Dairy groups seek resolution from U.S., EU on trade barrier

July 30, 2021

WASHINGTON — The International Dairy Foods Association (IDFA) this week announced it is calling on the U.S. government and the European Commission (EC) to quickly resolve a regulatory dispute that threatens the export of dairy ingredients. IDFA notes that U.S.-produced dairy ingredients are used to make infant formulas and critical adult nutrition products in European Union (EU) member states and other nations, and the association says unless the United States and EC resolve the issue in coming weeks, the supply chain for global infant formulas will be thrown into chaos, resulting in product shortages, job losses and price increases.

IDFA member companies make and supply medically important specialized nutritional products for infants and adults that are made exclusively for European companies or shipped through EU member states. Now the EC is seeking to revise import certificates on U.S. goods to include animal health attestations that IDFA says are “onerous” and “run counter to World Organisation for Animal Health (OIE) guidance.”

These new health certificates, IDFA explains, may require farms to be inspected more frequently, while also requiring producers to keep logs of data on cow health and movement. Some in the dairy industry say the rules are too intrusive and require farmers to hand over too much information to foreign governments. Negotiations are ongoing, and as the new EC requirements are due to take effect Aug. 21, 2021, trade groups across the United States and EU have requested additional time to assess the impact of the new regulations.

IDFA warns that ultimately, the regulation could force some U.S. exporters out of business, particularly those who work exclusively with nutrition formula producers in the EU. The new EC requirements could threaten approximately $600 million to $900 million in annual sales of these nutrition products and disrupt supply chains, IDFA estimates, adding that there are no alternate suppliers for these ingredients, which will be depleted by the end of 2021 without resolution of the issue. The EC certificate requirements also apply to all products shipped through its territory, also known as trans-shipping, including dairy shipments destined for U.S. military bases in Europe and any products shipped to other countries for further processing before being exported back to the EU, meaning the entire global supply chain for these goods may be impacted.

“IDFA and its members have been working tirelessly for months to educate both U.S. and European officials about the catastrophic impact of the EU’s misguided policy,” says Michael Dykes, president and CEO, IDFA. “Despite those efforts and the clear impact to critically important global infant formula sales, U.S. dairy exporters may lose complete market access to the EU, impacting European processors and consumers all around the world.”

While the U.S. government and dairy industry disagree with the EC’s requirements, U.S. suppliers and makers of these dairy ingredients have not received sufficient time or necessary technical guidance from the EC to effectively implement the new certificates, IDFA says. Therefore, U.S. suppliers and makers of these dairy ingredients are requesting an extension of the Aug. 21 implementation date to allow more time for the United States and EC to reach a satisfactory resolution of this issue. IDFA is urging the Office of the U.S. Trade Representative (USTR), USDA and FDA to work collaboratively to resolve the issue with the EC and to prioritize preserving the uninterrupted flow of U.S. dairy exports to Europe.

“At a time when global public health must be our collective priority, it is deeply troubling that we are facing a potential crisis in global supply chains for these specialized nutritional products,” says Becky Rasdall, IDFA vice president, trade policy and international affairs. “Existing contracts have been thrown into question, jobs and facilities that support the nutritional needs of vulnerable populations are facing closure, and consumers who need the products are most vulnerable. We must avert this crisis now.”

Additionally, IDFA last week sent a letter to EC Trade Commissioner and Executive Vice President Valdis Dombrovskis and Commissioner for Health and Food Safety Stella Kyriakides requesting an extension of the implementation date through the end of 2023 in order to hold good faith discussions with the U.S. government to resolve the issue. IDFA notes in the letter that it recognizes the EC’s right to an appropriate level of protection; however, these regulation appear to exceed not only OIE recommendations, but also are more trade-restrictive than necessary to protect health, and therefore are inconsistent with the World Trade Organization Agreement on Sanitary and Phytosanitary Measures.

Last month, a bipartisan group of U.S. representatives also wrote to EU Ambassador to the United States Stavros Lambrinidis urging delayed implementation of the new EU certification requirements and greater recognition of the strength of the U.S. system in producing safe exports (see “U.S. reps urge delayed implementation of new EU certification requirements for dairy” in the June 18, 2021, issue of Cheese Market News). The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) thanked the lawmakers for emphasizing the need to prevent significant trade disruptions to U.S. dairy exports.

“We have strongly supported U.S. government efforts to seek an extension from the EU and a workable solution to allow trade to continue without overly burdensome requirements,” says Shawna Morris, senior vice president, trade policy, USDEC and NMPF. “The looming Aug. 21 deadline of the new EU certificate’s implementation has been a very large priority for us given the amount of dairy product impacted by these requirements and the lack of scientific basis in the EU’s new requirements. The issue is still evolving, but we do not expect that the market will shutter next month.”

Morris emphasizes that the EU certificate issue is part of a larger problem with the EU’s imposition of unwarranted nontariff barriers and trade-restricting proposals that create an imbalance in trade.

“While the EU is constantly initiating new and more demanding requirements on U.S. exporters, the U.S. continues to make it quite easy for EU cheese, butter and other dairy products to come into our market. This imbalanced treatment has contributed to a dramatically lopsided trade balance in dairy products between the U.S. and the EU,” Morris says.
“Looking ahead, it’s critical that the administration confront the EU on these outstanding practices and the all-too-frequent burdens layered on U.S. farmers and food manufacturers without justification,” she adds. “Any trade negotiations with the EU must address these nontariff barriers to dairy trade and should move toward a systems-recognition approach to limit these occurrences of uncertainty for American dairy exporters.”

CMN

Hearing examines enforcement and implementation of USMCA

July 30, 2021

WASHINGTON — The U.S. Senate Finance Committee this week held a hearing to discuss the U.S.-Mexico-Canada Agreement (USMCA) one year after the trade agreement entered into force. The hearing provided an opportunity for the committee to examine whether USMCA’s commitments are delivering on their promise, and it will help in developing a future trade agenda, according to Sen. Mike Crapo, R-Idaho, ranking member of the U.S. Senate Finance Committee.

“Mexico and Canada are two of our most important trading partners. We cannot take these relationships for granted,” Crapo said in his statement at Tuesday’s USMCA hearing. “To take one example, the United States exported $1.4 billion and $731 million worth of dairy products to Mexico and Canada, respectively, in 2018.”

He added, “If we are going to unlock the promise of USMCA, and also understand its shortcomings, we need to press for effective implementation and enforcement.”

Crapo said he supports a number of USMCA innovations to help meet the challenges of the 21st century economy, including Canada allocating new tariff-rate quotas (TRQs) for dairy products, and Mexico agreeing to protect 33 common cheese names.

Committee Chairman Sen. Ron Wyden, D-Ore., also noted in his statement that under USMCA, Canada agreed to give U.S. dairy products more access to the Canadian market. However, Canada undermined that commitment with new regulatory barriers before USMCA officially went into effect last July, he said.

Among the industry stakeholder witnesses at the hearing was Idaho dairy producer Allan Huttema, chairman of the Northwest Dairy Association/Darigold board of directors and member of the National Milk Producers Federation
(NMPF) executive committee. In his testimony, Huttema said USMCA enforcement is essential for the agreement to reach its potential for U.S. dairy farmers and processors to supply high-quality cheeses, milk powders and a variety of other dairy products to customers around the world.

“USMCA made tremendous strides to modernize trade rules and facilitate the smooth flow of U.S. dairy products throughout North America, but the benefits of USMCA will only flow if Canada and Mexico properly implement the agreement,” Huttema said. “This will require proactive monitoring and enforcement of USMCA implementation, including through enforcement actions such as that taken against Canada’s administration of its tariff-rate quotas for dairy products.”

In addition to monitoring Canada’s TRQ administration, Huttema urged “vigilant monitoring and aggressive enforcement” with Mexico. He noted as of late there has been “a proliferation of poorly designed Mexican regulations that have been disrupting trade, eroding the U.S.’ role as a reliable supplier.”

Some examples he cited were new standards for milk powder and cheese Mexico introduced in January 2020 along with proposed amendments to these standards that he said go against the good regulatory practices provided for under USMCA. Another area that needs to be closely monitored and if needed enforced, Huttema said, is Mexico’s implementation of USMCA provisions on common cheese names and geographical indications.

“Regrettably, Mexico has acceded to the European demands to prevent the use of common food names through the imposition of illegitimate GIs,” he said. “Mexico undertook important commitments to the United States through USMCA side letters on common cheese names and prior uses to protect from the abusive and illegitimate actions from the European Union during the Mexico-EU free trade negotiations. We need to ensure that Mexico implements these provisions in a manner that fulfills and recognizes the market access gain in NAFTA and USMCA.”

In addition, Huttema discussed the importance of building upon USMCA to pursue additional trade agreements in other key markets around the world, including the United Kingdom, Southeast Asia, Japan and China.

“The U.S. Dairy Export Council (USDEC) appreciates the Senate Finance Committee and its members for hearing Allan’s testimony and answers regarding the importance of the USMCA and new trade opportunities to the U.S. dairy industry,” says Krysta Harden, president and CEO, USDEC. “USDEC agrees with Allan regarding the need to pursue greater market access opportunities for high-quality American dairy products that our international consumers demand. USMCA was an important step forward, but it’s not enough. We need new trade agreements to expand on Congress’ hard work in passing USMCA. The EU is filling the vacuum that American trade policy is leaving — an issue that Congress needs to address with additional market opportunities for U.S. exports.”

USDEC and NMPF say the $6.5 billion worth of U.S. dairy products exported each year underpins the economic health of dairy producers, processors and manufacturers across the United States. American dairy exports create more than 85,000 direct jobs and have a nearly $12 billion economic impact. Whether it is Canada’s TRQ administration or Mexico’s array of new regulations intended to limit imports, NMPF and USDEC have urged the U.S. government to ensure USMCA is fully enforced.

“NMPF and the dairy producers it represents are grateful to the Senate Finance Committee for inviting Allan to discuss the benefits that the USMCA has brought U.S. dairy producers and cooperatives,” says Jim Mulhern, president and CEO, NMPF. “But as Huttema said so well, adequate enforcement is necessary to ensure American dairy producers are provided the access promised in the agreement. We are grateful to the Senate Finance Committee members for their advocacy in support of the recently initiated dispute settlement proceedings over Canada’s dairy tariff-rate quotas — a critical step in enforcement of this agreement.”

CMN

High Desert Milk to expand, add new milk protein product

July 30, 2021

BURLEY, Idaho — One of Idaho’s leading dairy processors has undertaken a major expansion that nearly doubles its output. The $50 million project will allow Burley, Idaho-based cooperative High Desert Milk to increase its annual butter output from 45 million pounds to 85 million pounds and add a new, high-demand milk powder product called MPC-70 to its lineup.

MPC-70 is a milk protein concentrate containing 70% protein. Featuring a light aroma and clean taste, MPC-70 often is used in sports nutrition beverages, protein bars, icings, desserts, soups, sauces, baked goods and dairy foods, High Desert notes.

According to High Desert research scientist Brandon Carter, the co-op creates MPC-70 by removing most of the lactose from skim milk and concentrating the proteins via a filtration process that applies pressure to force sugar off protein.

The co-op will yield 36 million pounds of MPC-70 annually in addition to the 68 million pounds of nonfat dry milk it currently produces each year. High Desert’s CEO Randy Robinson says 60% of its MPC-70 is earmarked for Latin America.

Robinson notes the new production line, which is part of a 10-year growth plan, became operational in June. Although a cooperative, High Desert recently began contracting milk.

“Finding new sources of milk is a new business model for us as a vertically integrated cooperative,” Robinson says. “We currently receive 2.2 million pounds of milk per day, and when our MPC-70 production line goes online, our intake capacity will reach 4.7 million pounds per day. We are in a unique position to help other dairymen in the Magic Valley who are struggling to achieve their ambitions.”

Robinson adds that Idaho is a great place to dairy.

“We have dedicated people, the resources and the room it takes to have a thriving dairy industry in this state,” he says. “Our ability to provide the world with safe, nutritious, sustainable and affordable products is one of our greatest assets.”

A half-dozen dairy farm families joined together in 2001 to establish High Desert Milk as a marketing cooperative to secure better pricing. The co-op built a milk powder plant in 2008 and began offering sweet cream in 2008 and butter in 2013.

“The farm-to-table movement and consumer interest in local food sourcing has grown in popularity in the last several decades,” Robinson says. “It’s important for people to know that High Desert Milk handles everything from the animal feed to the milking parlor to the package. That allows us to control our quality and food safety.”

He notes demand for dairy foods has spiked during the pandemic.

“When COVID-19 first struck, two things went flying off grocery store shelves: toilet paper and milk,” he says. “Milk is an exceptionally nutritious food, and there’s no way moms are going to let their kids go without some on their cereal.”

Dairy West CEO Karianne Fallow notes High Desert Milk has been a leading innovator in the food production business since its inception.

“High Desert Milk is a leading example of the kind of innovative, growth-oriented companies that prosper in Idaho because it cares about the animals, the people and the products that make it so successful,” she says. “High Desert dairy farmers and employees are passionate in their work because they care about feeding the world with safe and nutritious food.”

She adds that High Desert’s current output represents 5% of the total milk processed in Idaho.

High Desert Milk employed 105 people prior to this expansion, and the company says it expects to add another 44 jobs with the new MPC-70 production line. This is the second large expansion since the plant was built in 2008. It added an extra 500,000 pounds of butter-making capacity to the existing facility in 2013.

CMN

Makers, retailers optimistic as cheese sampling returns

July 23, 2021

By Trina La Susa

MADISON, Wis. — As specialty cheese shops and other retail stores bring back sampling, cheesemakers are expecting a boost in cheese sales going forward. With additional e-commerce advertising, new digital opportunities and improved sanitation, they are equipped with new tools to get cheese into the hands of consumers and tell their dairy farm stories in a post-pandemic world.

“Truly the most impactful way to grow specialty cheese sales is through sampling and demoing the items,” says Rich Mende, senior vice president of channel programs, Dairy Farmers of Wisconsin, Madison, Wisconsin. “You need to get cheese into consumers’ mouths to create the full experience. It also provides a platform to tell the story behind the cheese, cheesemaker and, in some cases, the dairy farm that supplies the milk.”

Sampling and demoing cheese helps create in-store excitement to draw consumers into the specialty cheese department. For some retail consumers, Mende says the specialty cheese department can be overwhelming, with hundreds of varieties and unfamiliar brands, and being able to try the cheese opens up an opportunity for a discovery that may lead to a new favorite cheese. In addition to getting people to try cheeses, it also lends an opportunity to tell the story behind the cheese, he adds.

“As sampling is just now starting to open up across the country, it will be interesting to see how retailers and local health departments approach in-store sampling and what, if any, new safeguards are put in place,” Mende says.

For artisan cheese shop Fromagination, located on the Capitol Square in Madison, Wisconsin, hygiene and safe food handling continues to be a top priority with the return of sampling. Ken Monteleone, head cheesemonger, creative director and owner of Fromagination, says last year when the pandemic unfolded, Fromagination took action right away by following all the guidelines from the Centers for Disease Control and Prevention to ensure safety of its staff and customers.

“When the pandemic first started, hygiene became a top issue as people in the initial stages were being told to wipe down groceries before they were brought into the house. We’re going to continue to do our due diligence in terms of all things we learned during the pandemic,” Monteleone says. “Our team has really become more aware of safe food handling and how to make sure our customers trust us that we’re doing everything we can to care for the cheese and also present it well to them.”

As a cut-to-order and full-service shop that requires skilled employees, Fromagination still is in the process of reopening from five days a week to seven days a week, Monteleone says. The store currently is re-hiring for its front-of-the-house team at the brick-and-mortar store since a majority of resources were shifted to virtual classes and online. He notes that people visiting Fromagination feel comfortable shopping as people who aren’t vaccinated still are required to wear masks but those vaccinated don’t have that requirement.

“Part of how I built this business is people experiencing the cheese before they purchase. Obviously, during COVID-19 we were restricted from doing any of that, so we had to do a better job of really describing flavors,” Monteleone says. “It really made us grow our skill set because we couldn’t rely on an expression from a customer; we had to explain the flavors the cheeses possessed since they weren’t able to sample it. Now that we’re able to sample again, we’re finding that two things are happening: People are Zoom-ed out, and they’re coming into the store for the sampling experience that they’ve missed.”

Fromagination reopened sampling June 19, when the Dane County Farmer’s Market returned to the Capitol Square, and Monteleone found that the store’s customer purchasing ratio increased 25%. He says he expects to see that ratio improving as the store’s next phase is trying to get vendors to come in and sample.

Monteleone notes that Fromagination also has segmented its cheese assortments to ensure some grab-and-go cheeses are available in addition to the small artisan cheeses that are on display for sampling. He says there are some basic cheeses that people know and don’t need to try — they just want to replenish their refrigerators for the week.

Over 14 years, the cheese shop has carried hundreds of cheeses from Wisconsin, the United States and other countries. While the shop inventory is focused on Wisconsin products, Fromagination also often provides its guests with tastes of cheeses from expert producers in places such as Vermont, Minnesota, California, Italy, France, England and the Netherlands.

“What we find is our average retail transaction has gone up because we’ve expanded our assortment and we’re kind of catering to people that want that full service because that’s what’s pretty much made Fromagination what it is — having expert cheesemongers that can tell you the cheesemakers’ stories and guide you through your palate as you taste their cheeses,” Monteleone says.

New cheesemakers also entered the marketplace during the pandemic and have used in-store sampling as a method to introduce their cheeses to customers. For example, Blakesville Creamery in Port Washington, Wisconsin, was established in 2020 as part of an existing dairy farm and today has 1,200 goats in its herd producing milk for its fresh, washed-rind goat cheeses. The planning and design phase of the creamery started back in 2017, and construction on the creamery was completed in March 2020.

“We make goat cheese from the milk of our own herd. Our product line is focused on soft-ripened cheeses,” says Veronica Pedraza, head cheesemaker and general manager of Blakesville Creamery, who has been making cheese for 15 years, and previously worked at Sweet Grass Dairy, Jasper Hill Farm and Meadowood Farms. “This type of cheese is not as familiar for Wisconsinites as say, Cheddar or Swiss. In-store sampling helps introduce this style of cheese to customers.”

Meanwhile, Emmi Roth USA Inc., a subsidiary of Switzerland-based Emmi Group, is a producer of specialty cheeses based in Fitchburg, Wisconsin, that has a history of success in driving purchases of specialty cheeses through in-store sampling. The company is known for its award-winning cheeses from the United States, Switzerland and Europe, each crafted from fresh, locally-sourced milk. Some of its key cheese brands include Le Gruyère AOP, Kaltbach Cave-aged, Roth Grand Cru and Buttermilk Blue.

Most of the grocery retailers Emmi Roth works with stopped live demos last year and at the start of this year. Now that they have gradually gotten back toward sampling product again, Emmi Roth’s Vice President of Club Sales Kevin Hevrdejs says retailers are looking to have a good third and fourth quarter compared to last year by getting demos back on the sales floor.

“We typically saw about a 20-30% increase in sales during the week of sampling,” Hevrdejs says. “The greatest benefit is that the retailer ordered more product for the sampling and sometimes featured our product on an endcap, so sales and purchase went up significantly at that retailer.

Cabot Creamery, Cabot, Vermont, has not done in-person sampling since the pandemic began, but it is planning to test the waters over the summer and fall to see how it goes. Amy Levine, director of business support development at Cabot Creamery, notes that acceptance of sampling programs may vary around the country, and the creamery is hopeful consumers will be ready and open to sampling this summer and fall.

“Everyone is eager to get back to normal. We know that certain regions are more accepting of relaxed guidelines than others,” Levine says. “The future of sampling depends on consumers’ comfort level with taking and trying a product in a safe environment, and we anticipate that some markets will be open to that sooner than others.

“The sensory experience of tasting our cheese and experiencing it firsthand is by far one of the most effective marketing tools that we have,” Levine adds. “We take great pride in the flavor and quality of our products, and that’s why we have historically jumped at any opportunity for sampling whether in stores or out in the community. Plus, it’s just a great opportunity to talk and connect with people and tell our story.”

In the meantime, Cabot Creamery has shifted its focus to more digital and e-commerce marketing opportunities, and it continues to use its Instacart Shoppers programming to stay in communication with consumers. Digital and e-commerce outreach will continue to be a focus beyond the pandemic, Levine says.

In addition to greater brand awareness and growing partnerships with its retail customers through sampling, Emmi Roth has added additional e-commerce advertising to reach consumers who altered their shopping behaviors with the onset of COVID-19.

“E-commerce advertising has had a positive ROI (return on investment), and it will continue to be a long-term strategy,” Hevrdejs says.

Virtual classes and webinars also have become popular since the COVID-19 pandemic began, according to Monteleone. During the spring and summer months, Fromagination is focusing on virtual group classes designed for companies and organizations who might have employees all over the country and want to engage in a team building experience. In the winter months, he says Fromagination will continue to do virtual classes and make them available to anyone.

“An added bonus of being in Wisconsin and having great relationships with its cheesemakers is really being able to showcase them in a way that was not as widely utilized prior to COVID,” Monteleone says, noting that all classes focus on Wisconsin, tell cheesemaker stories, introduce cheeses and pairings — and some classes even feature the cheesemaker and their farm.

CMN

U.S. Trade Representative Tai hosts forum at Wisconsin farm

July 23, 2021

WASHINGTON — U.S. Trade Representative Katherine Tai last week joined U.S. Rep. Ron Kind, D-Wis., to host a trade forum at Hamburg Hills Farm, an Organic Valley member dairy in Stoddard, Wisconsin.

The July 16 roundtable with local farmers and small business owners near La Crosse, Wisconsin, included discussion on how trade policy can better help the farming and agriculture industry and its workers, according to a readout from the Office of the U.S. Trade Representative (USTR). Tai emphasized the importance of making sure farmers, including those from small and family-owned farms, and agricultural workers have a seat at the table as trade policy is developed. She also discussed USTR’s commitment to ensuring that farmers can bring their products to new markets and expand their customer bases.

The U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF) commended Tai and Kind for hosting the trade forum. The groups say their members participating in the event emphasized the need for greater market access for dairy products and the impediments trade barriers pose to greater international trade. At the event, dairy farmers belonging to NMPF and USDEC members Associated Milk Producers Inc., Dairy Farmers of America, FarmFirst and Organic Valley, among others, praised Kind for his leadership as he continues to encourage the Biden administration to work toward greater opportunities in international markets.

Krysta Harden, president and CEO, USDEC, stresses that obtaining and expanding market share abroad is critical to U.S. dairy manufacturers and exporters.

“The global dairy industry is more competitive than ever, so we greatly appreciate Congressman Kind hosting Ambassador Tai on a dairy to provide tangible examples of why the U.S. dairy value chain depends on international trade,” she says. “We’re thrilled the ambassador could visit the farm to see for herself how America’s dairy farmers are producing for the global marketplace. We appreciate both of their personal efforts to ensure Canada meets its tariff-rate quota obligations under the U.S.-Mexico-Canada Agreement (USMCA).”

Jim Mulhern, president and CEO, NMPF, says the organization looks forward to working with Tai, Kind and their staff to reduce foreign trade barriers through country-to-country dialogues and new trade agreements.

“On behalf of dairy producers and their cooperatives, NMPF thanks Congressman Kind for his ongoing advocacy in securing trade opportunities for dairy farmers in Wisconsin and nationwide,” he says. “We’re grateful that Ambassador Tai and hardworking USTR staff are pursuing a dispute settlement case to finally secure Canadian market access granted under USMCA.”

Ahead of Tai’s visit to Wisconsin, the International Dairy Foods Association (IDFA) released a statement praising the ambassador for her commitment to U.S. dairy producers and processors in enforcing U.S. trade agreements to their fullest and maintaining a rules-based trading system for U.S. dairy. IDFA says Tai’s trip to Wisconsin is another positive development for American dairy.

“The most pressing priorities for U.S. dairy are the dispute settlement case over Canada’s manipulation of dairy tariff-rate quotas under the U.S.-Mexico-Canada Agreement and an urgent matter related to the European Commission, which is in the process of implementing non-science-based certification regulations that will all but wipe out U.S. dairy’s access to European Union nations and will threaten global infant formula supplies,” says Becky Rasdall, vice president of trade policy and international affairs, IDFA. “Just as important is understanding how the United States plans to engage in trade negotiations moving forward. Without Trade Promotion Authority, U.S. dairy’s hopes of broadening our access in target markets such as Southeast Asia are waning. We look forward to continuing to partner with Ambassador Tai on these and many other priorities on behalf of U.S. dairy.”

CMN

June milk production in major states up 3.2% from year ago

July 23, 2021

WASHINGTON — Milk production in the 24 major milk-producing states in June totaled 18.09 billion pounds, up 3.2% from June 2020, according to data released this week by USDA’s National Agricultural Statistics Service (NASS). For the entire United States, May milk production was estimated at 18.96 billion pounds, up 2.9% from June 2020. (All figures are rounded. Please see CMN’s Milk Production chart.)

NASS reports May’s revised production for the 24 major states totaled 18.95 billion pounds, an increase of 12 million pounds or 0.1% from last month’s preliminary production estimate.

June production per cow in the 24 major states averaged 2,011 pounds, up 27 pounds from June 2020 and up 4 pounds from May 2021. For the entire United States, production per cow in June is estimated at 1,994 pounds, 26 pounds above June 2020 and down 94 pounds from May.

NASS reports the number of milk cows on farms in the 24 major states was 9.00 million head in June, up 161,000 head from June 2020 and down 1,000 head from May. In the entire United States, there were an estimated 9.51 million milk cows in June, 153,000 cows more than June 2020 and 1,000 less than in May.

California led the nation’s milk production in June with 3.46 billion pounds of milk, up 3.1% from June 2020. Wisconsin followed with 2.64 billion pounds of milk produced in June, up 2.8% from June 2020.

CMN

DMI shares insights on how U.S. dairy can ‘win’ with consumers

July 16, 2021

By Alyssa Mitchell

EGG HARBOR, Wis. — How can the dairy industry build on the strong consumer demand witnessed during the COVID-19 pandemic? How can the industry continue to compete with non-dairy alternatives? These questions and more were addressed during a presentation by Paul Ziemnisky, executive vice president of global innovation partnerships for Dairy Management Inc. (DMI), during the 2021 Wisconsin Dairy Products Association’s Dairy Symposium held here this week.

The consumer is king across global sales channels, Ziemnisky notes, and dairy needs to continue to leverage its position as a protein powerhouse. Perceptions of the industry’s leadership and command of the future are shifting, as challenges simultaneously are increasing, he says.

Data from the National Milk Producers Federation shows domestic and global dairy sales have soared over the past decade, up 20% and 444%, respectively, while USDA data shows per-capita U.S. consumption reached a new high in 2019, Ziemnisky notes.

U.S. cheese and butter continue to show long-term growth. While milk consumption has declined, Ziemnisky notes it can’t be attributed solely to plant-based alternatives, as other innovations in beverages like water, coffee and carbonated soft drinks have taken share of that space.

At retail, dairy is the largest “edible aisle” in retail at $67 billion, according to 2020 data from Information Resources Inc. (IRI). Ziemnisky says improvements could be made on the foodservice side, possibly via new innovations and marketing programs.

Nearly all households purchase at least some dairy, with cheese leading the pack, Ziemnisky notes. He says industry stakeholders could benefit from joining together on dairy’s collective benefits in marketing and messaging versus solely focusing on companies’ individual products.

“Dairy should call out more of its nutritional benefits because competitors are calling these things out on their products, without much regulation,” he adds.

Industry stakeholders also can benefit by embracing risk taking and piloting new technologies, Ziemnisky says.
New use occasions is another area to focus on, he adds.

On the dairy alternatives side, investment in that space is rapidly increasing, most notably in North America and Europe, Ziemnisky notes. This market has less regulation of product naming, standards of identity, and nutrition, advertising and sustainability claims, he adds.

Meanwhile, consumers increasingly are focused on sustainability issues in dairy, such as the use of plastic. Ziemnisky says data shows the top three packaging changes consumers want to reduce the environmental impact of grocery shopping include products in packaging that can be 100% recycled; products in packaging that is biodegradeable; and products packed in material other than plastic.

He adds that IRI data shows plant-based alternatives are more developed in the expanding e-commerce channel than at overall retail.

However, dairy can “win” with a holistic approach, Ziemnisky says. He outlines a series of strategies including:

• Target — Put the consumer first, leveraging consumers’ needs and desires, play to trends and look ahead to the next generation of consumers.

• Reframe — Rethink dairy’s positioning: not milk, but beverages; not cheese, but snacks.

• Disrupt — Create buzz around products. Use limited time offers for marketing value, not just sales growth.

• Drive — Penetrate new uses and occasions. For example, chicken sandwiches are seeing growth, but cheese hasn’t yet taken advantage of the “add-on” opportunity there.

• Connect — Connect with consumers where they are, for example, the gaming realm, Ziemnisky says, noting 90% of Gen Z consumers classify themselves as gamers, and gaming was the third-largest hobby for Gen Z and millennials in 2019. Focus on dairy’s relevance with brands that live their purpose, engage with influencers and modernize traditional brands.

• Lead — Look to e-commerce as a long-term investment rather than focusing on an immediate return on investment, Ziemnisky says. Bring a vision for category growth to retail rather than just growth of individual products or brands.
“Companies that show a willingness to invest in data, analytics and technology will lead the transformation,” Ziemnisky says.

CMN

IDFA files formal objection to FDA final rule on yogurt standard

July 16, 2021

WASHINGTON — The International Dairy Foods Association (IDFA) has submitted a formal objection to the FDA’s final rule to amend and modernize the standard of identity for yogurt, saying it is “out of date,” not taking into consideration the progression of technology and the yogurt-making process, and could remove some popular yogurt products from grocery store shelves.

“After 40 years of waiting since FDA first issued standards for yogurt, the FDA dropped a new final rule on the standard of identity for yogurt in late June, underscoring a lack of transparency in the FDA rulemaking process. Because the rulemaking process has been so severely delayed and because the agency has consulted very little with yogurt makers, the final rule is already out of date before it takes effect,” IDFA Senior Vice President of Regulatory and Scientific Affairs Joseph Scimeca says, noting that FDA for the most part relied on comments submitted 12 or more years ago to formulate its final rule.

Scimeca adds that IDFA has been offering feedback or assistance to FDA since it released its initial proposed rule in 2009, but the agency largely has ignored its comments and suggested revisions to ensure a modernized standard.

“The result is a yogurt standard that is woefully behind the times and doesn’t match the reality of today’s food processing environment or the expectations of consumers,” Scimeca says. “Unfortunately, IDFA has been left with no reasonable options except filing a formal objection to this final rule and imploring the agency to revisit the final rule to amend and truly modernize the standard of identity for yogurt.”

IDFA says while the final rule hits the mark in some areas, it misses badly in others. For example, the final rule consolidates three separate standards — for yogurt, lowfat yogurt and nonfat yogurt — into one standard of identity for yogurt, allowing food makers to modify traditional standardized yogurt and communicate these modifications via label descriptions, product names and claims such as “lowfat yogurt,” which IDFA says seems reasonable. However, the final rule also expands the allowable ingredients in yogurt in some instances and adds confusing restrictions in others. FDA accepted industry suggestions and established a minimum amount of live and active cultures for yogurt containers to bear the labeling statement “contains live and active cultures” or a similar statement. The final rule also allows manufacturers to fortify yogurts by adding vitamins A and D, provided they meet minimum fortification requirements, which all aligns with IDFA’s requests; however, the minimum fortification requirements are two to three times higher than standards for most dairy products and conflict with FDA’s own vitamin D regulations, IDFA says.

IDFA’s objections to specific provisions of FDA’s final rule include the following:

• Baseless and overly prescriptive limitations around what ingredients can be added after fermentation, such as cream, which fail to recognize that milkfat in cream contributes the same general properties to yogurt regardless of whether added before or after fermentation.

• Restrictions related to the required acidity and pH of the yogurt that, as written, could result in popular and traditional “cup-set” style yogurt products to be discontinued along with other styles.

• Conflicting new requirements that would deter yogurt makers from voluntarily adding vitamin D to yogurts, which companies have done for decades and hope to continue.

• IDFA supports clear discourse of non-nutritive sweeteners on labels where consumers are used to looking for this information in the ingredient declaration. However, the final rule doesn’t allow the use of non-nutritive sweeteners unless nutrient content claims, such as “reduced calories,” are used on the label. IDFA believes this requirement will drive innovation in the yogurt industry away from the manufacture of standard of identity yogurt toward non-standardized products. Further, the requirement runs counter to recommendations made in the 2020-2025 Dietary Guidelines for Americans (DGAs), when the agency should be incentivizing yogurt makers toward nutritionally-enhanced products consistent with the DGA, IDFA says.

Additionally, IDFA voiced strong concerns over a lack of transparency, outreach and responsiveness in FDA’s general rulemaking process used to develop the new yogurt standard.

CMN

USDA lowers most commodity price forecasts for 2021, 2022

July 16, 2021

WASHINGTON — USDA lowered its price forecasts for most commodities in 2021 and 2022 in its latest World Agricultural Supply and Demand Estimates report released this week.

USDA’s milk production forecast for 2021 is lowered from last month to 228.2 billion pounds as slower expected growth in milk per cow more than offsets higher forecast cow numbers. However, the 2022 milk production forecast is raised from last month to 231.6 billion pounds on higher cow numbers. USDA’s Cattle report, to be released July 23, will provide a mid-year estimate of the dairy cow inventory and producer intentions regarding retention of heifers for dairy cow replacement, the agency notes.

Imports on both fat and skim-solids bases are raised for 2021 and 2022 on stronger expected imports of cheese and butterfat-containing products, the report says. Exports on a skim-solids basis are also raised for 2021 and 2022, reflecting stronger exports of whey, skim/nonfat dry milk (NDM) powder and lactose. Fat basis exports are unchanged from last month.

For 2021, cheese, butter, NDM and whey price forecasts are lowered from last month on relatively high stocks and weaker-than-previously-expected demand, USDA says. Cheese in 2021 now is forecast to average $1.655 per pound, while butter is forecast at $1.690 and NDM at $1.210. Dry whey is forecast to average $0.570 in 2021.

As a result, Class III and Class IV prices are lowered, to $16.80 and $15.40 per hundredweight, respectively, USDA says. The 2021 all-milk price forecast is lowered to $18.30 per hundredweight.

For 2022, price forecasts for cheese and butter are lowered, to $1.680 and $1.750 per pound, respectively, on larger expected stocks and higher production, but price forecasts for NDM and whey are unchanged at $1.220 and $0.510, respectively. With lower cheese and butter prices, Class III and Class IV price forecasts are reduced to $16.75 and $15.75 per hundredweight, respectively, and the 2022 all-milk price forecast is lowered to $18.50, USDA says.

CMN

Dairy ‘cliffhangers’ need resolution

Jim Mulhern, president and CEO, National Milk Producers Federation

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