From DMC to FMMOs, from price ‘movers’ to ‘make allowances’: House Ag hearing reviews farm bill dairy provisions

By Sherry Bunting, June 24, 2022

WASHINGTON — It was a lot to wade through, but after two panels and nearly four hours, many cards were on the table, even if the full deck was not counted. 

The U.S. House Agriculture Committee hearing Wednesday, June 22 was a 2022 review of the current farm bill’s dairy provisions. Chairman David Scott (D-Ga.) set the stage with his opening remarks, noting a significant part of the hearing would be devoted to the dairy safety net, namely the Dairy Margin Coverage (DMC), but also to talk about the Federal Milk Marketing Orders (FMMO) to learn if this system is “the best fit for today’s world.

“We want to continue to listen to farmers and navigate the issue for the best approaches to any changes,” he said, setting the next stage for listening sessions.

Those testifying talked about building consensus for FMMO changes, a charge handed down from Ag Secretary Tom Vilsack last December, and again more recently, when he said a consensus agreement by stakeholders on one plan was needed before a national hearing on milk pricing could be held.

On the Class I ‘mover’ change in the last farm bill, USDA AMS Deputy Administrator Dana Coale noted that the change was authorized by Congress after an agreement was reached between NMPF and IDFA to change the ‘higher of’ to a simple average plus 74 cents. This was designed to be revenue neutral, she said, but the pandemic showed how an unforeseen market shock can create price inversions that significantly change this neutrality. (testimony)

Coale noted that “market abnormalities” brought on a situation where Class I was below Class III, which doesn’t typically happen, and this created losses.

“In the 2018 farm bill Congress authorized a change to the Class I price mover. We implemented that in the department in May 2019. This change was a consensus agreement reached between NMPF and IDFA to benefit the entire industry. Implementation in the farm bill was designed to be revenue neutral. However, nobody foresaw a pandemic occurring, and no one could have projected the implications that pandemic would have on (prices), particularly within the dairy sector. What we saw occur from mid-2020 through mid-2021 was a significant change in that revenue neutrality. As you look at the Class I mover before the pandemic and moving out of the pandemic, it is maintaining pretty much a revenue neutral position compared to the prior mover. However, due to the (class) price inversions that occurred, we had some major losses incurred by the dairy sector.”

Dana Coale, Deputy Administrator, USDA AMS Dairy Programs

On the primary dairy safety net, Farm Service Agency Deputy Administrator Scott Marlow went over the Dairy Margin Coverage (DMC) and explained the beneficial changes that have been implemented since the 2018 farm bill. (testimony)

He noted that supplemental DMC would have to be made permanent in the next farm bill in order for that additional production history between the 2011-13 figure and the 5 million pound cap to be covered in future years.

“In 2021, DMC payments were triggered for 11 months totaling $1.2 billion paid to producers who enrolled for that year, with an average payment of $60,275 per operation. At 15 cents per cwt at the $9.50 level of coverage, DMC is a very cost-effective risk management tool for dairy producers. Ahead of the 2022 DMC signup, FSA made several improvements. The program was expanded to allow producers to enroll supplemental production (up to the 5 million pound cap). In addition FSA updated the feed cost formula to better reflect the actual cost dairy farmers pay for alfalfa hay. FSA now calculates payments using 100% premium alfalfa hay, rather than 50% of the premium alfalfa hay price and 50% of the conventional alfalfa hay price. This change is retroactive to January 2020 and provided additional payments of $42.8 million for 2020 and 2021. We are very concerned about the margins. It is very important the way DMC focuses on the margin. Farmers are facing inflation of costs beyond the feed that is part of this calculation. This margin based coverage has proven to a model and is something we need to look at for other costs and commodities.”

Scott Marlow, Deputy administrator usda fsa farm programs

Dr. Marin Bozic, Assistant Professor Applied Economics at the University of Minnesota gave some long range trends and observed the factors that are decreasing participation in Federal Milk Marketing Orders. (testimony)

He mentioned that a consideration not to be ignored is the status of vibrancy and competition as seen in transparency and price discovery. When asked about proposals to improve this, Bozic said the proposals need to come forward from the industry, the stakeholders, and that the role of academia is to provide numbers, trends, and analysis of proposals, not to decide and determine these marketing structures.

“Farm gate milk price discovery is challenged by this lack of competition,” he said. “If a corn producer wishes to know how different local elevators would pay for corn, all he needs to do is go online or tune in to his local radio station. Dairy producers used to be able to ‘shop around’ and ask various processors what they would pay for their milk.”

Bozic was quick to point out that, “We should not rush to generalize from such anecdotal evidence, but in my opinion, it would also be prudent not to ignore it.”

“FMMOs start from a set of farmer-friendly ideas… They have somewhat lost luster due to declining sales of beverage milk. In regions other than Northeast and Southeast, fluid milk sales no longer provide strong enough incentives for manufacturers to choose to stay consistently regulated under FMMOs. My estimates are that the share of U.S. milk production in beverage milk products is likely to fall from 18.3% in 2022 to 14.5% by 2032. Do Federal Orders suffice to deliver fair market prices to dairy producers? The critical missing ingredient is vibrant competition for farm milk. Whereas just six or seven years ago, many producers had a choice where to ship their milk, today it is difficult. When some dairy producers have asked for milk price benchmarking information from their educators or consultants, those service providers have in multiple instances faced tacit disapproval or even aggressive legal threats from some dairy processors. Further research and an honest debate on competition in dairy is merited.”

Marin bozic, ph.d., department of applied economics, university of minnesota

Where FMMO changes are concerned, Bozic noted some of the broader issues to come out of the Class I pricing change that was made legislatively in the last farm bill. For example in future reforms, when there is lack of wide public debate on proposals, he said: “It increases odds of a fragile or flawed policy design, and lack of grassroots support for the mechanism in changing markets. FMMOs have a comprehensive protocol for instituting changes through an industry hearing process. The Class I milk price formula can be modified through a hearing process.”

From Bernville, Pennsylvania, representing National Milk Producers Federation (NMPF) and DFA, Lolly Lesher of Way-Har Farms shared the benefits of the Dairy Margin Coverage (DMC) program through FSA and other risk management tools through RMA. She said they purchase the coverage at the highest level each year as a safety net for their 240-cow dairy farm. (testimony)

DMC is intended for smaller farms producing up to 5 million pounds of milk annually, but other farms can layer it in with other available tools at the tier one level on the first 5 million pounds or choose to pay the tier two premium to cover more of their milk through that program, but other tools like DRP are also available, Marlow explained.

Turning to the Class I pricing change in the last farm bill, Lesher said the change was an effort to “accommodate a request for improved price risk management for processors, while maintaining revenue neutrality for farmers… but the (pandemic) dramatically undercut the revenue neutrality that formed its foundation.”

“As valuable as the (DMC) program has been, many farmers have not been able to fully benefit because the underlying production history calculation is outdated. It is critical that the (supplemental DMC) production history adjustment be carried over into the 2023 farm bill… The events of the last two years have shined a spotlight on the need for an overall update to the FMMO system. Class I skim milk prices averaged $3.56/cwt lower than they would have under the previous ‘mover’. This undermined orderly marketing and represented net loss to producers of more than $750 million, including over $141 million in the Northeast Order. The current Class I mover saddles dairy farmers with asymmetric risk because it includes an upper limit on how much more Class I skim revenue it can generate… but no lower limit on how much less… those losses become effectively permanent.”

lolly lesher, way-har farm, bernville, pennsylvania, representing nmpf and dfa

According to Lesher’s testimony: “The dairy industry through the National Milk Producers Federation is treating this matter with urgency and is seeking consensus on not only the Class I mover, but also a range of improvements to the FMMO system that we can take to USDA for consideration via a national order hearing.”

Lesher serves on DFA’s policy resolutions committee and she noted that DFA, as a member of NMPF “is actively participating in its process (for FMMO improvements), which involves careful examination of key issues to the dairy sector nationwide… We look forward to working with the broader dairy industry and members of this committee as our efforts advance.”

Representing International Dairy Foods Association (IDFA), Mike Durkin, President and CEO of Leprino Foods Company stressed the “extreme urgency” of updating the “make allowances” in the FMMO pricing formulas. These are processor credits deducted from the wholesale value of the four base commodities (cheddar, butter, nonfat dry milk and dry whey) used in FMMO class and component pricing as well as within the advance pricing for fluid milk. (Leprino is the largest maker of mozzarella cheese in the U.S. and the world. Mozzarella cheese is not reported on the USDA AMS price survey used in the FMMO class and component pricing.) (testimony)

Durkin also noted the importance of making the Dairy Forward Pricing Program that expires September 2023 a permanent fixture in the next farm bill for milk. This program allows forward pricing of milk used to make products in Classes II, III and IV so that longer-duration contracts can be used by this milk when also pooled under FMMO regulation without fear of the authority expiring in terms of the FMMO minimum pricing. (Milk that is used to make products in Classes II, III and IV is already not obligated to participate in or be regulated by FMMOs.)

“The costs in the (make allowance) formula dramatically understate today’s cost of manufacturing and have resulted in distortions to the dairy manufacturing sector, which have constrained capacity to process producer milk. Congress can improve the current situation by directing USDA to conduct regular cost of processing studies to enable regular make allowance updates. The need to address this lag is now extremely urgent. While our proposal to authorize USDA to conduct regular cost surveys will eventually provide data to address this in the longer term, steps must be taken now to ensure adequate processing capacity remains. Updating make allowances to reflect current costs will enable producer milk to have a home. Making the (Dairy Forward Pricing Program for Class II, III and IV) permanent could also facilitate additional industry use of this risk management tool for longer durations without concern about the program expiring.”

Mike Durkin, president and ceo, leprino foods, representing idfa

Lesher also thanked House Ag Ranking Member G.T. Thompson for his Whole Milk for Healthy Kids Act, seeking to bring the choice of whole and 2% milk back to schools. The bill currently has 94 additional cosponsors from 32 states, including the House Ag Chair David Scott and other members of the Agriculture Committee. The bill was referred to the House Committee on Education and Labor.

Other key dairy provisions were reported and questions answered, including a witness representing organic dairy farmers. There’s more to report, so stay tuned for additional rumination in Farmshine and here at Agmoos.com

Recorded hearing proceedings available at this link

Written testimony is available at this link


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Iconic Readington Farms prepares to transition to procuring milk from DFA plants for ShopRite, other stores


By Sherry Bunting

WHITEHOUSE STATION, N.J. — The iconic Readington Farms plant bottling milk brands for ShopRite and other stores — both subsidiaries of Wakefern Foods Corp. — is “concluding negotiations to procure its milk and other beverages from Dairy Farmers of America (DFA),” according to an email response today (Dec. 23, 2021) from Karen O’Shea, Wakefern corporate communications. (The communication came after Farmshine’s press deadline, and this updates the brief mention in this week’s Milk Market Moos.)

“The transition from Readington to DFA is expected to begin sometime in January 2022 and continue until all our stores are serviced by our new provider. We are also working with DFA on a path to offer cooperative membership to the dedicated direct shippers who currently supply Readington, if they so choose,” O’Shea stated.

According to its website, Readington Farms is currently served by over 150 independent dairy farms and the Whitehouse, New Jersey plant processes 15,000 gallons of milk per hour.

DFA is a national cooperative with 7000 members and seven fluid milk and beverage plants in the Northeast/Midatlantic trading region, many of them purchased during the Dean Foods bankruptcy sale in May 2020. DFA purchased the Cumberland Dairy in Bridgeton, N.J. in November 2017.

In 2019, Readington Farms was authorized a $2.5 million RACP grant from the Pennsylvania Redevelopment Authority to build a new milk plant and headquarters in the Lehigh Valley. Pre-design plan review was to be part of the Upper Macungie Township Planning Commission’s August 2021 meeting, but this review was postponed to October and again postponed to January 2022, according to township agendas and minutes.

According to Wakefern, this new facility will not be pursued and no public funds were received or accepted. The company will withdraw its grant application for a facility in Lehigh Valley, Pennsylvania.

“Readington and Wakefern considered a number of locations in the region as potential sites for a new fluid processing dairy. After an extensive search and exploration of all possibilities and costs, Wakefern decided not to pursue a new facility and instead procure its milk and other beverages from a third-party provider,” O’Shea reported.

“Currently, Wakefern is concluding negotiations with Dairy Farmers of America (DFA) to provide its fluid milk and other beverages. In addition to their network of 7,000 dairy farmers, DFA also has seven fluid milk processing facilities located in our trading area that will serve Wakefern’s needs,” she said.

Supply and demand are the real story behind chaos in cream markets

istock photo purchased and used with permission
As shortages of cream products become more obvious in retail and foodservice channels, USDA’s Dec. 8 fluid milk and cream report acknowledged raw milk cream supplies are “tight to extremely tight” in the eastern U.S. at the same time that processors nationwide are trying to ramp up production of cream cheese, butter and seasonal products to meet sustained strong demand. In the midwestern markets, USDA notes Class I bottling needs have risen instead of declining like they normally do in December, and in the eastern markets, Class I bottlers are taking in more milk for steady to strong sales. istock photo

By Sherry Bunting, Farmshine

BROWNSTOWN, Pa. — What’s the real story with the availability of cream products and whole milk, especially in the population centers of the eastern U.S., and why the continued base penalties, base reductions, warnings of greater deductions on future milk checks — even for the base-obedient producers? Why the talk of overproduction of milk — especially in the Northeast and Mid-Atlantic region — when headlines are noticing a crimp in supplies?

A paradox, for sure.

One clue that makes this a true supply and demand situation — as opposed to purely a sign of supply chain disruptions — is the most recent USDA dairy products report showing 1.6% less butter was produced in October compared with a year ago, attributable to increased demand for cream and declining milk production.

The U.S. also exported more fat in the product mix than prior years.

In relation to this, October butter stocks, according to USDA NASS, are down 13% from September and 6% lower than a year ago after being double-digit percentage points higher than year earlier for the previous two to three years. The seasonal increase of 11.2% more butter produced in October than September was not as robust as previous years and it met an increased drawdown that has left cold storage stocks short heading into the holiday baking season in competition with cream product-making season.

While processor leaders from IDFA did a second Washington D.C. fly-in last week, talking with members of Congress about the trade disruptions, exports have continued strong and domestic shortages of milk and cream products are popping up all over the place – especially in the Northeast and Mid-Atlantic region.

It’s clear that trucking and worker shortages contribute, but it’s also clear the issues go beyond the frequently-cited packaging shortages, given the fact that bulk product is also becoming limited in foodservice channels.

So much so that the Dec.4 New York Times covered what has become a worsening cream cheese shortage in New York City. This pertains to the bulk cream cheese base that bagel shops purchase to tailor-make their own schmears. Consumers report retail packs of cream cheese in short supply at chain stores in New York while the bulk cream cheese base is tenuous for foodservice.

In both New York and Pennsylvania, shoppers confirm scarcity of cream cheese and other cream products while stores are placing limits on purchases. Reports from Boston indicate stores are “screaming” for half and half. Others observe that eggnog production is exacerbating already tight cream supplies, but acknowledge the issues are bigger than just the seasonal beverage production.

Fox News picked up the story Dec. 6 and 7. They interviewed NYC bagel shop owners to learn how they are navigating the problem. One owner talked about begging his vendors for product, then locating some cream cheese in North Jersey and driving 90 minutes in his own truck three times to transport a total of 2000 pounds of the schmear.

The Fox and Friends morning hosts checked with Kraft-Heinz, the parent company of Philadelphia Cream Cheese, conveying the company’s statement that they are seeing a 35% spike in demand for the product, which they then blamed on panicking restaurateurs stockpiling it.

“We continue to see elevated and sustained demand across a number of categories where we compete. As more people continue to eat breakfast at home and use cream cheese as an ingredient in easy desserts, we expect to see this trend continue,” Kraft-Heinz spokesperson Jenna Thornton told Fox News in a written statement.

Fox and Friends host Steve Doocy, who does a lot of cooking, chimed in that he can’t find cream products, and they all wondered out loud, what’s the deal with no whole milk in the stores?

Facebook responses to queries about what’s happening in different areas confirm many are having trouble finding half and half, heavy cream, cream cheese, even butter, and some reported spot depletion of whole milk or all milk.

A Pennsylvania store owner texted a note claiming he simply can’t get whole or 2% milk for his store.

A ‘Lunch Ladies’ group on facebook discussed numerous incidents of milk order shortings, delays and non-deliveries lasting more than a week, in some cases several weeks.

In both eastern and western Pennsylvania, shoppers are reporting purchase limits and limited or non-existent supplies of whole milk and cream products at major supermarket chains. (In my own shopping over the weekend, a Weis location just outside of Lancaster had a decent supply of milk, but only a few off-brand unsalted butter packages in the case. I was lucky to pick up the very last Land O’Lakes butter pack lingering way back in the corner. In the baking aisle, the canned evaporated milk shelf was bare.)

A reader from Virginia reached out to say her local Walmart was full with milk Saturday, but not a jug to be found Sunday.

An anecdotal report from a shopper in Florida, after stopping at two stores, found no half and half, no heavy cream, limited fluid milk, a buying limit on cream cheese – but “lots and lots of non-milk ‘milk.’”

Coffee houses are also randomly affected, with reports out of New York and New England. in the Twitterverse noting both real-milk and oat-milk shortages as people tell of stopping at multiple locations for morning lattes. Mothers were also tweeting frustration this week over limited supplies of infant formula in some areas.

Perhaps complicating the issue – waiting in the wings — is the foray of DNA-altered yeast-excrement protein analogs being tested in the supply chains of large global corporations – like Starbucks. A headline from three weeks ago read “Perfect Day’s Dairy-identical Alt Milk lands at Starbucks.”

Starbucks is among the multinationals testing Perfect Day’s DNA-altered yeast-excrement deemed as dairy analogs in select West Coast locations. The Perfect Day company claims to be “on a roll” with the brand valued at over $1.6 billion and recently raising $350 million in its admitted efforts to “remove cows from the dairy industry, without losing the dairy.”

One aspect of the Perfect Day ramp up is the company works B2B with processors, not making their own consumer-facing products. If other companies are experimenting with the goal stated by Perfect Day last year of 2 to 5% augmentation of dairy processing with the yeast-excrement protein analog by 2022, there’s a scenario in this to think about: These protein analogs may be deemed “identical” to whey and casein in processor application, but they do not bring along the healthy fats, minerals, vitamins and other components of real milk.

Could current chaos in cream markets and product availability be a glimpse of future disruptions by protein analogs as the B2B model seeks to dilute real dairy under the guise of cow climate action? That’s a story for another day, but it bears watching in the context of the current paradoxical supply and demand situation right now.

For its part, USDA Dairy Market News reported Dec. 1 that milk output was rising in the East, but demand was still beating it. Then the Dec. 8 report said Northeast milk production had flattened under the pressure of rising input costs and penalties on overbase production.

Specifically, USDA DMN cites steady to higher bottling demand and active cheese production schedules soaking up supplies.

“Cream demand is strong throughout the East,” the Dec. 1st report said. “Some market participants have noted that widespread logistical issues – including driver shortages and delivery delays – pose a greater hindrance to cream-based operations than the tighter cream availability, itself, at this point.”

By December 8th, USDA DMN reported that eastern handlers were working to secure milk spot loads from other areas as local supplies are tight, noting that eastern cream supplies are “tight to extremely tight,” and some dairy processors reported very limited spot load availability.

The report also sought to explain the cream cheese shortage in retail and foodservice channels, noting multiple factors, including “logistics bottlenecks, labor issues and supply shortages at manufacturing facilities.”

While the report indicated stepped up butter production this week, one Pennsylvania milk hauler observed two empty silos and no trucks to be seen at the Carlisle butter/powder plant at the start of this week, which is unusual.

Related to cream cheese production in Northern New York, producers there say they were told plant worker shortages this fall meant less processing of their milk. This resulted in multiple occasions of having to dump milk that could not be processed, but the incidents were deemed “overproduction” with producers footing the bill.

Meanwhile, USDA DMN indicated more outside milk coming East to meet processing needs.

At the same time, dairy producers from multiple cooperatives in the Northeast and Mid-Atlantic region confirm they are still incurring stiff penalties on over-base milk. While some of the penalty levels have softened a bit from earlier highs, most are still being held to their base levels, or in the case of DFA, the Northeast and Mid-Atlantic producers are still being penalized for milk that is above 88% of their base.

This means in the face of reduced supply vs. strong demand, DFA continues its 12% reduction in base allotments that became prevalent, especially in the Northeast and Mid-Atlantic region, at the start of the pandemic. 

Furthermore, producers with other cooperatives report they have been warned to expect further deductions on their milk checks this winter – even if they did not exceed their bases — because there is still “too much milk,” they are told.

Attempts to gain further insights on the situation from major milk cooperatives and USDA went unanswered at this writing, so stay tuned for updates.

Checkoff leaders describe dairy transformation, milk-based blends, dual-purpose processing

During the 2021 Pa. Dairy Summit in February, dairy checkoff leaders presented a “virtual” breakout session on ‘what dairy checkoff has done lately’. Some key concepts discussed were transformation, trust, supply chain infrastructure and how DMI’s unified marketing plan is driving the industry’s “Dairy Transformation” plan and framework (also known as Dairy 2030). In a previous article, the sustainability and net-zero part of the equation was covered.

By Sherry Bunting, Farmshine, March 5, 2021

HARRISBURG, Pa. — As part of the 2021 Pennsylvania Dairy Summit, virtual attendees had the option of ‘attending’ a zoom session sponsored by American Dairy Association Northeast (ADANE), entitled What has dairy checkoff done for you lately? Moderated by Jayne Sebright, executive director of Pennsylvania’s Center for Dairy Excellence, the guests included Rick Naczi, CEO of ADANE, Barb O’Brien, DMI president, Karen Scanlon, senior VP of sustainability, Paul Ziemnisky, executive VP of global innovation partnerships, and Marilyn Hershey, DMI chair.

The first part of the program was a history lesson on how and why DMI (Dairy Management Inc) was formed to “bring greater efficiency” to how checkoff dollars are used. Leaders stated that DMI “eliminates millions spent in redundant money.” A graph was displayed showing that since the formation of DMI in 1995, total dairy disappearance has risen, along with milk production, to record levels.

A key point made is that DMI leaders see the unified and integrated plan “has helped the dairy industry grow, to help fulfill the dairy producers’ goal of growth.”

Leaders acknowledged that consumers trust farmers, but they believe checkoff’s role is defined as “educating consumers about that trust.”

Paul Ziemnisky gave a look at the future of dairy beverages, going so far as to say new processing facilities will need to be built as beverage plants able to handle all kinds of ingredients for the blended products of the future. In essence, he said, the future of fluid milk is “dual purpose” processing plants.

“We have taken milk to the energy arena, the cold brew with milk arena. We’re adding plants to dairy, making lactose-free dairy to address gut health. Our partners have led, and we have driven growth by over 1 billion pounds,” he said.

Touching on full fat dairy, O’Brien said DMI is “leveraging” the growth in full fat science.

A pressing question of farmers was asked: “Why do we not see television ads?”

The answer, said O’Brien, is “We are going to market differently from the consumer standpoint with less traditional TV ads and shifting to social and retail media channels like other companies are doing. We are looking to our partners, dairy brands, and foodservice brands to elevate their presence and elevate dairy’s presence within that,” she explained.

Ziemnisky pointed out the significant growth in foodservice investment in promoting products that highlight cheese within their own advertising channels.

“For the fluid milk category to be successful,” he said, “Brands need to establish the relationship with consumers.”

Hershey noted that the list of companies that advertised in the Super Bowl 10 years ago include Blockbuster video, Gateway computers, companies that are not in business any more, indicating that television ads are a large investment of ‘past’ industries (even though this year’s Super Bowl had ads by milk’s up-and-coming new competitors).

O’Brien and Hershey explained that DMI and MilkPEP (the fluid milk processor checkoff fund of over $90 million a year) work in “lockstep on consumer understanding, messaging and coordinating with the science.”

“We (DMI) are investing in thought-leadership and university partnerships while they (MilkPEP) have a consumer-focused charter,” said O’Brien.

An example she gave is Amazon launching into groceries in 2017 and ramping up in the last 12 months.

“They won’t settle for being second or third in 10 years, and we (DMI) get to be the ones to educate them on dairy,” she said, stating that Amazon Fresh dairy offerings today are 90% cows’ milk. “That could have been 50/50. We are a voice for dairy in the category.”

This led into further discussion of DMI’s target and the move to blended product partnerships.

Ziemnisky said “90% of consumers who buy plant-based drinks also buy milk today. The urban/suburban mom trying to get in shape is looking for low fat and looking for flavor. We have to give her more flavor. She is looking for advanced nutrition and things to energize her. She’s buying 27 gallons of traditional milk and 5 gallons of plant-based beverage a year because we did not give her almond flavor and oat flavor. She has to trust that we will give her the products she is looking for.”

Toward that end, said Ziemnisky, “We are blending to specific consumers around their dietary needs.”

“We will see the beverage space set up differently and our manufacturing plants will need to be set up as dual plants to make milk-based beverages because that is where the consumer is going, and it is our job to keep them where dairy is front and center,” he explained, noting that these blends “are shelved with milk so that the consumer is not walking over to the plant-based aisle.”

(In most stores, the plant-based is shelved in the dairy aisle so it’s hard to know how these blended products pull sales from solo-dairy or solo-plant.)

Ziemnisky noted, as farmers have heard before, that, “We have to be relevant, to develop formulations that make sure dairy is front and center, but provide the taste, nutrition and sustainability consumers are looking for.”

O’Brien said DMI’s mandate has been to “build trust” and address “shared priorities” while streamlining dairy promotion to be more efficient.

“We know accountability is absolutely critical,” said Hershey. “Farmers make the program and budget decisions through the significant farmer input” of United Dairy Industry Association (UDIA), the portion of the national branch that represents the state and regional promotion entities.

The bottom line, DMI leaders explained, is that the national decisions, strategies and unified marketing plan are ultimately governed by DMI’s board of 15 farmers, with two-thirds of dairy funding still residing with local leadership, but aligning with the “unified marketing plan” as all the state and regional organizations making up UDIA giving 2.5 cents of the local dime to DMI.

DMI works on two levels, said O’Brien, one being as a “global umbrella that farmers have created to address threats over time.”

The other level, they talked about was the domestic side, focused on youth wellness, developing a “deep bench” of nutrition experts and organizations to work with, and engaging on hunger with the food bank system.

On that “global umbrella” level, they explained that the U.S. Dairy Export Council, formed in 1995 receives $20 million annually in checkoff funds and is made up of the membership of 125 dairy companies, including cooperatives.

The Innovation Center for U.S. Dairy was later formed in 2008-09, with World Wildlife Fund (WWF) at the table right from the beginning  “to bring farmers, cooperatives, manufacturers and customers around common sustainability metrics.” Essentially, WWF has been involved from the beginning in the shaping of the FARM program and the sustainability metrics that are part of DMI’s Net Zero Initiative.

O’Brien and Hershey talked about GENYOUth (formed in 2008-09), saying it was “founded by farmers and brings tens of millions of dollars in from other sources to support dairy’s commitment to youth wellness in schools.”

O’Brien noted that since its founding, GENYOUth has “brought in” $100 million from companies outside the dairy industry to achieve the goal of what they calculate to be over 800 million servings of milk per year, and accounting for what they say are school sales of 400 million “incremental” pounds of milk.

In existence for 12 years, with an annual budget of around $10 million, $4 million of which is line-item national and regional checkoff funding, the percentages show the GENYOUth budget now includes more outside money than inside money; however, there is no clear accounting for the ‘vehicle’ costs of the various staff and fixtures, which would likely be additional. Furthermore, there’s the $6 million paid annually to the NFL, which is DMI’s GENYOUth ‘partner’. The purpose of this money was not divulged by DMI leaders during the session. 

Leaders also spent a good portion of time talking about how GENYOUth “worked tirelessly” to raise $17 million of “other people’s money” to support the distribution of milk to schools as cafeterias shut down during the pandemic. They maintained that without these efforts by GENYOUth, milk and dairy products would not have flowed steadily to children through schools. They said GENYOUth grants were given to 14,000 schools to pay for things like coolers for off-site meal distribution.

“We have insured milk and dairy products got to schools during the pandemic,” said O’Brien. She and Naczi both shared how they believe their organizations “pivoted and kept milk flowing” through schools, food banks, CFAP food boxes and other government feeding programs as well as “educating” schools on how to use the waivers for milk and dairy food sizes and packaging during the pandemic. They described national and regional checkoff organizations as the logistical coordinators for the flow of dairy to hunger channels – even though much of this was connected to the USDA CFAP programs.

They also explained how ADANE staff worked with stores to get the purchase-limit signs removed and to keep the dairy cases stocked during the height of the pandemic shut down last spring.

“We knew foodservice channels would get disrupted and looked at how to be sure dairy was going with and through the industry. With the retail influx of volume (purchases), we looked at how we can work across the supply chain,” said O’Brien, adding that dairy outperformed the growth in the rest of the retail sector by three percentage points during the pandemic.

PA Ag Secretary Redding sidesteps school milk question, cites other priorities

Pa. Agriculture Secretary Russell Redding sidestepped questions about school milk during State Senate budget hearings. He listed other priorities of advocacy in the “federal conversation” and cited the need for new processing for Pennsylvania’s dairy future. Screenshot photo of hearing on zoom

By Sherry Bunting, Farmshine, April 23, 2021

HARRISBURG, Pa. – During the Pennsylvania Senate budget hearings in April, in a question-and-answer exchange with Senator David Argall, representing Berks and Schuylkill counties, Agriculture Secretary Russell Redding talked about advocating for trade agreements, pricing policies, dairy investment and nutrition in “the federal conversation.”

However, on the question of advocating to legalize whole milk choice in schools? Asked twice. Not answered.

In fact, the Secretary’s entire agriculture budget testimony included just one small paragraph about dairy — something Sen. Argall picked up on and questioned. He asked Redding what portion of overall Pennsylvania agriculture is represented by dairy, to which the Secretary replied “about 37%.”

When pushed on what the department is doing, Redding said: “I can tell you dairy is about 37% of my conversations — even though the testimony doesn’t reflect that.”

“We have made real progress in dairy and have been part of that conversation, but there is still more to do for dairy to remain viable and remain at 37%,” said Redding, citing the work of the Dairy Futures Commission, but few details.

Asked to look five to 10 years down the road, the Secretary said the dairy industry has had some “really incredible years in the last five and some incredibly bad years in the last five. It is always going to be sustainable,” he said, “but the question is: Are we going to have those good years to make up for the bad years?”

(It has been seven years since a truly good year was experienced by dairy producers.)

The Secretary pinned the hopes of the future for dairy in Pennsylvania on “getting new processing.” 

Redding stated: “We can compete on the farm. We can compete as a state. But we have to compete at the marketplace too. I remain encouraged by what we’re doing, but we have to keep pressing to make sure we get the right state and federal policies.”

However, there is one federal policy at the core of fluid milk marketing that the Secretary evaded.

Sen. Argall pointed out the 2010 federal policy that removed whole milk from schools.

“Do you see a solution to that issue, and is that really a big part of the overall problem?” the Senator asked.

“I think it is certainly a contributor, and I hear it all the time about whole milk. But what I try to encourage the dairy industry is to look at where total dairy consumption is — the 1%, the 2%, the whole milk — and can you get more cheese, get more yogurt in, can you get more dairy products into that school diet,” Redding replied.

“I think that’s probably what we have to keep our eye on,” he continued. “It’s going to take all of that product mix for us to turn this trend around of just dairy consumption generally. It’s a complicated equation. All of us need to keep pressing on the Congress to do more, to keep our trade agreements in place, and I can tell you… we’ve had some difficult (trade) steps for the last several years.”

(The last several years saw record volumes of exports. Tom Vilsack, current U.S. Ag Secretary and former U.S. Dairy Export Council president wrote in a blog post that 2018 was “a banner year for dairy exporters.” We all recall what 2018 was like for dairy farmers.)

Sec. Redding also referenced the negative PPDs on milk checks as an issue. He stated that, “The price difference between Class III and IV has cost Pennsylvania dearly, so that’s also part of the federal conversation.”

Sen. Argall picked up on the Secretary’s mention of ‘federal conversation,’ asking a second time about whole milk in schools.

“Are you working with anyone across the country to try to repeal that portion of the (federal) act that has greatly reduced the number of students (allowed) to drink whole milk in the schools?” the Senator asked.

“We have not been engaged in repeal. We have been engaged in what I mentioned earlier, about making sure that the Dietary Guidelines include dairy, and they do continue the three a day,” said Redding. “We have continued to advocate for continued investment in dairy, making sure that we do the trade (exports), making sure we have the pricing pieces.”

The Secretary went on to say; “We are advocating at a lot of different levels for dairy on the nutrition side and also the dairy investment side.”

In regard to new processing, after years of discussion, two dairy bills were passed by the House in the 2019-20 session, only to die in the Senate Ag Committee. One was a dairy keystone opportunity zones bill and the other was a bill dealing with transparency and distribution of state-mandated over-order premiums. Both bills, sponsored by Rep. John Lawrence had passed unanimously or nearly unanimously in the House last session.

During a meeting last week of the Grassroots PA Dairy Advisory Committee, Berks County dairy farmer Nelson Troutman, a committee member, noted a dairy redevelopment project in his county that looked to be a sure thing, only to be dropped.

Meanwhile, Pennsylvania has dropped from fifth to seventh, and now eighth in the nation in dairy production.

“This has gone on as the dairy industry consolidates,” said Mike Eby, a Lancaster County farmer, member of the grassroots committee, chairman of National Dairy Producers Organization and executive director of Organization for Competitive Markets.

“The Secretary mentions the momentum we have from fluid milk consumption rising recently. Increased sales of whole milk are a key to that increase. Legalizing whole milk choice in schools makes sense for children and dairy farmers,” Eby explained.

“Everything is political in this. Why do we not have whole milk in schools? People have no clue how important this is for dairy farmers. We have already lost a generation of milk drinkers,” notes Dale Hoffman, a Potter County dairy producer and member of the grassroots committee having worked on this issue for several years. 

Even the Pennsylvania Dairy Futures Commission, which was referenced by Sec. Redding in his comment about “making progress,” addressed the issue of whole milk in schools. 

The Commission was established by the state assembly in 2019 and issued its lengthy report in Aug. 2020 on a broad range of dairy issues. In one area of the report, the Commission made recommendations to improve the school milk experience, specifically stating: “Federal school milk program standards should allow the flexibility to offer a choice in flavored and unflavored milk, including whole milk.”

While several key state lawmakers report they are looking for an opening to do something on this at the state level, Secretary Redding evades the question, even changing the subject when asked about whether he is advocating for this in the federal conversation.

Instead, the Secretary responded by saying the Department advocates in the federal conversation for trade agreements, pricing pieces, and on the nutrition side being satisfied to have the ‘3-a-day’ in the school diet.

Here are a few questions Pennsylvania dairy producers may want to ask Pa. Ag Secretary Redding, by contacting the Pa. Department of Agriculture at 717-787-4737.

— Why does the Secretary advocate for ‘trade’ while completely sidestepping the question about advocating for whole milk choice in schools?

— Does the Secretary support Congressman Glenn “G.T.” Thompson’s bill H.R. 1861 Whole Milk for Healthy Kids Act to legalize whole milk choice in schools?

— Will the Dept. of Agriculture advocate for the health of children and the Commonwealth’s ag community by advocating for the bipartisan efforts to bring the choice of whole milk back to schools?

— In the budget hearing, Sec. Redding again identified the need for more processing in Pennsylvania. With properties up for redevelopment over the past few years in the heart of dairy areas, what is being done to encourage redevelopment projects for dairy processing?

— Given at least one such project was underway and then abandoned, what are the influences and obstacles?

The effort to legalize the choice of whole milk in schools is a federal and state issue. Public awareness has been increased over the past two years through the joint efforts of the Grassroots PA Dairy Advisory Committee and 97 Milk, including a petition that is being revitalized as the U.S. Congress and State Assembly begin a new legislative session. Graphic by Sherry Bunting

More open bidding process, accelerated timetable underway for sale of Dean Foods plants

By Sherry Bunting, Farmshine, Friday, March 27, 2020

HOUSTON, Texas – Changes have officially been made to the bidding procedures originally sought by Dean Foods in the conglomerate’s Southern Foods Group Chapter 11 bankruptcy and sale in the Southern District of Texas.

In a very brief continuation of bidding procedures hearing on March 19, U.S. Judge David R. Jones said he would sign an order that outlined the new procedures and accelerated timetable for bankruptcy and sale proceedings. A cover story in last week’s Farmshine described the concerns and changes that led to the new order.

On the evening before the hearing, Dean withdrew its original proposal for Dairy Farmers of America (DFA) to be designated as stalking horse bidder, essentially dissolving key elements of the Feb. 17 Asset Purchase Agreement with DFA on 44 of Dean’s 57 plants.

This move to a “value maximizing” sale process opens the bidding to more opportunities for additional single- and multi-plant bids as well as a potential restructuring bid.

Bids are due by Noon CDT on March 30, 2020, with Dean declaring winners shortly thereafter.

Objections to a sale order or transaction are to be filed in writing by April 1, 2020 at Noon CDT.

A hearing to consider the proposed sale transaction will be held before Judge Jones on April 3, 2020 at 9:00 a.m. CDT.

Attorneys and consultants for interested parties worked together at the suggestion of Judge Jones to modify the original proposal after objections were raised by the creditors committee, potential buyers of Dean assets, and more than a half dozen dairy cooperatives. Their concerns focused on the lack of fairness and transparency in the previously proposed bidding process that sought to designate DFA as lead bidder with protections for its 44-plant bid.

The order at the case docket does not remove DFA as a potential bidder but opens the process by not designating DFA as the stalking horse bidder.

More information can be found at the website for the Southern Foods Group case at https://dm.epiq11.com/case/southernfoods/dockets and at https://deanfoodsrestructuring.com/

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When freed from institutional food-police, what are consumers choosing?

_DSC0830Bad news meets dairy good news as industry navigates COVID-19 pandemic

By Sherry Bunting, Farmshine, Friday, March 27, 2020

BROWNSTOWN, Pa. — We will get to the good news, but first, the bad news…

These are tough times for Americans, and dairy farmers are hearing from their cooperatives and industry in such a way as to put a black cloud of doom over 2020.

Farmers are getting letters and phone calls stating milk base penalties will be strictly enforced beginning this week, in the case of Land O’Lakes, MDVA, DFA — for example — which ask for “voluntary milk reductions” and make plans for dumping milk on farms and at plants as “potential plant closures” meet spring flush.

They indicate that the ability of plants to process milk could “worsen,” giving folks the sense that the ability to process all the milk is already bad. And the dairy industry is preparing its farmers for the possibility of no compensation for displaced / dumped milk.

National Milk Producers Federation’s bulletin and press releases this week state they are seeking three things from the federal government — asking to reopen 2020 Dairy Margin Coverage enrollment, to purchase additional dairy products for humanitarian feeding programs, and to compensate them for “milk disposal” they deem to be “a real possibility as logistical challenges on the farm and at manufacturing plants may create severe disruptions.”

In fact, just 11 days into the COVID-19 national emergency declaration, NMPF came out with an estimate that the dairy industry’s losses “may exceed $2.85 billion”. Analyst after analyst is coming out with new forecasts — projecting milk prices paid to farmers could fall well below pre-COVID-19 forecasts and conjuring up images of 2008-09.

While the pessimistic psychology in these letters, phone calls and industry proclamations is peppered with platitudes such as “we’re in this together” and “we’ll rise to the challenge”…  dairy farmers are already rising to the challenge all day every day producing the milk that consumers are turning to in their time of grave health concern.

The psychology in the letters and phone calls received by farmers stands in stark contrast to the good news.

Now for the good news…

A silver lining became obvious last week and is continuing this week. Consumers are reaching for the jug! In fact, they are reaching for so many jugs that some stores are reportedly limiting milk purchases to one gallon per shopper.

They are also reaching for cheese, butter, yogurt and other dairy products as stores and plants scramble to restock.

While the Dietary Guidelines Advisory Committee is poised to further clamp-down on the allowable percentage of calories from saturated fat (sources say new guidelines might drop to 7% instead of the current 10%!), what are consumers doing?

Consumers are currently free from the government’s flawed and unhealthy “food police” nonsense that the Dietary Guidelines foist upon us by dictating our nation’s institutional feeding and foodservice in schools, daycares, workplaces — even restaurants.

Those dairy farmers attending the dairy checkoff question and answer session in Chester County, Pa. on March 5 heard firsthand from DMI leaders that dairy checkoff foodservice “partners” — like McDonalds – “want to meet the dietary guidelines on saturated fat and calories,” which is why their meals, especially for children, only offer fat free or 1% milk and it’s why the cheeseburger is not on the Happy Meal board. (But you can get a slice of cheese on that kid’s burger if you ask for it, and you can get whole milk in your hot chocolate, they say, if you ask for it.)

In our collective American lives — pre-COVID-19 —  stealth-health according to government rules has been in effect more than we realized.

The point here is this: Supermarkets are where consumers get to choose what they want to feed their families when the menu is theirs to create. And consumers are learning that saturated fat is not to be so-feared, that Whole milk has less fat than they thought, and that Whole milk and dairy products provide more healthy benefits than they ever thought — including immune-building benefits.

Yes, milk education works. As soon as consumers get to choose freely, what are they choosing? They are choosing milk and dairy, and they are choosing whole milk over all other forms — when it is available.

While DMI leaders talk about “consumer insights” and “moving to where the consumers are” and “moving them away from the habit of reaching for the jug to try innovative new products”… what are we seeing when all the stealth-health controls are lifted and people are home choosing what they will feed their families during COVID-19 “social distancing” and “sheltering in place”?

We see them choosing the truly healthy comfort foods. They are choosing whole milk and 2% gallons and half-gallons, butter, full-fat cheeses and red meat for their families.

These items are quite literally “flying off the shelves.” This phrase is used in report after report this week about the demand pattern that is unfolding.

This supply-chain shift is something the dairy industry is wholly unprepared for, as the path charted for dairy processing and promotion has been so heavily linked to flawed dietary guidelines, institutional feeding, foodservice chain partners and new, more expensive, innovative products — that the concept of filling so many jugs with healthy, affordable, delicious milk is a bit off the charted path.

Even USDA Dairy Market News observed in its weekly report on Friday, March 20th what we also reported to you from our sources in Farmshine last week — that the surging demand at the retail level is more than overcoming reductions in sales to schools and foodservice. In fact, USDA DMN reports that retail milk demand is “overtaking inventories” and that retail orders are “heading into new territory.”

Pictures of empty dairy cases populate social media posts. And yes, USDA DMN confirms that Class I milk demand is ranging mostly from “strong” and “surging” in the West and Midwest, to “extraordinary” in the Northeast, to going “haywire” in the Southeast.

Given that the spring flush has begun, the current surge in fluid milk demand means less of this extra milk will go into manufacturing — as long as consumers continue the current level of fluid milk buying and as long as the milk is in the stores for them to buy.

This pattern should help the surplus butter situation, which was revealed again in last week’s February Cold Storage Report. Last year ended with inventories of butter up 18% compared with the end of 2018. The February report showed butter storage was still bursting at the seams.

But earlier this week, at a local grocery store, only a very local brand of butter was available. Zero Land O’Lakes butter could be found in the case.

USDA DMN in its March 20 weekly report stated that cream is widely available, which seemed to contradict the agency’s description of whole milk sales and its notation in the report that butter churns have strong orders from retailers for what they call “print” butter – butter for retail sale, not bulk inventory.

So what do the numbers look like?

It’s more difficult than ever to get timely information from USDA AMS about packaged fluid milk sales, but here’s what virtually every dairy analyst is reporting this week. They cite the Nielson supermarket data showing fluid milk sales were up 32% last week, that sales of whole and 2% are dominating, when available, and that retail sales of other dairy product classes were up double digits.

Milk and dairy products are a centerpiece of “comfort food” and in-home meals. Families are enjoying milk again. Will they keep enjoying it after they return to school and work? Or will they be back in rush zone of packaged carbs instead of cereal and milk, and back in the government’s “stealth-health” or “fake health” zone where fat is restricted and carbs are unlimited?

It will take some time to sort out the buying patterns that linger after the initial surge in dairy demand currently experienced at retail, but here’s some additional positive news to think about.

When consumers are educated and get the opportunity to seriously whet their appetite. When they tune-out the frivolous ‘sustainability’ banter about cows and climate and can ignore the rules about saturated fat… When they focus-in on their families, turn to milk for health, flavor and comfort, and remember or realize for the first time what they were missing… Who knows what they will choose going forward – when they are allowed to choose?

Even when families return to work and school, they may remember coming to dairy for immune-building properties, for comfort, for health.

Nielson has a chart at its public website tracking key consumer behavior thresholds in six quadrants: Reactive health management, pantry preparation, quarantine preparation, restricted living, and living a new normal. It shows their consumer insights on how buying patterns evolve during a health emergency of the scale of COVID-19, and how this peels away some of the frivolous drivel and constraints that influence consumer behavior in ordinary times.

In the sixth phase, “living a new normal,” Nielson describes how “people return to daily routines of work and school, but operate with a renewed cautiousness about health.” It goes on to state that this creates “permanent shifts in the supply chain.”

Citing the use of e-commerce and hygiene practices as examples, this sixth phase of “living a new normal” when returning to daily routines could also apply to food and beverage purchases as consumers returning to true health and comfort during the first five phases may continue to prioritize true health and comfort after those phases have passed.

What do consumers really want? Where are consumers moving when they are free to move?

Without institutional control of daily diets and promotion, we are seeing a glimpse of the answer to that question within the context of COVID-19 pandemic buying patterns. Real whole nutrition, foods that build immunity, awareness of Vitamin D deficiencies in our population affecting immune system response, the role of other elements in milk for immune-building, preference for local food that doesn’t travel so far, and a revitalized awareness of how regional food systems are critical to our food security — these are perspectives that could prevail to influence buying patterns into the foreseeable future.

Uncertainty prevails right now, but hope is alive, and the good news is that milk and dairy have much to offer.

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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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DMI CEO on fluid milk

‘Let’s have dairy-based protein in 3-D printers and whatever comes next.’

Schools represent more consumer touch-points for milk than all other sectors, combined

By Sherry Bunting, Farmshine, Friday, March 22, 2019

CHICAGO, Ill. — The fluid milk category is receiving much attention after a decade of rapid declines in sales. What does the CEO of the national dairy checkoff organization DMI have to say on the topic?

For starters, he says the dairy industry should stop blaming the alternative beverages and start looking at its own failures.

In his CEO’s Report, delivered at the February DMI board meeting, DMI CEO Tom Gallagher addressed the fluid milk question. While no press release or public statement or copy of the CEO’s Report was provided to Farmshine, a video was posted to the private Dairy Checkoff facebook page and was subsequently provided to Farmshine by a dairy farmer participant.

Since Gallagher states while giving his “CEO’s Report” that this information is ‘public’ and that “we want you to take pictures of it and share it, do what you want with it, it’s yours.” So we are sharing with Farmshine readers what was shared with us by dairy farmers what was shared with dairy farmers via the closed facebook group.

Gallagher began his report talking about farmer engagement. 

“The power of the industry is within the industry, it’s the farmer,” he said. “We can commit to activating the dairy farmer at the local and national levels, then we can have a big voice, especially, on what it is that your checkoff really does.”

He talked about the changing world of consumer influence, saying that, “When you think about the things we need to do, more and more they are moving away from the things we are familiar with.”

From there, he referenced a presenter for the following day who would be talking about the future, about 3-D printing of food.

“Well, it’s not the future because you can go on Amazon today, and for $2000, buy a 3-D printer that will print dessert for you,” said Gallagher. “We think, why would people eat that? They don’t like processed foods. But the people who make those and the food production people — and hopefully dairy protein will be in that, not plant protein — they don’t need the 90% of people consuming your product. They just need 5 or 10 or 4% to have a very successful business. If that’s what people are going to be doing, we need to be there.”

Gallagher announced that DMI will be buying a 3-D printer, a few of them. “We’ll buy one, and we’re going to figure it out and we’ll figure out how to approach these 3-D printing companies with dairy-based proteins in foods to be used in them,” he said. “We can’t afford to be nickeled and dimed with 4% of consumers here and 5% there.”

He went on to observe that just 4% of consumers identify as vegan and that vegetarians are also a small number. “What is really driving plant-based foods and beverages is not predominantly the vegan movement, it’s because these companies are investing  hundreds of millions of dollars and are getting really good at taste, are phenomenal at marketing and great at innovation.”

He referenced diets that promote being vegan or vegetarian before 6:00 and other consumer trends.

“I think our goal is it is not either-or, it can be both… We have to be honest with ourselves, there will be plant-based beverages out there, and people will buy them, and they will gain share, not because people are vegan or concerned about sustainability… it’s because the food and beverage companies are doing a great job at what they do,” Gallagher said.

“If we do the same job in the dairy industry, we will be just fine. But if we sit back like we did with fluid milk, we will be where we are with fluid milk,” he added.

Referencing a report in the 1980s before the checkoff was authorized by Congress, Gallagher said: “That report laid out everything that needed to be done for fluid milk, and that same report would be valid today because none of it was done — not until fairlife and a few other things.”

“It’s not that the bad guy came and took it (fluid milk sales), it’s that us, the dairy industry collectively, did not keep growing and innovating and doing what we should do,” said Gallagher from a marketing, not policy, standpoint. “Instead of getting in a lather about plant-based food companies, let’s do what we are supposed to be doing as an industry.

“Let’s do marketing. Let’s do innovation. Let’s have dairy-based protein in 3-D printers and whatever comes next. That’s were we need to be,” said Gallagher. When it comes to policy, nutritional values and sustainability discussions, that’s another discussion we need to enter into.” 

In the breakdown on sales, he said foodservice milk is up slightly even though retail and other sectors are down. The data was by servings, and he explained how sales figures are pieced together and how program evaluations fit into those.

He also talked about a meeting DMI had with the top persons from the five top coops for packaged fluid milk salesn — DFA, Select, Prairie Farms, Darigold and Maryland-Virginia — along with Jim Mulhern of NMPF, Tom Vilsack of USDEC, Rick Naczi of ADANE, Marilyn Hershey, president of DMI, along with a former CEO of fairlife with some insights. 

“We came out of that meeting as positive about fluid milk as ever on how the industry can work together to change the trajectory,” said Gallagher, explaining that they looked at how much of fluid consumption is really pushed down into Class II, and to see if getting and including that number, what that would do to the per-capita fluid milk consumption numbers. 

“The group focused on kids. Kids is the deal — at 6 billion containers a year, when everything else is 5.3 billion,” said Gallagher. “So while schools only represent 7.7% of consumption, it represents more touch-points with consumers than everything else combined. So, they, on their own, quickly came to the conclusion that we have got to deal with the kids for a variety of reasons — sales and trust. And they asked DMI to put together a portfolio of products for kids inside of schools and outside of schools. What are the niches that need to be filled? What’s the right packaging? What needs to be in the bottle? And we can do that,” he said.

Depending on the results of the next meeting, the circle could be expanded. And regulatory, legislative and standards of identity issues were brought up that DMI can’t be involved in, but NMPF can. 

Author’s note: Meanwhile, all of those kids in school, those 6 billion touch-points for milk every year that surpass all other touch-points for milk, combined, are forced to consume (or discard) fat-free or 1% milk. The simple answer would be to give them whole milk that tastes good so they know what milk is vs. trying to re-invent the wheel. As an industry, we can’t know what the per-capita fluid milk consumption figures would look like today if the 60 billion touch-points over the past 10 years had been permitted by the government to consume whole milk. Before reinventing some pre-competitive proprietary wheel, shouldn’t those touch-points (schoolkids) have an opportunity to try real whole milk?

To be continued

Homemade ads about milk reveal and surprise community

By Sherry Bunting, published in Farmshine, Friday, January 4, 2019

“Everything helps… Anything helps,” said Nelson Troutman. The Pennsylvania dairy farmer gave consumers in his area an early Christmas gift, and this gift of knowledge keeps giving in the New Year.

Frustrated by the forced emphasis on low- and non-fat milk promotion and seeing the need to draw attention to the simple healthy truth about milk, while planting the seed that consumers can ask for local milk, Troutman came up with his own promotion idea.

On December 11, he painted a wrapped round bale with the words “Drink LOCAL Whole MILK 97% FAT FREE!”

Then he placed the round bale in his pasture, where it is visible at the intersection of Wintersville and Stouchsburg Road near Richland, in the Lebanon/Berks area of Pennsylvania.

After all, whole milk is standardized to 3.25% fat content, making it virtually 97% fat-free — a point on the minds of consumers that milk labels and checkoff promotion have not been able to tap into.

“It was the cheapest and easiest thing to do, and I’ve gotten a lot of very nice and interesting comments,” said Troutman in an interview with Farmshine. “Today, I saw two ladies walking down the street. They had just passed the bale. I had no idea who they were. They saw me coming out the farm lane and waved. I am sure they were talking about the bale.”

Nearly three weeks after his round bale billboard was placed for the community and those passing through to see, Troutman said the gift keeps giving with new and continuing conversations.

“I am amazed at talking to people about this educational bale,” Troutman said Monday (Dec. 31). “People say to me that they did not know any milk is 97% fat-free, much less that the whole milk is 97% fat-free!”

Troutman uses their surprise at this revelation as a teachable moment.

“I explain that fat-free milk is 100% fat-free, 1% milk is 99% fat-free, 2% milk is 98% fat-free and whole milk — at 3.25% fat — is basically 97% fat-free. They are astounded,” he affirms. “So, I ask them what they thought any milk is, and they tell me that they never thought about it. When I ask them what they think the fat percentage of whole milk is, most answers were 10% to 20% fat. I actually had one man say he thinks whole milk is 50% fat! His wife made him drink 2% milk for that reason.”

So what is being gained with this message? Troutman gives an example. He said the man who confessed that he thought whole milk was 50% fat — upon hearing the truth — said he will never again drink 2% milk and has switched to whole milk while also being made aware of the local ties and how to find local brands.

What does all the milk confusion tell us about the success — or failure — of mandatory checkoff promotions? People are confused about so many things where milk is concerned. But the fat content should not continue to be one of their confusions. It is standardized and easy to demystify with a simple message, a simple sign, that opens the door to conversations that matter.

Troutman said he knows that the dairy farmers’ mandatory checkoff promotion organizations of American Dairy Association Northeast (ADANE) and Dairy Management Inc (DMI) — and even Allied Milk Producers — cannot advertise milk as 97% fat-free. He says there are government rules about putting this on the label or in a checkoff-funded campaign.

But, he believes it is high time for a grassroots promotion.

“We farmers can do this! It’s real education, and it sure beats the price of the milk mustache. Advertising is expensive, but we farmers have an edge. We live along roads and highways where we can put up signs, use our bales, silage bags, silos, barns, and wagons,” says Troutman.

“We also have friends that have agribusinesses in town that could use a sign. And there is Facebook, which is very powerful to the consume. We need the consumers in Pennsylvania to ask for whole Pennsylvania-produced milk at our restaurants, schools and stores,” he adds.

Troutman is definitely on to something, as people across the state and in other regions as well have complained all year on social media and at meetings and with photos of supermarket dairy shelves that whole milk is often not stocked to the density of the fat-free, low-fat and reduced fat milks.

In fact, as one producer in northern Pennsylvania noted recently, she has to order whole milk on ahead at her local store if she wants more than three gallons for an event. When asking the store manager why whole milk is not made more available in the dairy case, the store owner told her the reason is because it isn’t as healthy and contains too much fat!

Nelson Troutman’s simple idea is borne of frustration but with education and truth at its core, and it is easy to implement.

He says that dairy farmers are fed up with decades of their product being thrown under the bus by dietary guidelines and promotion restrictions leading people to believe — over time — that whole milk is full of fat. The labels do not even say 3.25% fat! And this has led to people having all kinds of inflated ideas about how much fat is in whole milk to begin with.

It is no wonder that even well-educated pediatricians mindlessly follow blindly the lies of omission — telling mothers to put their children on lower fat milks at age two because they falsely believe whole milk is more than 10% fat!

Troutman made his round bale sign and placed it in his pasture by a busy intersection to educate his community and to encourage other farmers and agribusinesses to use his idea to educate their communities.

“Maybe they want to do something on a bale or a wagon or a silage bag,” he said. “Everything helps… anything helps.”

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