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Deal with Canada and Mexico brings relief to U.S. exporters

May 24, 2019

WASHINGTON — Late last week, the United States announced an agreement with Canada and Mexico to remove the Section 232 tariffs for steel and aluminum imports from those countries and for the removal of all retaliatory tariffs imposed on American goods, including dairy products, bringing much-needed relief to the U.S. dairy sector.

The agreement provides for aggressive monitoring and a mechanism to prevent surges in imports of steel and aluminum. If surges in imports of specific steel and aluminum products occur, the United States may re-impose Section 232 tariffs on those products, according to the Office of the U.S. Trade Representative (USTR). Any retaliation by Canada and Mexico would then be limited to steel and aluminum products.

Earlier this week, Mexico officially lifted its retaliatory tariffs against U.S. cheese exports.

Dairy stakeholders praised the news and also urged Congress and the administration to move forward with ratifying the U.S.-Mexico-Canada Agreement (USMCA) as soon as possible.

“We applaud the Trump administration, as well as the governments of Mexico and Canada, for prevailing with a market-principled approach,” says Michael Dykes, president and CEO of the International Dairy Foods Association. “With this deal in place, it is now essential that Congress turn its attention to swift ratification of the U.S.-Mexico-Canada Agreement to ensure that we are maintaining and growing markets with our most important trading partners, especially in this time of uncertainty for our agricultural economy.”

Dykes notes the USMCA includes important improvements that will expand exports of American dairy products to Canada and Mexico while enabling dairy products to trade freely.

“Congress must move quickly to approve the deal and restore certainty to our dairy producers and processors,” he says. “Just as important, as the U.S. approaches negotiations with Japan, China, the European Union and other nations, it is critical that we maintain market access for our dairy industry, and move toward a market-principled approach on trade.”

Tom Vilsack, president and CEO of the U.S. Dairy Export Council, says the announcement is an important development for the U.S. dairy industry.

“We applaud the hard work of negotiators from all three countries that made it possible as well as the numerous members of Congress that have insisted upon the need to resolve the Section 232 metal tariffs dispute with our North American partners,” Vilsack says.

“America’s struggling dairy farmers are in need of some good news, and (this) announcement certainly helps,” adds Jim Mulhern, president and CEO of the National Milk Producers Federation (NMPF). “To move forward in boosting exports, Congress needs to pass the USMCA, and administration officials need to resolve the latest impasse in U.S. negotiations with China in a way that’s favorable to producers. Meanwhile, trade negotiations with Japan and other key partners also must move ahead. The time for progress on all fronts is now.”

FarmFirst Dairy Cooperative notes that more than 20 years have been dedicated to increasing U.S. dairy export volumes to Mexico, building a strong trade relationship but also a valuable channel of safe, quality food products for Mexicans to enjoy.

“This is a step in the right direction, especially as Congress considers USMCA. Dairy farmers are eager to see additional progress made on these trade agreements, including the passage of USMCA. Now that the tariffs are no longer in place, Congress can remove that political barrier and move forward with approving this trade agreement,” says John Rettler, president, FarmFirst Dairy Cooperative.

The American Dairy Coalition (ADC) also praised the news, noting the retaliatory tariffs hit farmers at a time when the industry was already struggling with low milk prices and a lack of workforce.

ADC now urges House Speaker Nancy Pelosi, D-Calif., to schedule a vote on USMCA.

“Each day that this important agreement is not in place leads to more uncertainty in the dairy industry as we lose access to off-shore markets,” says Walt Moore, ADC board president. “The ongoing farm crisis transcends partisanship. It’s time for America’s farmers to contact their congressional representatives — regardless of political affiliation — and let them know that enough is enough. It’s time to move forward. Farmers need a path to stability. We need the ratification of the USMCA immediately.”


Dairy industry in the Dakotas looks to grow, stay competitive

May 24, 2019

Editor’s note: As part of our series, “From Cow to Curd: A Look Across the Nation,” Cheese Market News takes a look at the cheese and dairy industry across the United States. Each month we examine a different state or region, looking at key facts and evaluating areas of growth, challenges and recent innovations. This month we are pleased to introduce our latest states — North Dakota and South Dakota.

By Rena Archwamety

MADISON, Wis. — With ample land for dairies and crops, low land prices, supportive policies and some large processors in the region, South Dakota and North Dakota hold a number of opportunities for the dairy industry.

According to the International Dairy Foods Association (IDFA), South Dakota’s dairy industry is responsible for 3,218 direct jobs and a total economic impact of $2.71 billion in dairy products produced and sold in the state. The South Dakota Department of Agriculture notes that the state is home to 173 licensed Grade A dairy farms and nine dairy processors.

Last month, top leadership from IDFA traveled to Milbank, South Dakota, to meet with dairy industry leaders and state officials on legislative and regulatory issues, including pending trade agreements and negotiations, impacting the dairy industry. IDFA notes that South Dakota has experienced tremendous resurgence in dairy and related industries over the past few years due to expanding production by companies such as Valley Queen, Agropur, Land O’Lakes, Saputo and Bel Brands.

“I’m proud of the growth we’ve seen in the dairy industry here in South Dakota and appreciative of the strong partnership between local producers and processors in making quality dairy products for local markets, as well as those across the world,” says North Dakota Secretary of Agriculture Kim Vanneman.

During the meeting, Vanneman met with IDFA President and CEO Michael Dykes, Sen. John Thune and professional staff for Sen. Mike Rounds at the newly-expanded Valley Queen Cheese Co. in Milbank, South Dakota. They toured the facility and then participated in a roundtable discussion.

“Valley Queen appreciates the willingness of these government leaders to engage with our industry at a grassroots level. We can’t expect policymakers to understand our needs if we’re not explaining to them how these policies impact our businesses and our ability to stay competitive,” says Doug Wilke, CEO, Valley Queen.

• Expansion mode

Valley Queen this year is celebrating its 90th anniversary. The company was founded in 1929 by Swiss immigrants Alfred Nef and Alfred Gozenbach, who were looking for a new home for their small Wisconsin cheese plant. En route to Montana to inspect a promising new site, Gozenbach stopped in Milbank, South Dakota, for gas, where he met some area businessmen. who persuaded him to stay the night, visit some local dairies and ultimately locate the new cheese factory there.

Today Valley Queen employs 265 people and processes 4.3 million pounds of milk daily into cheese, as well as whey protein concentrate, lactose and anhydrous milkfat. It is in the midst of a $53 million expansion project, expected to be complete in July, which will increase milk processing capacity by 25 percent and boost cheese production capacity to 200 million pounds per year. Valley Queen’s products are sold to customers across the United States, and much of its ingredients are exported to other countries. Milk is collected from 42 farms within an 80-mile radius of Milbank, and 90 percent of this milk comes from South Dakota.

“Milk production continues to grow in South Dakota. This has tied beautifully into our strategic goals to grow our dairy processing capabilities,” Wilke says, adding that the state also is very supportive of the dairy industry.

South Dakota, Wilke says, has put a big focus on leading dairy development along the I-29 corridor that runs along the state’s border with Minnesota and Iowa, up through North Dakota and down through Nebraska.

“There’s strong support for business here, and the cost of doing business is lower than other regions, which makes us a competitive player,” he says.

Agropur’s cheese plant in Lake Norden, South Dakota, also is expanding as part of a project that will triple the plant’s capacity and add 100 new jobs. The expansion will enable the plant to produce nearly 1 million pounds of cheese and 540,000 pounds of whey powder per day.

“We started to produce cheese on the new lines in April 2019 and continue to ramp up operations,” says Tim Czmowski, vice president regional operations, Agropur. “Once complete, the Lake Norden plant will be the largest of Agropur’s 39 processing plants. This increase will demand milk from approximately 85,000 additional dairy cows in order to supply the plant’s needs.”

Dairy is the No. 1 driver of economic activity in South Dakota’s agriculture sector, and the I-29 corridor is the fastest-growing dairy region in the United States, he adds.

“The expansion of Agropur’s cheese and whey plant in Lake Norden, South Dakota, exemplifies a successful collaborative effort with the State of South Dakota, Hamlin County and the City of Lake Norden,” Czmowski says. “The South Dakota Economic Development Group worked hard to recruit dairy farmers from other states and countries to relocate to South Dakota and have been encouraging current dairy farmers to expand.”

In addition to strong support from state government agencies, South Dakota’s dairy industry benefits from research programs and testing facilities at South Dakota State University (SDSU). Along with universities in surrounding states, SDSU is part of the Midwest Dairy Foods Research Center, funded by dairy farmers through the checkoff program. In addition to participating in research projects on cheese quality, food safety, filtration applications and other areas, SDSU also has pilot facilities where companies can use equipment to run trials.

Lloyd Metzger, director of Midwest Dairy Foods Research Center and SDSU’s Alfred Chair in Dairy Education — endowed by and named after the founders of Valley Queen — notes that the university also helps to generate an educated workforce to contribute to the state’s dairy processing success.

“There is a readily available workforce, a readily available feed supply, and it’s a great place for dairies,” Metzger says. “The state did a good job of making it easy to get permitted to build dairies and facilitate growth. The big thing is, it has to make economic sense. We are in an area where dairying really does make sense.”

• North Dakota

North Dakota’s dairy industry is considerably smaller than that of its neighboring state. There are 58 Grade A dairy farms and eight Grade B dairy farms in North Dakota. The state offers many advantages for dairy producers, including affordable land, ag-friendly communities, easy-to-obtain permits, and readily-available, affordable feed, according to the North Dakota Department of Agriculture.

North Dakota has had its own milk marketing board that regulates fluid milk prices since 1967, when legislation was passed to prevent out-of-state plants from using the state as a dumping ground for surplus milk.

IDFA reports that North Dakota’s dairy industry provides 2,889 direct jobs and a total economic impact of $1.56 billion.
Among the state’s dairy processors are a Dean Foods fluid milk plant in Bismarck, North Dakota; Cass-Clay Creamery operated by Dairy Farmers of America in Fargo, North Dakota; and Pride Dairy in Bottineau, North Dakota, which manufactures mainly ice cream and butter for regional distribution.

Pride Dairy started manufacturing butter in 1930 and added ice cream in 1940. Today the business markets itself as the “Last Small Town Creamery in North Dakota,” and its ice cream parlor and dairy store, Dairy Dipper II, attracts visitors from across the United States. Pride Dairy also sells a small amount of cheese that it processes from bulk.

Kriss and Tonya Allard, who have a background in dairy distribution and own Sunrise Delivery, purchased Pride Dairy in October 2018 and are overseeing new expansion. Pride Dairy has gone from producing its ice cream once a week to four days a week, and it recently partnered with Sysco to expand its ice cream distribution.

“From April of last year to this year, we have quadrupled our business,” Kriss Allard says. “We like to say we are still small-batch, made with extra attention to detail, so we plan to ease into growth.”

In addition to its standard distribution channels, Pride Dairy makes a special flavor that is served at Mount Rushmore — Thomas Jefferson Vintage Vanilla — that is a replica of an original ice cream recipe served by the president. The company also created a s’mores ice cream flavor for state parks to serve during the summer.

Pride Dairy is slowly expanding sales of its butter, which is available in 1-pound packages and 40-pound blocks, and is distributed regionally through a contract with Dean Foods.

The number of dairy farms in North Dakota have dwindled over the decades, and Pride Dairy discontinued processing fluid milk in the 1980s due to the shortage of supply from Grade A dairies. Allard says the higher prices set by the milk marketing board help protect the state’s remaining dairies.


April milk production grew 0.3 percent over year earlier

May 24, 2019

WASHINGTON — Milk production in the 23 major milk-producing states during April totaled 17.38 billion pounds, up 0.3 percent from April 2018, according to preliminary data released this week by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Milk Production chart on page 14.)

March revised milk production, at 17.78 billion pounds, was down 0.3 percent from March 2018. The March revision represents a decrease of 40 million pounds or 0.2 percent from last month’s preliminary production estimate.

Production per cow in the 23 major milk-producing state averaged 1,996 pounds for April, 19 pounds above April 2018. This is the highest production per cow for the month of April since the 23-state series began in 2003, NASS says.

The number of milk cows on farms in the 23 major states was 8.71 million head, 55,000 head less than April 2018 and 1,000 head less than March 2019.

For the entire United States, NASS estimates April milk production was 18.43 billion pounds, up 0.1 percent from April 2018. NASS estimates there were 9.33 million cows on U.S. farms in April 2019, down 90,000 head from April 2018 and 1,000 head less than March 2019. Production per U.S. cow averaged 1,976 pounds in April, NASS says, up 21 pounds from April 2018.

California led the nation’s milk production with 3.54 billion pounds in April, up 2.6 percent from its production a year earlier, NASS says. There were 1.73 million cows on California farms in April, down 7,000 head from April 2018 and down 1,000 head from a month earlier. Production per California cow averaged 2,050 pounds in April, up 60 pounds from a year earlier.

Wisconsin followed with 2.54 billion pounds in April, up 0.4 percent from its production a year earlier. The state was home to 1.27 million cows, down 4,000 head from April 2018 and unchanged from March 2019. Production per cow in Wisconsin averaged 2,000 pounds in April, up 15 pounds from a year earlier.

In this month’s report, NASS notes that it will add Georgia to its monthly estimating program beginning next month. Historical data for the state for 2018 and earlier months of 2019 will be available.


Starting with Feta, Nasonville Dairy introduces Café Olympia line for retail

By Kate Sander

MARSHFIELD, Wis. — Nasonville Dairy, a family-owned dairy processor in northern Wisconsin, continues to expand its product lines with its Café Olympia label for retail.

The company is starting with Feta under the brand and likely will expand to other cheese varieties as well, says Ken Heiman, who manages the business along with his brothers Kelvin and Kim.

The decision to introduce the Café Olympia brand for retail was made to meet the needs of customers who don’t want to do a private label product but also want something smaller than a national brand, Heiman says.

The company has had the brand for awhile, but has used it as a control brand as needed. This will be the company’s first foray into the retail world with the branded line.

Among the offerings under the retail brand is the company’s new Cucumber Lemon Feta Crumbles, which won second place in the Flavored Feta class at the 2019 U.S. Championship Cheese Contest.

This cheese joins other award winners, including the company’s plain Feta, which won first place in last year’s World Dairy Expo Championship Dairy Product Contest and second place in its class at the Wisconsin State Fair. Also offered under the Café Olympia brand are other flavors of Feta including Tomato & Basil, Mediterranean, Garlic & Herb, Lemon Pepper and Black Pepper in addition to plain and reduced-fat varieties.

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Dairy groups urge Trump to address EU GI abuse, subsidies

May 17, 2019

WASHINGTON — The Consortium for Common Food Names (CCFN) this week sent a letter urging the Trump administration to correct the inequity in cheese sales between the United States and the European Union (EU), also pointing out the EU’s geographical indications (GI) policies that monopolize generic cheese names as a means to shut out competition.

“The United States is an extremely profitable dairy market for the EU; we must leverage that power in correcting this deeply frustrating inequity,” writes Errico Auricchio, CCFN chairman and president and founder of BelGioioso Cheese, Green Bay, Wisconsin. “I urge you to utilize all available tools to remedy this situation. Let us at least consider imposing the same restriction on them that they do on us: require that they not sell cheeses by these names into our market, as long as we are locked out of theirs.”

The United States is Europe’s No. 1 export market for cheese, totaling approximately $1 billion in annual sales. However, the EU restricts competition from the United States in many cheese categories, contributing to a $1.6 billion U.S.-EU dairy trade deficit, the letter states.

“Europeans can sell their asiago, parmesan, feta, etc., in Wisconsin, but cheesemakers like me are blocked from selling Wisconsin cheeses by the same names in Europe,” Auricchio writes, adding that it is “truly aggravating” that “while we are shut out of their market, which includes some of the highest cheese-consuming nations in the world, the United States allows EU companies to sell their cheeses with these names into our lucrative U.S. market — competing with us for our own U.S. consumers.”

CCFN notes that one of the main ways the EU blocks U.S. competition is by preventing nations outside the EU from marketing cheeses within Europe using common names like “parmesan,” which the EU says are protected by GIs. The United States long has maintained the protection of a GI like “Parmigiano Reggiano” should not be extended to encompass generic terms like “parmesan” that have been used by cheesemakers around the world for generations.

The United States recently rebuked the EU for its abuses on GI policies in the annual Special 301 intellectual property report from the Office of the U.S. Trade Representative. CCFN is encouraging the administration to evaluate the full range of tools at its disposal to address the asymmetrical nature of the U.S.-EU food trade relationship.

Meanwhile, the U.S. Trade Representative’s office (USTR) this week held a two-day public hearing regarding proposed action, including tariffs on EU products such as cheese, in the dispute over EU Airbus subsidies. The World Trade Organization recently found that Europe’s large civil aircraft subsidies violate international trade rules and determined the United States may levy duties on EU products until Europe comes into compliance.

The National Milk Producers Federation (NMPF) testified that USTR should impose tariffs on dairy shipments from Europe in response to EU subsidies.

“We have a unique opportunity to make a big dent in the dairy market access gap we face with Europe,” NMPF President and CEO Jim Mulhern said in his testimony at the USTR hearing. “Including EU cheeses, yogurt and butter on this list, as USTR has proposed, is entirely warranted, and we would encourage you to add additional EU dairy-related tariff lines.”

Mulhern says imposing these tariffs against EU dairy products would bring increased attention to the inequities that currently define the U.S.-EU dairy trading relationship due to a complex web of EU tariffs and nontariff obstacles.

“Simply put, we are largely being blocked from the EU market despite being a trusted and proven dairy supplier to the rest of the world,” Mulhern says, pointing out Europe’s use of GI requirements.

The Cheese Importers Association of America and the Specialty Food Association (SFA) also testified at this week’s hearing on how the tariffs could affect U.S. importers and specialty food retailers.

SFA President Phil Kafarakis noted in his testimony that cheese is the highest volume product in specialty foods, with annual sales of more than $4.2 billion. He also notes many of the food listed by USTR for possible tariffs are sold by small retailers who combine domestic and imported foods in their mix of high-quality and trending offerings.

“The proposed increased duties on specialty food products will have an adverse effect on U.S. small food businesses, decreasing sales and adversely affecting employment,” Kafarakis says. “A store with fewer specialty food imports or with only domestic specialty foods will be less attractive to consumers, resulting in fewer sales and less income for the retailers and the distributors. The harm will be seen in the reduced product selection at retail as well as in higher prices.”


USDA urged to assist farmers as tariff disputes continue on

May 17, 2019

WASHINGTON — Agricultural stakeholders are urging the Trump administration to assist the industries that are being increasingly squeezed by ongoing tariff disputes.

U.S. farmers and ranchers now face a third wave of tariff increases by China on $60 billion of goods — set to take effect June 1 — in retaliation against the latest increase in U.S. tariffs that went into effect May 10. That action increased tariffs from 10 percent to 25 percent on $200 billion worth of Chinese products.

“China’s tariff move is in response to the U.S. unilateralism and trade protectionism,” China’s finance ministry said in a statement this week. “China hopes that the U.S. will return to the right track of bilateral trade talks, work together with China and meet each other halfway to reach a win-win and mutually beneficial agreement on the basis of mutual respect.”

The mere threat sent prices further downward for certain commodities last week, says Zippy Duvall, president of the American Farm Bureau Federation (AFBF), in a letter sent to President Trump this week.

Rep. Collin Peterson, D-Minn., chair of the House Agriculture Committee, says the Trump administration’s decision to raise tariffs on Chinese goods does “nothing but use our farmers as political pawns and further ourselves from a real solution.”

“Farmers don’t set the prices they receive, and every action causes a reaction in the market,” Peterson says.

As U.S.-China talks continue, stakeholders including AFBF and the National Farmers Union (NFU) are calling on Congress to provide farmers with adequate support to maintain their livelihoods amid shrinking export markets and low farm income.

“We are more than a year into this trade war with China, and this most recent escalation suggests that there is no end in sight. At this point, we can’t expect export markets to go back to the way they were — the damage has already been done,” says NFU President Roger Johnson. “In the long term, there needs to be a fundamental shift in the way we establish the economic sustainability of agricultural production in the U.S. But until that happens, struggling family farmers and ranchers are in desperate need of a lifeboat to keep them afloat, whether that’s another round of Marketing Facilitation Program payments or some other form of economic disaster assistance.”

Duvall says while mitigation payments can never replace lost markets, as long as trade disruptions continue, AFBF is asking the Trump administration to provide assistance to farmers and ranchers.

The Trump administration could make as much as $20 billion available to farmers in a second round of assistance designed to help offset losses from China’s latest retaliatory tariffs, Agriculture Secretary Sonny Perdue said this week, according to media reports.

USDA last year pledged up to $12 billion in assistance for 2018 production, mostly in the form of direct payments to farmers as well as commodity purchases, and a second installment is expected to be modeled after the first, news reports say.

“We ask that trade assistance be offered to producers of all affected commodities, and that payment rates be based on historical production. In addition, we recommend that the USDA address the growing problem of oversupply by providing farmers with incentives to reduce overall production,” Johnson says. “The ever-worsening financial challenges being forced on family farmers and ranchers cannot be overstated.”

Meanwhile, stakeholders also are urging the administration to expand markets elsewhere, such as through the new U.S.-Mexico-Canada Agreement (USMCA).

The American Dairy Coalition (ADC) notes one ongoing barrier to ensuring reliable export markets is the ratification of USMCA.

“Agricultural leaders urge Congress to move forward with scheduling a vote on USMCA to ensure financial certainty for farmers as they move through the planting season,” ADC says.

News reports this week indicated the United States, Canada and Mexico are close to a deal to remove steel and aluminum tariffs that have weighed on farmers, a move that could significantly boost the chances that Congress will ratify USMCA. Treasury Secretary Steven Mnuchin this week said the Trump administration is “close to an understanding with Mexico and Canada” to remove tariffs that have been in place for nearly a year, according to reports.

A group of 68 food and agriculture associations and companies — including the International Dairy Foods Association, National Milk Producers Federation and U.S. Dairy Export Council — last week sent a letter today to congressional leadership and all 535 congressional offices strongly urging lawmakers to vote to ratify USMCA. (See “More than 60 dairy and agriculture groups urge Congress to pass U.S.-Mexico-Canada deal” in last week’s issue of Cheese Market News.)


Stakeholders praise outcomes of NCIMS meeting, PMO changes

May 17, 2019

WASHINGTON — The National Conference on Interstate Milk Shipments (NCIMS) meeting, which took place April 26-May 1 in St. Louis, Missouri, resulted in the passage of 39 proposals for changes to the Grade A Pasteurized Milk Ordinance (PMO), which regulates all dairy plants producing Grade A products.

The six-day biennial meeting included more than 400 attendees, including state regulators, FDA officials and industry stakeholders. Following committee discussions, about half of the 74 submitted proposals were assigned to a committee for initial review, during which a proposal can be passed, rejected or modified. Councils comprised of dairy industry and state health and ag department representatives then have the option to approve, reject or modify the remaining proposals before passing them on to the state delegates, where again the proposals could be accepted, rejected or modified.

The International Dairy Foods Association (IDFA) notes that one of the successful proposals, which it promoted, seeks to reduce the inspection burden on plants producing both Grade A and non-Grade A dairy products by having only one inspection for compliance with FDA’s Preventative Controls for Human Foods rule instead of the two separate inspections currently required for each grade of product.

NCIMS delegates also passed two proposals about yogurt that are important to IDFA members. The first will task an NCIMS study committee to review NCIMS’s role in regulating the repackaging of yogurt, sour cream, acidified sour cream and other cultured milk products that are produced in a commissary or other non-Grade A food production facilities. The committee will report its findings at the 2021 NCIMS Conference. The second proposal specified the required timeframes and pH levels for cooling yogurt that is cultured in the cup after filling.

“Coordinated efforts by IDFA dairy industry professionals working with committees, councils, state delegates and FDA officials resulted in successful outcomes on numerous proposals,” says Cary Frye, IDFA senior vice president of regulatory affairs and NCIMS program chair. “IDFA members and staff met with state delegates and FDA officials during the conference, and we worked cooperatively with the National Milk Producers Federation (NMPF) to present a united voice on many key issues.”

NMPF says the 2019 NCIMS conference was “an overall win for U.S. dairy producers.” All three of NMPF’s proposals that were considered “must-pass” succeeded, including proposals on streamlining shipping statement information for milk and milk products; clarifying testing for antibiotic residues; and making the ad-hoc committee on drug residue testing a permanent full standing committee.

NMPF adds it will issue a special edition Regulatory Register that will cover conference proceedings and outcomes in more detail.


Panel discusses strategies for launch of dairy protein initiative

May 10, 2019

CHICAGO — As the American Dairy Products Institute (ADPI) gears up to launch its new Dairy Protein Messaging Initiative (DPMI) this summer, a panel during ADPI’s annual conference here this week shared insights into the campaign’s target consumer groups and how the DPMI can reach them with impactful messaging on protein.

The DPMI was announced late last year after ADPI’s board of directors recognized a void in the industry’s messaging and communication of dairy protein ingredients in foods and beverages. ADPI commissioned a task force comprised of members who volunteered to evaluate the opportunity and recommend an action plan. Padilla and its FoodMinds division were selected to work with the ADPI task force to execute a fact-based, integrated strategic digital communications program, known as the Dairy Protein Messaging Initiative. (See “New Dairy Protein Messaging Initiative to positively, proactively spotlight dairy proteins” in the Nov. 9, 2018, issue of Cheese Market News.) The initiative is funded through supporters representing suppliers, associations, trade publications and others.

This week’s panel, moderated by Veronique Lagrange, director of strategic development, ADPI, featured consumer research findings from Padilla FoodMinds’ Grant Prentice and Jason Stemm and a discussion with DPMI co-sponsors Rudy Dieperink of FrieslandCampina Ingredients, Anand Rao of Agropur and Terry Brockman of Saputo.

ADPI says it is estimated that dairy ingredients represent 35 percent of dairy solids utilization in the United States, and this segment is critical to the “health” of the entire dairy industry.

Lagrange notes that while the protein market is growing — with more than 68 percent of U.S. consumers seeking more protein in their diet — the relative share for dairy has decreased from approximately 85-90 percent to less than 60 percent in recent years. Meanwhile, alternative proteins like almond, rice and others are competing in the marketplace and communicating aggressively.

In comparison, the dairy ingredient industry hasn’t proactively communicated on the positive attributes of its products relative to nutrition, health and well-being in a way that resonates with today’s consumers, she adds.

“Product introductions with whey and milk protein concentrates have increased in recent years, but a large portion of the incremental demand is being captured by alternative proteins,” she says.

The Dairy Protein Messaging Initiative seeks to fill this gap and influence today’s consumers though effective and fact-based digital communication methodologies.

Research presented during Tuesday’s session shows the dairy industry has an opportunity to highlight the positive attributes naturally found inside dairy proteins including satiating hunger, utilization for post-workout consumption and protecting against muscle loss.

In addition, when talking about sources of dairy proteins, research also shows consumers are more likely to identify specific milk protein products, such as whey, casein or milk protein concentrates, rather than referencing products as general “dairy.”

“Consumers do like cheese, whey and milk protein, but the term ‘dairy’ is generally associated with negative perceptions — like ‘dairy-free and non-dairy.’ Many consumers turn away from dairy because they associate the term with lactose intolerance,” Lagrange says.

The DPMI seeks to capitalize on milk protein’s healthy, natural attributes with a targeted message, “The Strong Inside.” Marketing messages may include, “What’s Your Strong Inside?” “More Strong in Your Life” and “Strong is More than Grams.”

“The Strong Inside” message has been tested through primary research involving more than 1,500 consumers, and it resonates with the target audience, ADPI says, noting this target audience includes younger consumers, flexitarians and women who are perhaps less loyal to dairy but seek to increase proteins in their diet.

“They can envision the benefits of milk-based proteins in the many facets of their everyday life,” Lagrange says.

“We can act now and communicate to promote the benefits of milk-based proteins to those customers seeking proteins, and we need to help them understand that not all proteins are created equal,” she adds.

Stemm, vice president, Padilla, says The Strong Inside’s simple, effective messaging is based on science and appeals emotionally.

“This will be the cornerstone of the campaign, which is designed to equally promote whey and milk proteins,” he says.

Strategic creative images also play a part. Research shows using imagery of cows brings up animal welfare and other concerns among the initiative’s targeted consumer groups, while milk-based proteins can be more positively viewed by vegetarians.

In addition, “milk” as a term has a desirable “aura,” and whey is exciting to consumers due to its connection with the fitness community, research shows.

“Today’s protein consumer is defined by specific personality characteristics: high intellect and high curiosity,” says Prentice, senior vice president of strategic insights, Padilla FoodMinds. “The consumers seeking protein are eager to learn and explore new ideas. Discovering and evolving the products they use is more important than sticking to traditional forms.”

Lagrange says one of the critical findings of Padilla FoodMinds’ consumer research is that with the right messaging to DPMI’s target consumer groups, the initiative will have an impact on perceptions and eventually consumer demand.

“Research shows we can ‘move the needle’ to increase preferences for milk and whey proteins,” she says.

Blake Anderson, president and CEO, ADPI, notes the goal of the campaign is not to malign plant-based products or agriculture.

“Our campaign will remain positive at all times, yet will seek to refute myths and misconceptions that exist,” he says. “Milk-based proteins have many desirable attributes, and we will build on this strong platform. Now the challenge for us, as an industry, is to unite and pull together resources to action and enable an effective campaign. We will need each and every ingredient supplier and association to help grow and defend the ingredient business, as it is such a large portion of the dairy industry in the United States. The health of the entire sector is at stake.”


American Butter Institute, NMPF push back on use of dairy terms

May 10, 2019

ARLINGTON, Va. — Plant-based imitations of butter and other dairy products pose an increasing challenge for consumer understanding in the butter sector, according to the American Butter Institute (ABI), which held its joint annual meeting with the American Dairy Products Institute (ADPI) this week in Chicago.

The butter industry is dealing with proliferating imposters even as butter’s popularity grows, making it crucial for FDA to take action before these “fake” products make federal standards of identity for established terms such as “butter” and “margarine” meaningless, says Tom Balmer, executive director, ABI.

Speaking at the annual gathering, Balmer points out that for generations, plant-based butter imitations have been marketed under a federal standard of identity as margarine or under the non-standardized term “vegetable oil spread.” However, in the face of declining margarine and spread sales, companies now are seeking to capitalize on butter’s resurgent popularity by using the term “butter” and applying it to products that do not meet butter’s federal standard of identity. This gnaws at the integrity of food standards, Balmer says, and misleads consumers who may believe they’re buying an equivalent to butter when, in fact, no such quality standard is being met.

“Just because consumers are rejecting plant-based margarines and spreads, companies can’t turn around and violate federal law by slapping the term ‘butter’ on a product label and pretend it’s worthy of a dairy term,” Balmer says. “A falsely labeled product is a misbranded product, and misbranded products don’t belong on grocery shelves. The proliferation of these products is eroding the integrity of the marketplace, and the FDA needs to stop it before its own rules become meaningless.”

Balmer also notes butter’s many strengths that position it to compete well with plant-based products. Butter is a “cleaner” product — salted butter, for example, contains two ingredients (salt and cream), while Wayfare’s “Dairy Free” product has at least 10 ingredients.

“Butter is popular precisely because it has qualities imitators can’t match,” Balmer says. “Imposters don’t deserve a label that’s destined to disappoint consumers who expect the high quality of the real thing.”

ABI in September filed a complaint to FDA over imitators using dairy terms. It also supports the National Milk Producers Federation’s (NMPF’s) citizen petition with the agency filed in February, which outlines a road map toward a constructive resolution of the problem of mislabeled imitation dairy products.

Meanwhile, NMPF this week pushed back on an analysis recently released by the Plant Based Foods Association (PBFA). PBFA had commissioned a review by Linkage Research and Consulting of comments filed in an FDA docket on the labeling of plant-based products. (See “Plant Based Foods Association spotlights comments to FDA in favor of dairy terms” in last week’s issue of Cheese Market News.)

NMPF points out that FDA had solicited comments because, according to the agency, it “has concerns that the labeling of some plant-based products, which can vary widely in their nutritional content, is leading consumers to believe that those products have the same key nutritional attributes as dairy products.”

However, NMPF claims PBFA mischaracterized what FDA has been considering, trying to turn a discussion of consumer transparency and nutritional inferiority into a debate over whether consumers think almonds are a dairy products. NMPF adds that the PBFA presented an incomplete and selective review of comments as authoritative.

“None of the fake foods stealing dairy terms contain the same nutrition as the milk or dairy product they attempt to imitate,” says Jim Mulhern, president and CEO, NMPF. “The vegan and animal rights activists who were encouraged by our opponents in this debate to flood the docket with comments understand that these fake products don’t contain milk. But that’s never been the issue. Research clearly shows that consumers don’t understand the nutritional differences between real, natural dairy products and the inferior, imitation products masquerading as milk.”

Mulhern points to public opinion research conducted by Ipsos that shows 77 percent of buyers of dairy and plant-based beverages think almond-based drinks have as much or more protein than dairy, when in fact real milk has as much as eight times more protein. The research also showed 78 percent thought plant-based drinks had at least as many vitamins and minerals as dairy and 68 percent thought such beverages had at least as many “key nutrients” such as calcium and potassium, which they do not, Mulhern says.

“It’s understandable why the fake-milk crowd would rely on fake facts — the actual ones aren’t on their side,” Mulhern says. “But that doesn’t excuse their adulterating a debate taken seriously by the American Academy of Pediatrics, the School Nutrition Association and others who have thoughtfully explained why labeling transparency is a public good.”


USDA report forecasts milk production to expand in 2020

May 10, 2019

WASHINGTON— In its “World Agricultural Supply and Demand Estimates” report released today, USDA forecast U.S. milk production to expand to 222.7 billion pounds in 2020 as producers respond to higher milk prices and lower feed costs.

Milk per cow is expected to continue increasing, and the forecast also reflects the one extra day due to leap year.

The forecast is USDA’s first forecast for 2020 in this outlook report. It forecasts milk production to total 218.7 billion pounds in 2019, down 800 million pounds from its forecast last month.

Commercial exports on a fat basis are forecast at 10.2 billion pounds in 2019, up from 9.8 billion pounds forecast last month. The 2019 forecast for skim-solids basis exports is increased by 400 million pounds from last month’s report to 42.6 billion pounds.

Both fat and skim-solids basis commercial exports are expected to grow in 2020 as U.S. products are expected to become more competitive due to slower growth in competitor supplies, the report says.

Cheese currently is forecast to average $1.650 per pound in 2019, and climb to $1.710 per pound in 2020.

USDA says the 2019 Class III price is forecast to average $16.05 per hundredweight in 2019, and is expected to rise to $16.55 in 2020. The 2019 Class IV price is forecast to average $16.20, and is expected to climb to $16.80 in 2020.

The 2019 all-milk price is forecast to average $18.05 in this month’s report, up from $17.50 forecast last month. The 2020 all-milk price is forecast to average $18.80.


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Today's Cheese Spot Trading
May 24, 2019

Barrels: $1.5800 (-3 1/2)
Blocks: $1.6825 (NC)

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Cheese Production
U.S. Total March
1.100 bil. lbs.

Milk Production
U.S. Total April
18.430 bil. lbs.

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Dairy: Delivering health and nutrition for millions of years

Joe O’Donnell, Ph.D.

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