in those years than the 30-year trendline

Global supply chain structures also became more prominent as multi-national dairy ingredient suppliers connect with DMI partner-brands.

On the fluid milk side, DMI’s stated goal is to “reinvent the milk experience for consumers.” At the same time, the overall goals are focused on dairy innovation via business plans and structures that are more global in nature, focus on foodservice chains that represent domestic and overseas markets and utilize further processed, reformulated, and blended dairy ingredients while also creating menu items that use these proprietary ingredients to fit USDA’s low-fat dietary guidelines as the restaurant trade moves into ‘stealth health’ mode.

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DMI by the numbers, proprietary path of partners is paved

By Sherry Bunting, Farmshine, August 30, 2019

CHICAGO, Ill. — As the path of dairy checkoff promotion continues to evolve — especially since 2008 when a series of memorandums of understanding were signed by Dairy Management Inc. (DMI) and the National Dairy Council (NDC) with then USDA Secretary Tom Vilsack — the money flows increasingly toward DMI partnerships, agency services and executive staff through sub-agencies of DMI that facilitate the proprietary partnerships.

Innovation Center for U.S. Dairy, U.S. Dairy Export Council, GENYOUth, Newtrient LLC, are a few of the vehicles for “proprietary” industry partnerships, which DMI refers to as ‘leveraging industry resources.’

In particular the Innovation Center, working closely with USDEC, is the vehicle for pre-competitive “proprietary” dairy innovations.

In fact, this innovation really began through a relationship between Fonterra USA and DMI as early as the 2006-08 time frame. Their respective ‘test kitchens’ are just three miles apart on the outskirts of Chicago, where milk proteins and ingredients, concentrators, extenders and utilization characteristics have been the focus of proprietary work.

As DMI CEO Tom Gallagher stated at a dairy conference in Wisconsin in March, food scientists from DMI have “cracked the code” on cheese-melting characteristics for partners like Taco Bell and Pizza Hut. He also talked about the new pizza cheese innovations with Dominos to meet USDA school lunch rules, calling them “wildly popular with students.”

From that March presentation at the Professional Dairy Producers of Wisconsin conference in Madison, the Wisconsin State Farmer quoted Gallagher summing up his job: “My job is real simple. I have to get the industry to do things with your product after it leaves the farm — that consumers want.”

Toward that end, Gallagher explained to the shift away from television ads and other “one-way” promotions to social media “conversations” and industry “partnerships.” It has shifted from promoting milk and dairy to providing product development specialists working for DMI’s partners — like McDonald’s, Dominos, Taco Bell and others — to get them to “do stuff” that puts more dairy in the fast-food pipeline (look for more on this in a future article).

A key driver of the shifting direction of checkoff promotion is the world renown Edelman company, with its headquarters in Chicago — 17 miles east of DMI’s offices and just two miles from the Chicago headquarters of Fairlife LLC, two miles from the Chicago offices of Coca-Cola and a mile and a half from PepsiCo’s Chicago offices.

According to Richard Edelman, in his May 2017 blog post at the company’s website, the Edelman company (known worldwide simply as Edelman) has been the public relations and communications firm for DMI for over 20 years. 

In this particular post, Richard Edelman writes about the launch of DMI’s Innovation Center for U.S. Dairy in 2008 and how he is looking forward to the leadership of the former USDA Secretary Tom Vilsack coming on board that year (2017) as president and CEO of checkoff-funded USDEC and Innovation Center for U.S. Dairy (after signing MOU’s with DMI while Secretary in 2008-09).

This Edelman blog post covers the launch of the Undeniably Dairy campaign that month (May 2017), calling it the first time Edelman has had a project “bringing together a fully integrated campaign at this scale.”

With offices worldwide and mergers throughout the advertising and public relations industry, Edelman is the world’s largest such firm and is open about their re-alignment of clientele around “social responsibility” and  “global environmental sustainability.” In fact, they’ve dropped clients with businesses not deemed “environmentally sustainable.”

Edelman and its clients — such as PepsiCo, Danone, Unilever and others — are listed as prime sponsors buying-in to the EAT Forums that are pushing the EAT Lancet report about the ideal global diet of cutting per-capita animal protein consumption – meat, dairy and eggs – by more than 75% over the next 10 years to “reduce the environmental impact of feeding 10 billion people.”

The firm was instrumental in setting up GENYOUth in 2008 and recommending CEO Alexis Glick as its coordinator. Not only are DMI and PepsiCo clients of Edelman, so is the National Football League. The NFL has a longstanding relationship with PepsiCo that predates the GENYOUth / Fuel Up to Play 60 alliance with dairy checkoff.

And, while PepsiCo is an Edelman client, Coca Cola is a headline client of Edelman’s spinoff Zeno Group, a global integrated communications agency founded 20 years ago by Richard Edelman’s father Daniel J. Edelman after Richard had taken over the reins of Edelman.

Edelman, fairlife (Coca Cola) and NFL Properties are the Top 3 Contractors paid by DMI in 2017, as shown on the IRS 990.

So what do the numbers tell us about the above-mentioned relationships?

According to the IRS 990 forms filed by DMI for tax-year 2017, the Daniel J. Edelman, Inc. company, mind-bending mastermind of “social marketing”, was paid $15.3 million in 2016 and $17.8 million in 2017 for “agency services.” That was 11.5% of DMI’s total budget of $155 million in 2017.

DMI paid NFL Properties LLC, New York, N.Y., $5.12 million in 2016 and $5.63 million in 2017 for “Promotion.” Is this the pay-to-play cost of the GENYOUth alliance and MOU? After all, the NFL is positioned as a partner with dairy farmers in the “dairy-farmer-initiated” GENYOUth. The NFL was in on the MOU signing with DMI and Tom Vilsack while he was Secretary of Agriculture.

But, while the NFL’s annual contributions to dairy checkoff’s GENYOUth are listed on GENYOUth IRS 990s as ranging from $370,000 in 2014 to $945,000 in 2017, DMI lists checkoff payments to NFL Properties of between $5 and $6 million for 2016 and 2017 on the DMI IRS 990.

It’s all about the kids, right? There’s more here than kids and breakfast carts.

Meanwhile, fluid milk sales continued to decline, even more rapidly over the 2008-18 decade as low-fat and fat-free school promotion and provision was dairy checkoff’s best play while the plant-based alternatives continue blitzing consumers with – you guessed it — television ads and “one-way” promotions that DMI says “don’t work.”

The alt-beverage industry has worked with Edelman client PepsiCo on its low-fat product portfolio through a variety of incubator projects involving plant-based alternatives for dairy products.

The alt-beverage industry is working closely with Edelman client Danone, which has set a goal to transition much of its yogurt market into plant-based alternatives over the next 5 to 10 years, opening the world’s largest plant-based yogurt facility in upstate Pennsylvania earlier this year.

The alt-beverage industry has even convinced the nation’s largest dairy-farmer-owned cooperative, DFA, to invest in alternative beverage production assets and to innovate with a DMI-checkoff-funded product innovation — a new blend of low-fat, lactose-free dairy milk combined with 50% almond or oat beverage that rolled out in Minnesota in August 2019, with sights set on the Northeast by 2020.

DMI is spending checkoff dollars in search of the next fairlife on which to hang dairy promotion’s hat.

Incidentally, Fairlife LLC received $8 million in DMI checkoff funds in 2017 for “promotion,” according to the most recent publicly-available IRS 990 documents.

So, what else can be learned from DMI’s IRS 990 returns in 2017?

For starters, they had $2 million fewer dollars to work with compared with 2016. Total revenue controlled by DMI was $155 million, along with the unified marketing plan that filters down through regional agencies spending the other half of the dairy farmer checkoff revenues that total right around $320 million. Some state dairy promotion order boards, like in New York, automatically give 25% of their budget (2.5 cents of the state’s dime) to DMI as a matter of course. For other boards, the pass-through may be more, or less.

Looking at program areas, the most recent IRS 990 for 2017 shows that $110 million of the $155 million in checkoff funds under direct management of DMI was described to the IRS as “program funding revenue,” $39.5 million as “core funding revenue” and $5.6 million as “contract services revenue.”

Of the total $155 million in revenue for 2017, DMI categorized $82.2 million as “domestic marketing”, $17.1 million as “export”, while $7.85 million was research, and nearly $7 million for contract services and other expenses.

Since we know that Edelman received $17.6 million from DMI for “agency services” in 2017, it’s clear that some of that is in a category other than “contract services.”

Compensation of board officers, directors and trustees totaled just shy of $3 million.

Other salaries and wages totaled $17.6 million, with pensions and contributions $3.1 million, other employee benefits $2.3 million, and payroll taxes $1.37 million.

Legal, accounting and other totaled around $550,000, office expenses $1.5 million, information technology $2.7 million, rents or occupancy $1.65 million.

In total compensation from DMI and related agencies under DMI control, the highest paid staff in 2017 was executive vice president Dr. Greg Miller (Doctor Dairy), who heads up NDC’s Dairy Research, at $1,546,760.

Listed as a “former highest-compensated employee”, Daniel Chavka, one of several DMI chief financial officers, was paid $769,475. Chief financial officer Carolyn Gibbs was second-highest, paid staff at $1,191,557 through July, and another CFO Quinton Bailey earned $246,542 in 2017.

DMI CEO Tom Gallagher was paid $899,810, followed by executive vice president Jean Ragalie-Carr at $857,406. She is a registered dietician serving as National Dairy Council president.

Fifth-highest paid officer is former Secretary of Agriculture Tom Vilsack in his first year as a DMI executive vice president, serving as president and CEO of DMI’s USDEC. From DMI and related agencies under DMI control, Vilsack was paid $800,557 in 2017.

DMI president Barb O’Brien was compensated $649,419 in 2017.

Additionally, two other DMI executive vice presidents Mark Leitner and Elizabeth Engelmann were compensated $638,041 and $478,809, respectively, in 2017.

The total for items related to salaries, other compensation, and employee benefits for 2017 was listed at $27.37 million – 17.7% of total revenue in 2017.

The agency services of Edelman, at $17.8 million, was 11.5% of total 2017 DMI revenue.

The $8 million paid to Fairlife LLC was 5% of total revenue.

DMI travel was listed at $3.55 million, while the line item for conferences, conventions and meetings was $1.46 million in 2017.

The DMI board chair (listed as Paul Rovey in 2017) was paid $25,000. Other board officers and members of the executive board saw compensation ranging from $1800 to $8600, while many board directors were listed as receiving zero compensation.

To be continued

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DMI’s mission has undeniably strayed

By Sherry Bunting, Farmshine, August 23, 2019

CHICAGO, Ill. – Since Dairy Management Inc (DMI) was formed, it has grown to include (and control) many agencies and partnerships that put much of the work into the zone of “proprietary,” even to the 81 voting DMI board members.

In the portion of the most recent 2017 IRS 990 form, where DMI is asked to describe its program accomplishments, the responses specify that, “DMI partners with foodservice industry leaders to help create dairy-based innovation to drive dairy sales and build trust in dairy products.”

The response describes 2017 activity in detail. 

While the work done to boost cheese use by restaurant chains resulted in increases of milk equivalent tonnage that are quite impressive, according to DMI (look for more on that in a future article), it is the fluid milk sector reinvention that we will examine here.

In its 990 description of fluid milk partnerships, DMI states: “The dairy checkoff program, working with committed milk processors, embarked on a comprehensive revitalization strategy to reinvent the milk experience for consumers.”

What does that mean? 

DMI explains: “The focus includes milk as a standalone beverage as well as an ingredient in other beverage segments such as coffee, tea, smoothies, energy drinks and more.”

As part of this “comprehensive revitalization” effort, the DMI board approved partnerships since 2010 with eight companies they deem as leaders and innovators in the milk and beverage arena, including: Dairy Farmers of America (DFA), which just recently launched the Live Real Farms Dairy + Almond and Dairy + Oat ‘milk’ comprised of half low-fat lactose-free dairy milk and half almond or oat beverage; Darigold/Northwest Dairy Association, which among other new fluid milk products markets a fat-free creamer it calls ‘fat-free half-and-half’ (a contradiction in terms).

Also among the eight are these current partners as of 2017: The Kroger Company, which sources 80% of its milk to Select Milk Producers / Fair Oaks;  Shamrock Farms, which partnered with DMI on the Rockin Refuel brand found in chains like Subway nationwide; and Coca-Cola/Fairlife.

Specifically, the 990 form reports that, “The Checkoff program supported Lactaid innovation, marketing and health professional outreach, which spurred innovation and growth in the lactose-free segment overall.”

The 990 description states that the dairy checkoff supported innovation in extended shelf-life brands as well.

But its signature is fairlife, according to the 2017 form 990, which states: “DMI assisted and invested in the national 2015 launch of fairlife milk. The goal was to create a national fluid milk brand leveraging the resources and scale of Coca-Cola. Fairlife has been a tremendous success and continues to grow, achieving dollar sales of $250 million,” according to DMI.

“This is a feat that fewer than 1% of new products achieve,” DMI states further, adding that, “About 50% of consumers repeat their purchase of fairlife, a good predictor of its success moving forward. Based upon fairlife’s initial success, fairlife’s owners have announced (in 2017) the addition of two new production lines to meet consumer demand.”

Those production lines, according to DMI, were planned for installation in 2018. Production lines are also planned for Canada as the product was piloted there in 2018.

According to DMI, a new fairlife plant in Arizona is set to begin production in late 2019.

Other partnership products, such as Shamrock’s Rockin Refuel and the coffee and tea latte drinks with Shamrock and with Kroger were mentioned in the fluid milk portion of DMI’s 990 description of accomplishments.

In summary, states DMI, “Our partnerships are already stimulating change in the industry and fundamentally changing the way the fluid milk industry does business by driving investment in modern infrastructure and by creating new products.”

In fact, according to the DMI 990 form, the agency states that the lactose-free milk segment grew by 15% in 2016 and 11.5% in 2017.

Meanwhile, diet and health professionals are increasingly recognizing the benefits of regular whole milk and the A2 milk on digestive sensitivity. This is something that is not promoted by any mandatory dairy checkoff organization and whether it is conventional whole milk or A2 milk, there is no need to further process the milk to obtain the benefits on digestive sensitivity or lactose intolerance.

For example, New York City registered dietician, certified diabetes educator and author Laura Cipullo writes: “When someone eats full-fat dairy versus low-fat dairy, the fat will actually delay the absorption of the milk’s sugar (lactose). As a result, blood sugar rises more slowly over a longer period of time. Consequently, insulin follows this same pattern. Less circulating insulin means less risk for development of insulin resistance and diabetes.”

This was further supported at the recent hearing in Harrisburg, Pa. that focused on getting whole milk back in schools.

During the hearing and rally, registered dietician and nutrition professor Dr. Althea Zanecoskey stated that whole milk provides ‘satiety’, helping those consuming it stay fuller, longer. She said studies show how children consuming whole milk, compared with low-fat (1%) milk, had lower body fatness and less risk of obesity. They also had higher vitamin D status. It took three cups of low-fat milk to get the vitamin D status seen in children after consuming just one cup of whole milk. Vitamin D is a nutrient of concern, according to medical professionals finding it lacking in children and youth.

Whole milk, in and of itself, checks all the boxes.

According to Cipullo, the milkfat found in whole milk “calms digestive sensitivity.”

In fact, according to various expert comments at the USDA Dietary Guidelines docket in the Federal Register, the beneficial milkfat consumed in Whole Milk, reduces the amount of lactose per 8-oz serving, and even more important, as stated above, the milkfat in Whole Milk slows the absorption of the lactose.

Cipullo explains: “Full-fat dairy is lower in lactose, making it easier for individuals with lactose intolerance to digest compared to low-fat or no-fat dairy,” she writes. “Meanwhile one specific fatty acid contained in dairy is known to aid in gastrointestinal health, and according to a 2013 review from Polish researchers, may actually hold promise in the treatment of IBS and promoting healthy gut bacteria.”

While the innovators partner with dairy checkoff to “reinvent the milk experience”, there is evidence now that a simple solution — that would benefit all dairy farmers paying into the mandatory dairy checkoff from all markets — would be to promote and support real, simple, un-fooled-around-with whole milk.

USDA’s oversight and the flawed Dietary Guidelines are the only obstacles standing in the way, despite a growing list of research-based information showing that whole milk holds beneficial keys to health, not harm, when it comes to long-term cardiovascular disease risk, obesity, body mass index, diabetes and other metabolic disorders, digestive health and sensitivity, vitamin D status, nutrient density, nutrient absorption, satiety (feeling fuller, longer), memory and cognitive focus, as well as mood and mental sharpness. Not to mention the more than a dozen essential nutrients that ride along when people choose whole milk because it tastes good instead of opting for empty calories from other non-dairy beverages.

DMI shows its goals for innovation, further processing, blending, and marketing of ‘dairy-based’ or ‘dairy-included’ beverages as a market-building path for the future.

But at the same time, stronger promotion of the original, purely perfect Real Whole Milk would resonate with consumers, because most do not know anything about milk, and when they learn the truth, it opens their eyes to whole milk as a choice.

Whole milk could be ‘reinvented’ just as it is, with better packaging and the freedom to actually promote it. But due to USDA’s control of the message and direction of dairy checkoff, and the proprietary nature of the many partnerships that the checkoff funds, it may be time to reinvent the mandatory dairy checkoff.

Does milk need reinventing?  Simply-unfooled-around-with whole milk checks all the boxes for health and flavor. Meanwhile, DMI states in a 2017 IRS form 990 that it has a “comprehensive revitalization strategy to reinvent the milk experience for consumers.” Since whole milk was pulled from schools in 2009, more young people are growing up believing they are lactose intolerant. Meanwhile, the innovations brought to market with DMI partners over this time period are dairy-based low-fat lactose-free and blended beverages. However, a growing body of research shows science-based reasons why the fat-free and low-fat milk consumption promoted to youth by the dairy checkoff through FUTP60 and GENYouth, in partnership with USDA, may actually be creating much of the new and milder forms of digestive sensitivity that could be avoided by simply consuming regular whole milk. Graphic by Sherry Bunting

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Value added? Or subtracted? DMI, DFA partner on new blend

By Sherry Bunting, Farmshine, July 26, 2019

MINNEAPOLIS, Minn. – The news of DFA’s new Dairy Plus Blends – a half lactose-free low-fat milk / half plant-based beverage concoction broke mid-July. DFA’s Live Real Farms brand website showed Lund and Byerly’s stores as the place to buy the Dairy + Almond and Dairy + Oat, but a visit to two stores on the list at the Minneapolis city limits did not have the beverages in the dairy case – yet.

Looking at the packaging, a first impression is: Wow, why doesn’t 100% milk packaging look this good. If only the agencies managing mandatory milk promotion funds and dairy-farmer-owned co-ops put as much thought into packaging and marketing 100% Real Whole Milk as they do for a diluted “innovation,” imagine what could be accomplished!

A further examination of the new Dairy Plus Blends packaging brought this thought: Why use words such as “Purely Perfect” and “Original” for a blend, when such words would seem best reserved for marketing the actual original, purely perfect 100% Real Whole Milk that the DFA member-owner dairy farmers produce and that actually results in the dairy-checkoff promotion funds.

We asked DFA for some background. In fact, we sent 11 questions to DFA and to DMI communications staffs because we were aware that DFA’s Live Real Farms brand is part of a checkoff-supported partnership between DMI and DFA to innovate products in the fluid milk space under the auspices of DMI’s Innovation Center for U.S. Dairy.

We first wanted to know, why the blend? Why not just create an almond FLAVORED 100% real milk beverage? Because, after all, the new Dairy Plus Blends have half the calories, but they also have half the natural nutrients and only slightly more than half the protein of real 100% dairy milk.

It seemed like value was being subtracted, not added.

We all know that almond beverage has barely any almond in it, being mostly filtered water and some additives, so it seemed like the product is an offering of diluted milk. Since we couldn’t find any on the shelf yet at Lund and Byerly’s in Minneapolis, we aren’t sure if consumers will be asked to pay more – for less.

Of course, the packaging does have more. It touches all the right chords.

DFA was kind enough to answer some of our questions, although we have heard nothing back yet from DMI.

“In an effort to meet the demands of modern consumers, Live Real Farms has launched a new beverage, Dairy Plus Blends, which combines all the nutritional benefits of real cow’s milk with the flavor and texture of alternative beverage options like almond or oat,” stated Rachel Kyllo, senior vice president of growth and innovation at Live Real Farms, a DFA-owned brand.

The reply came by email to the questions we submitted.

“All the nutritional benefits of real cow’s milk”? (The label says 5 grams of protein per 8-ounce serving, not 8, and the other naturally occurring nutrients in real cow’s milk are also reduced.)

Kyllo continues in the reply:

“Nearly 50% of consumers who buy plant-based beverages also have dairy milk in the fridge, so they’re buying both products,” she writes. “This product is not about pivoting away from dairy, instead we saw an opportunity to fulfill a need as people like almond or oat drinks for certain things and dairy for others. This product combines the two into a new, different-tasting drink that’s still ultimately rooted in real, wholesome dairy.”

We wanted to know DMI’s part in developing this concept, seeing that dairy farmers mandatorily pay a checkoff promotion fee on every 100 pounds of milk they sell.

DFA’s response stated that, “The overall product concept for Dairy Plus Blends was developed along with DMI and the Innovation Center for U.S. Dairy. Consumer focus groups were conducted with Millennial and Gen X primary shoppers. Overall feedback was positive regarding the product concept, taste and packaging.”

We wanted to know more about how the product will roll out.

“Dairy Plus Blends are now being test marketed at more than 300 retail stores in Minnesota,” the DFA response stated. “If successful in test, the brand plans to roll out more broadly across the United States, beginning in the Central and Northeastern regions of the U.S.”

DFA has already been bottling plant-based alternatives in copacking arrangements in the Midwest. And, the Cumberland Dairy plant in New Jersey, formerly owned by the Catalana family, and purchased in 2017 by DFA, bottles plant-based beverages also as the Catalanas still operate the plant and retained ownership of their plant-based beverage investments.

We also wanted to know how the real dairy milk that makes up 50% of the new Dairy Plus Blends is classified for Federal Order pricing, but that question was not answered.

And, we wanted to know if DFA in its “partnership to innovate” with DMI has any plans to innovate the marketing and packaging of 100% Real Whole Dairy Milk in such a pleasing and attractive way as they have with the Dairy Plus Blends? That question was not answered either.

We also wondered if this “blend” will pull dairy milk drinkers as they hear all this talk about becoming “flexitarian” – cutting back on foods that come from cows and adding more foods that come from plants to, you know, save the earth and all.

Along these lines, DFA’s response attributed to Kyllo at Live Real Farms was: “We’re confident milk will continue to have a place on family tables for years to come, but we also understand and appreciate that consumers have choices in what they drink today. We think Dairy Plus Blends offer a refreshing taste experience and provides a unique way to get dairy in front of consumers who might explore other beverage options.”

We wonder if this is an invitation by a dairy-farmer-owned cooperative, funded in part by dairy-farmer-checkoff to lure consumers into experimenting with something new instead of dairy milk or will it appeal to people who have no intention of drinking 100% real dairy milk? It’s hard to tell, but it’s worth watching.

Some advocates of this kind of experimentation say that the fluid milk market needs more lactose-free choices. There are already lactose-free milk choices, there is also A2 for other types of digestive sensitivity, and there’s one thing everyone seems to be forgetting. Whole milk is more easily digested by people with these sensitivities. There’s actual real proof of this now, not just personal experience, but that’s a story for another day.

In this time of continued fluid milk sales losses, farm milk prices below breakeven for five years and dairy farms exiting the business, why does the dairy-checkoff not re-brand and re-market and innovate the packaging and promotion of Real 100% Whole Milk that is virtually 97% fat-free and loaded with natural goodness? Why not actually partner to innovate the brand-promotion MILK? What a novel idea!

Oops, that’s right. I think USDA lawyers would have a problem with that.

One thing that is impressive coming out of Live Real Farms is the Wholesome Smoothie line of Whole Milk yogurt smoothies last year. DFA says it plans to develop “a robust product line with the launch of additional, innovative products over the next three to five years.”

We’ll be paying attention to all of them.

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