Change is constant. Innovation is great. But please respect The Milk.

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By Sherry Bunting, Market Moos, Farmshine, Friday, February 28, 2020

Winter dairy conferences have been replete with talk of a changing dairy industry along with optimism about the future of innovation in dairy foods and beverages. If you’ve read the food and grocer trade magazines or watched the dairy case at supermarkets, the name of the game is new-new-new, everyone wants to put out something new. Some new products fly off the shelves, others not so much.

The big new non-dairy competitor in the milk case these days, for example, is oat beverage — and as the trade journals state, it’s a virtual explosion.

But dairy beverages are getting a makeover too in some quarters.

Meanwhile, we have retailers telling us that 95% of shoppers put a gallon or half gallon of real dairy milk in the cart.When asked what can be done to put more of those attention-getting nutrition tidbits on fancier milk labels, the answer inevitably is “there’s only so much real estate to work with on a gallon milk label,” or “we don’t change our gallon milk labels very often,” or “there are a lot of regulations about what we can and can’t put on a gallon milk label.”

Of course dairy producer audiences are always reminded that that The Milk is a low-margin product.

Put simply, this means the industry doesn’t want to do much with low-margin commoditized milk, they’d rather put their effort into high-margin products, which means new, different, adjusted, blended, extended, ultrafiltered and differentiated products for which they can charge more — all the while loss-leading The Milk right into low-margin or no-margin territory because 95% of shoppers put in their cart. Something is wrong with this picture.

When asking a retailer who spoke at a dairy conference recently in the Southeast if there’s anything that can be done to stop the ridiculous levels of loss-leading we see at stores (outside of Pennsylvania of course), his answer was a question: “How does that sell more milk?”

Explaining that the extreme loss-leading for real dairy milk ($1.50, $1.25, 99 cents/gal) pushes stress back through the supply-chain and conditions consumers to disrespect the most nutritious option — that admittedly most shoppers still put in their cart — my explanation was met with a shrug, and this reminder: “It’s got to be moved, and we eat the loss, and the only thing more expensive than selling milk cheap is throwing it away.”

Hmmmmm. Doesn’t the decision to do extreme loss-leading make The Milk an even lower-margin product?

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By the looks of the whole milk shelves in supermarkets and convenience stores — more often than not these days — they’re understocked, hardly in danger of being overstocked, even in Pennsylvania where loss-leading is prohibited.

With all of these new and “high-margin” dairy case beverages and foods and blends and mixtures and substitutes competing for space, at least one retailer revealed that shelf space will begin becoming an issue.

There are opportunities for real whole dairy milk within this strange set of marketing circumstances. It is a curious fact that sectors with more variety — like today’s dairy case — do more in sales overall, but where is the respect for The Milk?

It becomes apparent why the gallon jug is both loved by retailers as the “get you in the store loss-leading staple with a high turnover (but shorter shelf life) ” and at the same time ignored precisely because it is the low-margin high-turnover product they say they don’t make money on taking up all of that space that could be used for high-margin products with longer shelf life and better return.

The answer lies somewhere in the middle of this scenario, and maybe it begins with a simple request of retailers and the dairy industy: please respect The Milk. If we don’t respect it, how can we expect consumers to respect it, desire it and want to pay what it is worth?

unnamed (80)Single-serve 16 ouncers with pretty packaging, that’s one way to differentiate that so-called low-margin whole milk. Experiential flavors is another. Flavored milk is hot, growing by double digits year over year.

But gallons? For families? They are the shopper-draw that doesn’t “capture growth” … just captures customers through the doors where they can buy it cheap.

Processors and cooperatives that are innovating in the real fluid milk space have their work cut out for them when store-brands continue to loss-lead The Milk into a space of disrespect within a dairy case that is literally bursting at the seams with high-margin new products seeking to capture growth… after taking it away from The Milk that got the shoppers in the door.

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DFA-Dean reach initial $425 mil. bid agreement, starting point in court-supervised sale

deanfoodsBy Sherry Bunting, Farmshine, Friday, February 21, 2020

HOUSTON, Tex. — Dean Foods Company announced Monday, Feb. 17 that it has reached an initial agreement with Dairy Farmers of America (DFA) regarding sale of a substantial portion of Dean’s assets. The two parties have entered into an asset purchase agreement that was filed in the Southern Food Group bankruptcy case with the Court for the Southern District of Texas in Houston this week, along with other motions.

This is just a first-step in a legal process that will unfold over the next several months and begins with Dean’s motion seeking court approval of DFA as the “stalking horse bidder” with an initial bid of $425 million at a hearing set for March 12.

A “stalking horse bidder” is the low-bid that can be accepted by the debtor in a court-supervised sale, and with certain bid protections for that bidder if other bids are offered.

The agreement includes 44 of Dean’s 57 currently operating plants and other of Dean’s assets as well as certain liabilities related to these assets. But, as learned in an email interview with a Dean Foods spokesperson and a review of court documents, this is not an all-inclusive price for the 44 locations as certain real property connected to these assets is named as for additional purchase.

Furthermore, 14 of Dean’s operating plants and 13 closed plants and/or distribution depots are listed as excluded from the DFA-Dean agreement.

This agreement still requires the approval of the U.S. Department of Justice (DOJ) and the United States Bankruptcy Court for the Southern District of Texas.

Anne Divjak, Dean Foods vice president for government relations and external communications, indicates that the company is cooperating with DOJ’s probe of antitrust concerns by providing requested information and answering questions.

Timeline and competing bids

A timeline for court hearings has been set beginning with the March 12 hearing to approve DFA as “stalking horse bidder.”

Interested parties with competing bids for the assets included in the DFA-Dean agreement as well as bidders for assets excluded from that agreement have until March 31 to provide the court with information in order to be considered as qualified potential bidders.

Those qualified bidders will then have until April 13 to submit bids.

A court-supervised auction would then be conducted sometime in April with an approval hearing set for April 27.

Negotiations continue

Divjak confirmed that Dean is speaking with other parties interested in acquiring assets – including some that are interested in assets excluded from the DFA-Dean agreement. Court documents also confirm that Dean is speaking with advisors and creditor committees about other restructuring options, though no details are provided.

Court documents reveal further that Dean Foods and investment banker Evercore Group, hired in February 2019 to evaluate potential strategies for the future, began negotiations with DFA in October 2019 — believing DFA to be the entity “likely to contribute significant value to the debtor’s businesses,” but they failed to reach agreement prior to the bankruptcy petition date of November 12.

After November 12, Evercore began communicating with additional potential strategic and financial buyers while continuing to engage with DFA, according to court documents.

These documents described the past three months in which Evercore received incoming interest from nearly 100 entities, including 55 potential strategic buyers (18 of them regional dairy companies) and 44 potential financial buyers. Of that number, 38 parties were provided with confidential information regarding Dean’s business. Several of those, including DFA, expressed interest in considering a transaction with Deans and were granted access to a data room containing additional confidential information on the bid assets.

Court documents also show Dean’s explanation that it continued to follow a “competitive process and arm’s length negotiations… to secure a bid from DFA,” which now pertains to the motion filed with the court on Monday seeking approval of DFA as the “stalking horse bidder.”

According to a Dean press release at the Dean Foods restructuring website (https://deanfoodsrestructuring.com/), president and CEO Eric Beringause states that, “We have had a relationship with DFA over the past 20 years, and we are confident in their ability to succeed in the current market and serve our customers with the same commitment to quality and service they have come to expect.”

At a Northeast Dairy Leadership meeting in Syracuse, New York right after the Dean bankruptcy filing in November, DFA CEO Rick Smith was quoted in a Berry on Dairy blog post to say:  “Everybody’s been telling me for years that we are the logical owner of Dean’s. And I’ve already gotten phone calls about people who want to partner with us. We will be interested in some assets, undoubtedly. And not interested in some, undoubtedly. Some (assets) should be closed. Some will require partners.”

Of the assets excluded from the DFA-Dean agreement, half are currently operating plants and half are plants that are closed. Of the 13 closed plants Dean is looking to sell, eight were closed 15 to 20 years ago, several of them in 2001; and five were closed more recently in 2018 when over 130 dairy producers in eight states lost their Dean contracts after Walmart’s first milk bottling plant opened.

What’s included in the DFA-Dean agreement?

Included in the DFA-Dean agreement are all four currently-operating Dean plants in Pennsylvania – Lansdale, Lebanon, Schuylkill Haven and Sharpsville — along with the Florence, New Jersey plant.

Also included are one plant in New York, two in Massachusetts, two in North Carolina, one in South Carolina, two in Florida, two locations (three plants) in Tennessee, five in Texas, two in Ohio, two in Michigan, two in Indiana, three in Illinois, one in Iowa, one in Wisconsin, one in Idaho, two in Utah, one in Nevada, one in New Mexico, two in Montana, two in Colorado, one in California. The Barber Pure plant in Birmingham, Alabama is split with only the ice cream business being included in the Dean-DFA agreement while the fluid milk business has been excluded.

Brand assets that are part of the agreement include DairyPure, TruMoo and Steve’s Ice Cream.

Subsidiaries in Mexico are also mentioned in the agreement. Furthermore, Dean holds an ownership interest with Organic Valley in Organic Valley Fresh, and this distribution joint-venture is included in the DFA-Dean agreement.

Dean’s motions filed this week also seek certain “relief” items in the final auction process, including provisions that DFA would assume certain contracts and leases referred to as “proposed assumed contracts” that are connected to the sale transaction.

How this affects Dean Dairy Direct milk suppliers is unclear in terms of protection under the transfer of these milk supply contracts under the sale of related assets.

On Wednesday (Feb. 19), a hearing was conducted to handle a motion filed by a dairy farmer in Tennessee to end his milk supply contract with Dean to pursue a new contract with another milk buyer out of concern about potentially losing his Dean contract after the sale of assets is approved. Under bankruptcy court-supervised sale and reorganization, critical vendor contracts cannot be terminated or changed by either the debtor (Dean Foods) or the vendor (dairy producer) without court-approval. The outcome of the hearing was not yet available.

What’s excluded from the DFA-Dean agreement?

Among the 13 closed plants that are excluded from the DFA-Dean agreement are the recent closures of Meadow Gold in Erie, Pennsylvania, a Garelick plant in Lynn, Mass., and the Dean plants in Braselton, Georgia, Louisville, Kentucky, Florence, South Carolina and Livonia, Michigan.

They are all for sale, according to Divjak, who indicated Dean was “actively looking for buyers for these facilities before the asset purchase agreement was announced.”

Among the 14 operating plants that are excluded from the DFA-Dean agreement are notably the Land O’Lakes plants in Sioux Falls, South Dakota and Bismark, North Dakota, and several other Minnesota plant locations.

According to Divjak, the Land O’Lakes brand is not part of the DFA-Dean agreement. Dean has a long-term licensing contract with Land O’Lakes cooperative to use the brand name and Indian Maiden logo for fluid milk and soft products sold from Dean plants. That licensing agreement, which Divjak said could be negotiated by potential buyers, also applies to other Dean plants as whipping cream, half-and-half and other products sold under the Land O’Lakes brand name are found at supermarkets nationwide, while the Land O’Lakes line of whole milk, 2% reduced-fat, 1% low-fat and fat-free milk is a well-known brand with a following in the western Minnesota, South Dakota and greater Central Plains region.

Dean Foods’ minority interest in Good Karma, a flaxseed alternative non-dairy beverage, is not part of the agreement and is separate from the bankruptcy proceeding.

Before the November 12 Chapter 11 bankruptcy petition, Dean Foods had secured special financing of $850 million to underpin its position as debtor-in-possession as well as gaining court approval to use operational cash flow to continue operations and payments to critical vendors during bankruptcy and sale. The special financing was previously expected to keep operations going for about nine months — through July or August.

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ADDENDUM PUBLISHED IN MARKET MOOS COLUMN:

Revealing details in Dean deal

A conference hearing Wed., Feb. 19 in the Dean Foods bankruptcy and court-supervised sale case in Houston, Texas, available by teleconference, revealed many details as motions were heard. Attorneys representing the creditors committee, lenders committee, bondholders committees, Dean Foods, DFA, and a growing list of interested parties covered some sale transition concerns and concerns of creditors about the the low bid of $425 million by DFA that Dean is asking Judge David Jones to approve as a “stalking horse bid” at a hearing set for March 12.

Attorneys argued that the flow of necessary proprietary information from Dean Foods to other parties interested in offering bids has been stalled and delayed to the point where other interested parties were learning about what plants are included and excluded in the DFA-Dean agreement for the first time on Monday — the same day as the rest of the world found out via press release from Dean Foods.

For example, the adhoc bondholders committee is still waiting on a critical piece of information related to milk payables. In that regard, an attorney representing the creditors committee revealed that DFA — as a large creditor of Dean Foods with significant payables — could have a $1 for $1 deduction in its bid offer to secure its claims that other creditors do not share because DFA is also a critical vendor.

Judge Jones had earlier commented that the business model of the company “worked great in the 1960s but not 2020.” As a self-proclaimed “numbers guy,” the judge said he has looked at the numbers and done the math, and his assessment was hinted at when he commented that there is a sense of urgency to get this deal done so that the bankruptcy proceedings do not fall on the backs of vendors, including farmers and communities.

He said he did not want to be responsible for schoolchildren not getting their milk if the process is protracted for too long and the company fails.

He also stated that, “If integration fixes the problem, we ought to be working on integration.”

Toward that end he asked the entities to work together to see to it that the information needed flows to where it needs to go, but responsibly, and that he will give hearings and listen to all qualified interests, but that he did not want motions and proposals that simply waste the court’s time.

Also, a dairy farmer seeking permission to end his milk supply contract with Dean in February was granted permission as he asserted concerns about ultimately losing the contract after the company is sold and had another option for his milk.

 

Borden second major milk co. in 60 days to file Chapter 11

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‘Business as usual’ motions face lender objections over how cash reserve is accessed and used. Judge grants Jan. 7 ‘interim’ relief with authority to pay pre-petition ‘critical vendors’, including producers supplying milk. A hearing on the final order in regard to critical vendor payments and cash management is set for Jan. 23.

 By Sherry Bunting, Farmshine, Friday, January 10, 2020

WILMINGTON, Del. — Citing unsustainable debt, including pension funds, negative dairy industry trends, fluid milk category declines as well as margin pressure in a loss-leading, commodity-driven market, the Borden Dairy Company, based in Dallas, Texas, but organized in Delaware, became the second major fluid milk bottler in the past 60 days to file for Chapter 11 bankruptcy protection.

Unlike the November Dean Foods filing with intentions to sell assets, Borden states its intentions are to use the Chapter 11 process to restructure its business for the future.

The company seeks to combine the bankruptcy filings of its 12 affiliated milk plants and one transport company stretching from Texas to Florida and north to Ohio under Borden Dairy Holdings LLC, owned by Acon Investments LLC,which had recapitalized these assets as recently as 2017 when purchased from Laguna Dairy after they were spun off from Grupo Lala.

Processing 500 million gallons of fluid milk annually for customers including supermarkets and schools, Borden employs 3300 people at milk plants in Alabama, Florida, Georgia, Kentucky, Louisiana, Ohio, South Carolina, and Texas. Milk is supplied by dairy producers and milk cooperatives in these and other states.

In addition to licensed brands Borden and Poinsettia, other brands involved include Coburg, Dairy Fresh, Dairymens, Flav-O-Rich, Kid Builder, Saba Sunburst, Sallie’s Southern Tea, Sunburst, and Velda. DFA separately owns the Borden brand license for cheese.

In Delaware District Bankruptcy Court, Wilmington, Judge Christopher S. Sontchi heard Borden’s first day bankruptcy pleadings on January 7.

“Concurrent to the decline of the number of milk producers, dairy processers have seen bottling margins decline due to competitive pressures from milk suppliers and large (and sometimes vertically integrated) customers. Couple this with the fact that … consumption has steadily declined, and it is no surprise that Borden and other dairy suppliers (such as Dean Foods) have begun to feel the same negative effects that have plagued dairy farmers for the past decade,” said Borden Chief Financial Officer Jason Monaco in his declaration with the court.

While all expected motions were filed to allow Borden to continue ordinary business while restructuring under bankruptcy protection — including motions to use a cash deposit reserve to pay pre-petition critical vendors such as dairy producers — attorneys for unsecured creditors objected Tuesday.

The lenders argued that, “(Borden) should not, and cannot, be allowed to use chaos of their own making to distract from the clear facts. There is no economic justification for… sudden chapter 11 filings, and the debtors cannot use the lenders’ (cash) collateral to finance an attempt by Acon to re-trade the out-of-court transaction,” that the parties had previously been negotiating.

The unsecured lenders contend that the bankruptcy filing occurred virtually on the eve of their out-of-court terms being ready for signatures. They contend that the $30 million cash deposit reserve is collateral and that other cash collateral Borden seeks access for operations are “insufficient.”

Acknowledging the importance of Borden continuing operations to preserve equity for all parties, the objecting lenders seek various protections from the court, including a position of consent with some oversight of budgets for the use of cash reserve and payment to critical vendors, including milk producers.

A day earlier, Borden CEO Tony Sarsam cited major milestones for Borden last year, including the revival of its spokescow Elsie, the brand’s reintroduction in Ohio and the launch of several innovative products such as state-fair inspired milk flavors and a new Kid Builder flavored milk line using 2% milk and containing 50% more protein and calcium with no added sugar.

Sarsam also explained in a press release that the company “continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry” that have contributed to “making our current level of debt unsustainable. He said ultimately, reorganization through court-supervision was the only solution “for the benefit of all stakeholders.”

Court documents reveal that Borden reported 2018 consolidated net sales of $1.181 billion with gross profit of $292 million but experienced operational income loss of $2.6 million and total net income loss of $14.6 million. These losses continued into 2019, with reported operational income loss of $22.3 million and total net income loss of $42.4 million from January 2019 through December 7, 2019, according to court documents.

Borden maintains that its situation differs from the Dean Foods bankruptcy.

“We believe that, from an operational standpoint, we are in a much better position than Dean Foods. Borden is EBITDA-positive and growing, which means we have solid earnings and are healthy,” Sarsam said in a public statement. “Borden intends to continue operations and strengthen our position … whereas Dean Foods announced its intention to sell substantially all of its assets. We are confident that, once we fix our balance sheet, we will be equipped to win together in the market.”

Documents also note Borden’s “need to raise new investor capital” to “continue to innovate with new products, modernize our facilities and equipment and improve Borden’s ability to compete in today’s market.”

The bankruptcy process is still in preliminary stages with more than 45 items filed on the docket within the first 48 hours.

Stating that this bankruptcy reorganization will not affect dairy producer contracts, Borden announced on Jan. 5 that it fully expects business as usual and to move quickly and efficiently through the bankruptcy process.

However, on Jan. 6 and 7, unsecured lenders filed the objections to many of the motions that would allow business as usual – creating potential ripples in that scenario.

As of Wednesday afternoon, Jan. 8, a signed interim order from the Jan. 7 hearing authorizes Borden to maintain its cash systems and bank accounts and provides interim relief to pay certain pre-petition obligations, such as payments to ‘critical vendor,’ including milk suppliers.

A hearing on the final order in regard to critical vendor payments and cash management is set for Jan. 23.

In the meantime, dairy producers supplying milk to Borden plants, are advised they may need to file a proof of claim with the court to be eligible for payment or otherwise consult an attorney for guidance.

The company’s claims agent, Donlin Recano, can provide appropriate forms once a deadline for filing claims has been set by the court. For more information on that, dairy producers can call the Borden restructuring information center toll free at 1 (877) 295-7345 or e-mail bordeninfo@donlinrecano.com.

A special Borden restructuring website contains various documents, including one that answers questions for raw milk suppliers at https://www.bordenfinancialreorg.com/

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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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Congressman to dairy farmers: ‘Government is between you and the consumer’

Dairy Advisory Committee formed, meets with federal, state lawmakers

During a June 3 roundtable discussion between dairy stakeholders and Pennsylvania state and federal lawmakers, Nelson Troutman (right) said Pennsylvania is a fluid milk island with milk and consumers right here, but pressure pushing in from all sides. He said the state is losing its ability to compete as federal dietary rules suppress fluid milk sales while the state’s antiquated milk marketing law incentivizes more milk-swaps along the four borders as fluid milk sales decline. Clockwise from top left are U.S. Congressmen G.T. Thompson (R-15th) and Dan Meuser (R-9th), State Senator David Argall, Lolly Lesher, Mike Eby, Dale Hoffman, Tricia Adams, Nelson Troutman, Bernie Morrissey, State Senator Scott Martin, Karl Sensenig, Bonnie Wenger, Krista Byler, Craig Lutz for Sen. Argall’s office, and Katie Sattazahn. Also present were various legislative staff. Attendees shared USDA data showing that in the past 12 months, Pennsylvania lost more cows (29,000 head) and more production (66 mil. monthly pounds) than any other state in the nation, with the potential see even greater losses in the next 12 months without substantial change.

By Sherry Bunting, Farmshine, June 14, 2019

HARRISBURG, Pa. — “What I’m hearing here is that the government is between you and the consumer. You would have no problem marketing milk if you could get your message and product to the people,” said U.S. Congressman G.T. Thompson, representing Pennsylvania’s 15th legislative district over a swath of central and northcentral and northwest Pennsylvania.

That summed up the concerns related to school milk, dairy checkoff, fake milk labeling and other issues during a meeting between 11 dairy stakeholders and a dozen state and federal lawmakers and staff in Harrisburg on June 3.

It was a listening session that was followed by a productive work session as the grassroots group will continue to meet and correspond as a Dairy Advisory Committee.

(l-r) Nelson Troutman, Mike Eby, Pa. State Senator David Argall, Bernie Morrissey, Craig Lutz.

Retired agribusinessman Bernie Morrissey and 97 Milk Baleboard initiator Nelson Troutman worked with Pa. State Senator David Argall of Berks and Schuykill counties to set up the meeting.

They pulled together an advisory committee of 11 people, including Troutman and Morrissey, along with Dale Hoffman and his daughter Tricia Adams of Hoffman Farms, Potter County; Mike Eby, a Lancaster County farmer and president of National Dairy Producers Organization; Lolly Lesher of Way-Har Farms, Berks County; Katie Sattazahn of Zahncroft Farms, Womelsdorf; Krista Byler, foodservice director for Union City School District in Crawford and Erie counties, whose husband operates a crop and dairy farm in Spartansburg; Bonnie Wenger of Wen-Crest Farms, doing custom cropping and heifer raising for dairies in Lebanon and Berks counties; and Karl Sensenig of Sensenig Feed Mill, New Holland. 

I was privileged to moderate the discussion, for which an outline was provided in advance.

Congressman Thompson was joined by Congressman Dan Meuser, who represents Pennsylvania’s 9th district covering Carbon, Columbia, Lebanon, Montour and Schuykill counties along with portions of Berks, Luzerne and Northumberland.

In addition to State Senator David Argall, State Senator Scott Martin of Lancaster County attended, as ded legislative aids for Senators Ryan Aument, Elder Vogel, and Mike Folmer with additional interest from State Representatives John Lawrence and David Zimmerman.

Lawmakers said they left the discussion with “more work to do” and an “elevated awareness.” Their message to dairy farmers was: “Keep it up. Keep doing what you’re doing (a nod to the 97 Milk campaign and the planned rally for the Whole Milk for Healthy Kids Act on June 18 at the state Capitol). They said raising public awareness is crucial.

“Every few days, the bill gets another cosponsor,” said Rep. Thompson of HR 832 introduced in late January. “It will take public support and momentum to reverse this. It’s a challenging task.”

Even with evidence that bad science led to the federal school lunch milkfat restrictions, Thompson said the House Committee on Education and Labor must take up the bill in order for it to move forward. He noted that current leadership of that committee is the same as in 2010 when The Healthy Hunger Free Kids Act tightened the vice grip on milk fat. (Learn more about the school lunch changes over the past 10 to 20 years here.)

The 2010 legislation with the blessing of former Ag Secretary Tom Vilsack not only prohibited whole milk in the National School Lunch Program, it also reduced total calories, required less than 10% calories from saturated fat and made the milk part of the meal’s nutrient analysis.

With a nod to Krista Byler, Thompson said he understands more is needed beyond HR 832. “We need to eliminate the beverage information from the nutrient standards limitations,” said Thompson.

Discussion followed about the current Childhood Nutrition Reauthorization process currently underway in the Senate and what opportunities might exist for a regulatory change there.

Byler noted that while every child gets a milk, many students throw the milk away and buy sugary drinks that don’t offer milk’s nutrition.

Legislators were surprised to learn that high school students can’t buy whole milk but they can buy Mountain Dew Kickstart at school. This 80-calorie beverage made by PepsiCo — the company that also created a Smart Snacks website for school foodservice directors and received the GENYOUth Vanguard Award last November — is deemed “okay” by the current USDA Dietary Guidelines because it has fewer calories than milk, zero fat and a list of added, not natural, vitamins and minerals. But it also has 20 grams of carbohydrate, 19 grams of sugar in the form of high fructose corn syrup and zero protein, whereas whole milk has 12 grams of natural carbohydrate and 8 grams of protein.

In addition to Mountain Dew Kickstart, students in high schools and middle schools across the U.S. can buy other sweetened drinks like PepsiCo’s Gatorade as well as iced tea coolers. In addition, high schools are also permitted to have coffee bars.

Yet schools are prohibited from offering whole milk (3.25% fat) or reduced-fat (2%) with its high-quality protein and long list of natural nutrients – unless a child has a medical note from a physician.

On the flip side, schools must provide non-dairy substitutes like soy and almond beverage if a parent, not a physician, writes a note. And no notes are needed for students to throw away the milk and grab a sweetened high-carb beverage from PepsiCo.

“My purpose in coming here, after speaking with other foodservice directors across the state, is the changes that were made to allow 1% flavored milk last spring are having disheartening results. Schools have been doing the fat-free flavored milk as a requirement for so long, they don’t all understand the new rule,” Byler explained.

Part of the issue, she said, is they have their cycle menus done far in advance, and the changes to the milk — even if whole milk were suddenly allowed — do not fit into the nutrient analysis of the meal.

Before 2010, the milk was not included in the nutrient analysis of the school lunch or breakfast.

“It’s a breath of fresh air to hear members of Congress talk about this,” said Byler. “This bill (HR 832) is amazing, but it doesn’t have legs to stand on without the regulatory change to exclude milk from the nutrient analysis of the meal. For schools to have this choice, this bill needs to pass, and the milk needs to be a standalone component of the meal, otherwise schools won’t be able to make it work.”

She said the same goes for the Smart Snacks program. An exception to regulations is needed so schools can offer whole milk, just as they can offer PepsiCo’s energy drinks.

At the federal level, Rep. Thompson said the Pennsylvania Congressional delegation is working on getting a companion bill for HR 832 in the U.S. Senate. (This actually did happene a day after this report was filed for press — Senators Pat Toomey (R-Pa.) and Ron Johnson (R-Wis.) introduced the Milk In Lunch for Kids (MILK) Act this week. Bill number and text have not yet been posted)

“The biggest thing we need is to generate enough public support,” said Thompson.

The Dairy Advisory Committee urged Pa. State Senators to support a resolution on the federal bills.

On The Dairy Pride Act, Thompson was more optimistic. He believes FDA is giving an indication that the public has been misled by competing alternative beverages that infer by the name “milk” to have the nutritional attributes of milk.

Tricia Adams spoke of the many school tours she conducts at Hoffman Farms in the spring and summer, and what the kids tell them about school milk.

She says the kids are “brutally honest. They tell us, ‘This is the good milk!’ But just to get whole milk for a tour, I have to special order weeks in advance,” she says. “It’s a struggle to get enough of it at one time. It’s just not available.”

 Her father Dale Hoffman observed that farmers are so busy, it’s tough to be involved in these things. He said it is scary how fast Pennsylvania is dropping in cow numbers and production.

“Somewhere, we need to get our foot in the door. This has got to be done if Pennsylvania is going to compete. We have the milk and the consumers right here,” said Hoffman. “We need your help. We hear it’s tough to get done, but it’s time to get whole milk back in the schools.”

Mike Eby said he sold his cows three years ago, but producers selling today “are getting half of what I got.” He said the dairy situation is increasingly difficult for farm families to manage whether they are staying in, or getting out, as the value of their assets shrink along with income.

“Where is our milk going to be coming from when we all go out?” he asked.

Eby describe the power of whole milk. He has been part of an effort to give out whole milk that is standardized to 3.5% fat instead of 3.25% to meet the California standards. 

“We give the milk away at four parades a year,” he said, and the math adds up to over 10,000 individual servings. “We could give more! They love it. People are screaming for that milk.”

Circling back to Rep. Thompson’s point. The problem isn’t the product, the problem is the government getting between the farmer and the consumer when it comes to marketing the high value, nutritious and delicious product they produce.

State issues were also discussed, including needed reforms to the Pennsylvania Milk Marketing Law. Each participant also gave a fast view of the long dairy situation.

“The average dairy farmer we serve is under 150 cows, and our feed mill has 107 years in the business. We’ve seen a lot, but nothing as bad as this,” said Karl Sensenig. “We are greatly concerned about what is the future for the generations to come in our business and on the farms. We have become their bank. The situation is beyond dire, and I’m afraid we haven’t begun to see the true loss of farms. Even if the price gets a little better, many are so far gone that there’s no way out.”

Katie Sattazahn also questioned the future. She is integral to the farm operated by her husband and his brother, and she works off the farm. They upgraded their facility three years ago, never expecting a downturn of this duration and magnitude.

“The biggest thing is, we are supposed to be glad when we have a breakeven year, but that has to change. As dairy farmers, we need to be profitable to put something back into our operations,” she said. “Every dollar we spend is spent locally. Our farms provide open space and benefits for the environment, and the money we spend in our business helps the economy.”

With two young children, Sattazahn says, “If it stays the way it is, why would we encourage them to do this?”

Bonnie Wenger explained the conditions she sees in the community of dairy farmers. She explained to lawmakers the added difficulty of this year’s prevented plantings, a struggle that will get worse this fall in terms of feeding cows.

Byler also talked about the dire situation in her county. “The dairy farms support our communities. They support other businesses and bring in revenues for our school districts,” she said. “What will be left for our small rural communities?”

On the school front, she showed examples of the marketing foodservice directors see, pushing them away from animal protein. This included visuals from Fuel Up To Play 60 and its focus on fat-free and low-fat. She wonders why they can’t just talk about milk, why they have to pound home the fat-free, low-fat with every caption, every sentence, over and over. She has trouble seeing the value in it from the side of the dairy farmer or the school program.

Lawmakers and staff were taking notes, writing in the margins and circling things on the outline provided. By the end of the session, Sen. Argall said, “You’ve created a lot of work for us.”

Congressman Meuser noted this is now an even higher priority for him.

Sen. Martin said this is on the Pennsylvania Assembly’s radar, and he mentioned a package of bills coming that are “just a start.” He mentioned the dairy commission being put together to advise the legislature on dairy. 

They reminded the group to urge others to attend the rally on June 18 at 11:00 a.m. at the Capitol Rotunda in Harrisburg to support the federal dairy bills on whole milk in schools and mislabeling of non-dairy beverages. The media will be there, and this is a chance to get the public involvement that is necessary.

Here is another link to 8 ways you can help. (Swipe to read second page of this pdf).

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Good news about milk is spreading rapidly

Milk Baleboard message reaches over 1 million people in first 7 days online (www.97milk.com, @97milk on facebook, @97milk1 on twitter)

By Sherry Bunting, Farmshine, March 1, 2019

RICHLAND, Pa. – It has taken off with overwhelming response on social media, and consumers reading and sharing the posts from “97 Milk” are expressing their surprise at how much they are learning about the goodness of milk while farmers are enthused to have a vehicle of grassroots promotion that sticks to the basics — promoting the healthy wholesomeness of dairy and helping consumers make informed choices about milk.

The big news this week is that the 97milk.com website and its corresponding facebook (@97milk) and twitter (@97milk1) accounts, have been very active, very quickly since launching last Friday evening, Feb. 22. Facebook, alone, had reached 1.2 million people by midnight Wednesday, just six days after launching.

What is 97 Milk, you ask?

Last week’s Farmshine had a feature story on page 19 about the launch of the website www.97milk.com as a grassroots offshoot of the Milk Baleboards that are popping up on farms and business properties across the countryside.

Those round bales painted with the message: Drink Local Whole Milk – 97% Fat Free were the idea of Richland, Pennsylvania dairy farmer Nelson Troutman. We have been following the development of his idea in the pages of Farmshine since Nelson made his first Milk Baleboard, pictured on our January 4, 2019 cover.

In fact, Nelson reports as of Wednesday morning, nearly two months after he made his first Milk Baleboard, he has made 26 — including one that was delivered to Farmshine on Feb. 27. He has delivered to many farms and businesses.

In addition, Dale Zimmerman of Zimhaven Holsteins in East Earl, made Milk Baleboards for his farm as well as for Shady Maple Smorgasbord just down the road. And other farmers are joining in.

Nelson continues to receive phone calls and has become somewhat famous in his community, attracting shoppers when he visits the grocery store in his home town.

“No one. Not one person, has said to me that, yes, they knew milk is virtually 97% fat free. No one, not young, nor old, nor in between,” Nelson stated in a follow up email with Farmshine early Wednesday morning, Feb. 27. “Since the bales and the website, I had people say to me that when their kids were small, the doctor told them to drink 2% milk, and now the kids are grown, and they were still drinking 2% milk — until this information came out. Now, they tell me they are drinking whole milk.

“This is all 100% education,” Nelson relates.

This overwhelming response has gone to the next level with the online presence that began Feb. 22 through a website, facebook page, instagram and twitter account for 97 Milk as the educational effort of grassroots dairy farmers. Through social media, the good news is spreading well beyond the Lebanon, Lancaster and Berks County region of Pennsylvania where the first Milk Baleboards were made and placed by Nelson on farms and businesses in the area.

How can this be?

Judging by the facebook page, there is an obvious consumer thirst for milk knowledge and an obvious farmer passion to deliver knowledge simply — without the dietary politics.

Within the first 72 hours, the @97milk facebook page had over 1000 likes and had reached over 100,000 people with the good news that whole milk is virtually 97% fat free.

Over the next 36 hours by mid-morning on Wed., Feb. 27 — not quite five days after launch — the facebook page had nearly 1,650 likes and follows, and the informational posts had reached a whopping 700,000 people. (By Thursday, Feb. 28, less than 7 days after launch, the page had over 2000 likes and had reached 1.2 million people.)

Even more important, these posts had — in less than 7 days — “engaged” nearly 100,000 people via likes, comments and shares of the educational information posted on the page. This does not include those who downloaded the informational images and shared them without sharing directly from the facebook page!

A post over the weekend (see image) illustrated the essential nutrients in milk and its composition as a hydrating beverage made up of 88% water, 5% carbohydrate, 3.5% protein and 3.25% fat, showing the long list of essential nutrients by their percentages of daily recommended values. This illustrative glass of milk reached nearly 100,000 facebook users by Wednesday morning and had engaged over 7,000 in likes, comments and shares.


Consumers are thirsty for knowledge about milk. Here is one simple example of how 97 Milk keeps the good news going. This visual facebook message was posted Wed., Feb. 27, reaching 3,300 people with nearly 300 interactions within its first three hours. Facebook image from @97milk

Another post that explained the fat percentages of milk had reached 45,000 people with 3200 interactions.

Another post giving comparisons of Real Whole Milk, 1% Real Milk, Soy, Almond and Coconut beverage reached over 17,000 people with over 1700 interactions within 24 hours.

And another post sharing the good news that all milk is tested free of antibiotics reached a whopping 608,000 facebook users and resulted in over 44,000 interactions, including over 9,000 direct shares!

Meanwhile, the posts have brought in questions and discussion in the form of public comments on the facebook page and in the form of questions sent by private message. In fact, these interactions are coming from far and wide — local, national, even international.

On Tuesday morning, the 97 Milk facebook page posted this explanation of why the Milk Baleboards have expanded to online 97 Milk communications:

“97 Milk was created to be a voice for our local dairy farmers. This is a place where people can get information on nutritious dairy products. It’s a place where farmers can tell their story, a place where our community can get information on how to support local dairy farms. There is so much confusing information regarding dairy, and there are always two sides to every story. 97 Milk tells the story of the many farms that love and care for their cows, the passion that many dairy farmers have, the many proven research-based facts on milk nutrition. This is our side that our community deserves to hear.”

The website is mentioned on every post, and it is a simple place to direct people who see the Milk Baleboards and the social media posts and want to learn more of the basics about Real Whole Milk.

Planned in the coming weeks are posts for social media that continue to provide bite-sized fact nuggets about milk, including how to learn where milk was bottled, why milk protein is called a complete protein, quotes from farmers about why they love what they do, and other inspirations. Check it out.

If you have a Milk Baleboard on your property, or have seen one displayed, please let us know the location (agrite@ptd.net) in order to help create a map of how the good news is spreading by these grassroots efforts.

If you would like a Milk Baleboard, check out last week’s page 19 feature story giving tips from Nelson on how to make one, and contact Nelson at 717. 821.1484 or Bernie Morrissey at 717.951.1774.

Jordan Zimmerman of East Earl is making and selling bumper stickers through the Lancaster County Holstein Association, and Morrissey has ordered magnetic signs.

To learn more about the online efforts, and to help spread the good news, check out the website at 97milk.com, facebook page @97milk and twitter account @97milk1.


Nelson Troutman of Richland, Pa. has made 26 Milk Baleboards for other farms and businesses in the area. Two weeks ago, he began painting them in his shop with the 97milk.com website! Photo by Sherry Bunting

Thompson, Peterson introduce Whole Milk for Healthy Kids Act of 2019

schoolmilkiStock-510657195web.jpgBipartisan bill would allow whole milk as option in school cafeterias

WASHINGTON – Making good on a promise to introduce legislation to bring whole milk back to schools, U.S. Representative Glenn ‘GT’ Thompson (R-PA) has joined forces with House Agriculture Committee Chairman Collin Peterson (D-MN) to introduce a bipartisan bill to allow for unflavored and flavored whole milk to be offered in school cafeterias.

H.R. 832, the Whole Milk for Healthy Kids Act of 2019 recognizes the importance of milk to the health and well-being of growing children.

Last year, the U.S. Department of Agriculture Secretary Sonny Perdue directed USDA to allow schools to serve 1% low-fat flavored milk in school meal programs that had been restricted previously to fat-free flavored milk.

H.R. 832 would take this further to allow whole milk to be included as well.

 

“Milk is the No. 1 source of nine essential nutrients in the diets of our students, but if they don’t drink it these health benefits are lost,” Rep. Thompson said in a press release Wednesday (Jan. 30). “Milk consumption has been declining in schools throughout the nation because kids are not consuming the varieties of milk being made available to them. It is my hope that the Whole Milk for Healthy Kids Act will bring a wider range of milk options to American lunchrooms so students can choose the kind they love best.”

“I’m proud to join Congressman Thompson in this effort that will provide more choices for nutritious and healthy milk to kids in schools, and a valuable market for dairy farmers in Minnesota, Pennsylvania and nationwide at a time when they’re continuing to face extremely difficult market conditions,” Chairman Peterson said in a statement.

Rep. Peterson is Chairman of the House Ag Committee and Rep. Thompson is a member of the House Ag Committee.

Thompson is also a member of the House Committee on Education and Workforce to which the bill was referred after its introduction on Jan. 29.

The nine original co-sponsors of the bill include Agriculture Committee Republican Leader Mike Conaway (R-TX) and three members of the Committee on Education and Workforce to which the bill was referred — Rep. Lloyd Smucker (R-PA), Rep. Dan Meuser (R-PA) and Rep. Elise Stefanik (R-NY).

Additional co-sponsors are Rep. Chris Collins (R-NY), Rep. Rodney Davis (R-IL), Rep. John Joyce (R-PA), and Rep. Mike Kelly(R-PA).

In a press release late last week, Thompson gave some background on this bill. He noted that in 2010, Congress passed the Healthy, Hunger-Free Kids Act which amended nutrition standards in the School Lunch Program.  Among the changes, the law mandated that flavored milk must be fat-free within the program.

This 2010 law, along with lower participation in the program, led to an alarming decline in milk consumption in schools since 2010. Declining milk consumption in schools not only impacts students, but also dairy farm families and rural communities across the nation.

Two years ago, to help encourage nutritious options in the School Lunch Program and increase consumption, Rep. Thompson introduced legislation – H.R. 4101, the School Milk Nutrition Act of 2017 – which provided schools the option to serve 1% low-fat flavored milk varieties.

In May of 2017, the USDA announced a rule that allowed schools to receive waivers for low-fat (1%) flavored milk, rather than only fat-free, which is the essence of H.R. 4101.

On January 29, 2019, Rep. Thompson introduced this bipartisan bill — H.R. 832, the Whole Milk for Healthy Kids Act of 2019. This legislation builds on the previous bill and USDA’s rule by allowing whole milk (both unflavored and flavored) to be offered within the School Lunch Program.

Producers and consumers are urged to contact their representatives to support this bill. Key members of Congress to reach out to on the Committee on Education and Workforce, which will be the committee to consider the bill, include Rep. Joe Courtney (D-CT), Chairman Bobby Scott (D-VA), Rep. Marsha Fudge (D-OH). View all Congressmen and women serving on this committee here

Follow the progress of H.R. 832, the Whole Milk for Healthy Kids Act of 2019 here.

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