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Dog days of August deliver for dairy

Michael Dykes

Michael Dykes is president and CEO of the International Dairy Foods Association. He contributes this column exclusively for Cheese Market News®.

August is a month known for vacations and heat waves that typically slow the pace of progress in our nation’s capital. But this month has been anything but slow for IDFA and the administration officials who announced some positive developments for the dairy industry, as well as Americans in need.

For the past few weeks, we have been working with USDA and urging officials to purchase pasteurized fluid milk for distribution to struggling Americans through food and nutrition assistance programs. I’m pleased to say that, working together, we have accomplished a historical first for fluid milk processors and millions of people who now will have more access to milk.

Let’s take a comprehensive look at the achievements for the month.

In the span of two weeks, Aug. 14-27, USDA earmarked nearly $135 million to purchase dairy products in funding packages developed under two separate authorities. These ambitious plans will address one of our country’s significant challenges — hunger — and, at the same time, provide a positive impact on the dairy industry at a time of significant market uncertainty. At IDFA, we applaud USDA’s actions and welcome the opportunity to participate.

While some of the details are still unfolding, it’s clear that this combined funding represents a significant milestone for our industry. The purchase programs provide new opportunities, and we must work with USDA to ensure their success. I’m sure the administration will look to the success of our efforts when deciding future actions and allocations, so let’s go all in.

• $50 million for fluid milk

The opportunities began to flow two weeks ago when USDA announced it will purchase $50 million in pasteurized fluid milk to be distributed through food assistance programs and food banks, such as those under Feeding America, the nation’s largest hunger relief organization.

Milk is one of the most requested items at food banks, Feeding America told us, but it is rarely available. In fact, food banks provide the equivalent of less than one gallon of milk per person, per year.

That’s why we’re so pleased to see USDA offer a commodity purchase program for fluid milk for the first time. We’ve been working side-by-side with our colleagues at the Milk Processor Education Program (MilkPEP) and Feeding America to promote the program and expand our efforts, with remarkable success.

Many milk processors have been working independently with Feeding America, especially through The Great American Milk Drive, which has delivered more than 1.8 million gallons of milk to food banks since 2014. But this new funding allows the industry to operate on a much larger scale. Under this initiative, USDA is expected to purchase and deliver 12 million to 15 million gallons of fat-free, low-fat (1 percent), reduced-fat (2 percent) and whole milk.

Not only are we now supplying one of the most requested items, but we’re able to offer a variety of fat levels to appeal to a variety of tastes. And we just may see a new generation of milk drinkers as a result, which would be a positive development for us all.

• $84.9 million more

But the good news doesn’t end there. On Monday of this week, USDA announced an additional $84.9 million in new funding to purchase pasteurized fluid milk and other dairy products as part of the nearly $12 billion in assistance to U.S. farmers and food manufacturers for trade mitigation. Again, we applaud the efforts of USDA to provide additional benefits and nutrition to people in need, while helping to alleviate some of the financial difficulties facing dairy farmers and companies that stem from lost export sales.

It’s clear that Agriculture Secretary Sonny Perdue and his team at USDA recognize the vital role that American agriculture and food processors play in global trade. With this package, USDA has erected a temporary bridge for agriculture while the administration continues its efforts to finalize the North American Free Trade Agreement and solidify other much-needed international trade pacts.

As part of the $12 billion package, USDA also allocated an initial payment of $127 million to dairy farmers and another $200 million for trade promotion that will build and strengthen new markets for U.S. agricultural products, including milk and dairy products.

Only USDA-approved vendors can participate in these purchase programs, and the approval process can take up to three weeks, so I encourage interested milk and dairy processors to apply as soon as possible.

Your participation is critical to help these programs succeed in the marketplace and deliver more milk for those in need.

• U.S.-Mexican trade agreement

Adding to the news for the week, the administration also announced on Monday that the United States and Mexico had reached a preliminary trade agreement in principle. The details we’ve reviewed to date offer considerable optimism for the dairy industry if they remain in the final pact. It’s unclear as of this writing, however, whether the agreement will be a bilateral or trilateral pact, now that Canada has returned to the negotiating table. We remain optimistic that it will be completed in time for Mexican President Enrique Peña Nieto to add his signature before he leaves office at the end of November.

As this month of action draws to a close, IDFA will continue to help companies navigate the market uncertainty that remains from tariffs and take advantage of new opportunities. Join us at Dairy Forum 2019, Jan. 20-23 in Orlando, to discover how, working together, we can continue to move dairy forward.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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