Archive for January, 2010

Dairy steps up to aid Haiti

Several dairy organizations stepped up to donate money and products to assist earthquake relief efforts in Haiti.

Dairy Farmers of America (DFA), through its DFA Cares Foundation, donated more than 4,500 cases of Sport Shake, in addition to a monetary donation. Sport Shake is a shelf-stable, dairy-based protein drink, was donated through through Convoy of Hope, a charitable organization based in Springfield, Mo., that has infrastructure in place to ensure that supplies are delivered quickly.

Individuals wishing to make a tax-deductible monetary contribution to support Haitian relief efforts may send a check made payable to DFA Cares Foundation (including a notation indicating “Haitian Relief Donation”) to: DFA Cares Foundation, c/o Ron Hilmes, 10220 N. Ambassador Drive, Kansas City, MO 64153.

The DFA Cares Foundation is a nonprofit charitable organization established by DFA to provide disaster relief and assistance to the dairy community and the community at large. The Foundation also oversees DFA’s scholarship program.

DCI Cheese Co., Richfield, Wis., donated $45,000 to the American Red Cross. This donation represents a $100 contribution made on behalf of each of the company’s 450 associates. DCI Cheese is the largest importer and marketer of specialty cheeses and other restaurant-quality prepared foods in the United States.

• In conjunction with the National Milk Producers Federation, Cooperatives Working Together (CWT) donated $100,000 to the American Red Cross. Cooperatives contributing to CWT include the following organizations:

Agri-Mark Inc.

Arkansas Dairy Cooperative Association

California Dairies Inc.

Conesus Milk Producers Cooperative

Continental Dairy Products, Inc.

Cooperative Milk Producers Association, Inc.

Cortland Bulk Milk Producers Cooperative

Dairy Farmers of America

Dairylea Cooperative Inc.

Empire Keystone Cooperative

Farmers Cooperative Creamery

Foremost Farms USA

Jefferson Bulk Milk Cooperative

Just Jersey Cooperative, Inc.

Land O’ Lakes, Inc.

Lone Star Milk Producers

Lowville Producers Dairy Cooperative Inc.

Manitowoc Milk Producers Cooperative

Maryland & Virginia Milk Producers Cooperative Association

Massachusetts Cooperative Milk Producers Federation Inc.

Michigan Milk Producers Association

Mount Joy Farmers Cooperative Association

National Farmers Organization

Northwest Dairy Association

Oneida-Madison Milk Producers Cooperative

Preble Cooperative

St. Albans Cooperative Creamery, Inc.

Schoharie County Cooperative Dairies

Select Milk Producers, Inc.

Snake River Dairyman Association Inc.

South New Berlin Milk Cooperative, Inc.

United Dairy Cooperative Services, Inc.

United Dairymen of Arizona

Upstate Niagara Cooperative, Inc.

Western Tier Milk Producers Cooperative

Zia Milk Producers

December, total 2009 milk production down

December milk production in the 23 major states totaled 14.6 billion lbs., down 0.8% from December 2008.  November revised production, at 14.0 billion lbs., was down 0.8% from November  2008. The November revision represented an increase of 24 million lbs. or 0.2% from last month’s  preliminary production estimate.

The number of milk cows on farms in the 23 major states was 8.31 million head, 206,000 head less than  December 2008, and unchanged from November 2009. Production per cow in the 23 major states averaged 1,758 lbs. for December, 29 lbs. more than December  2008.

Total U.S. milk production in December was estimated at 15.8 billion lbs., down 0.9% from December 2008. Total U.S. cows were estimated at 9.1 million head, 252,000 head less than  December 2008, and down 3,000 from November 2009. Production per cow was estimated at  1,735 lbs. for December, 32 lbs. more than December  2008.

October-December milk production down 1.0%

Milk production in the U.S. during the October-December quarter totaled 46.2 billion lbs., down 1.0%  from the same period in 2008.  The average number of milk cows in the U.S. during the quarter was 9.09 million head, 243,000 head less than the same period last year.

Preliminary annual milk production lower

With December’s preliminary estimates, 2009 milk production in the 23 major dairy states totaled 185.3 billion lbs., 0.3% less than 2008. There were an average of 8.4 million cows in those states in 2009, about 86,000 fewer than 2008; milk production per cow increased 141 lbs, to average 20,845 lbs. on 2009.

With December’s preliminary estimates, 2009 total U.S. milk production was estimated at 189.3 billion lbs., 0.4% less than 2008. There were an average of 9.2 million cows in 2009, 115,000 fewer than 2008; milk production per cow increased 186 lbs, to average 20,582 lbs. on 2009.

Hilmar Cheese expansion in Phase II at Dalhart, Texas

DALHART, TX.  January 14, 2010. Builders, welders and electricians are busy as Hilmar Cheese Company, and its division, Hilmar Ingredients, lift walls into place as part of the Phase II project at its Dalhart, Texas, facility.

Hilmar Cheese Co. is investing another $100 million in its Dalhart, Texas facility. The expansion includes additional milk storage capacity, natural American-style cheese production lines and expands Hilmar’s line of innovative and functional whey products.

Hilmar Cheese Co. is investing another $100 million in its Dalhart, Texas facility. The expansion includes additional milk storage capacity, natural American-style cheese production lines and expands Hilmar’s line of innovative and functional whey products.

Hilmar Cheese Company is investing another $100 million in the facility, bringing the total investment to more than $200 million. The expansion includes additional milk storage capacity, natural American-style cheese production lines and expands Hilmar’s line of innovative and highly functional whey products.

“Ultimately, the addition will give us the ability to double capacity in Texas,” explained John Jeter, CEO and President of Hilmar Cheese Company.  “We are installing emerging technology to increase our ability to meet our customers’ changing needs.”

Hilmar Cheese Company, Dalhart, is located in the Texas Panhandle. Texas’ positive business climate, reliable regulatory environment and central location have created a booming dairy region. More than 25 growing dairies provide a high quality milk supply to Hilmar Cheese Company.

“Thanks to the hard work and dedication of our employees, the Dalhart facility is a tremendous success,” explained David Ahlem, Dalhart site manager. “We will be hiring and training an additional fifty people to join our team this year.”

The expansion will be commissioned in late 2010.

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Founded in 1984 by twelve Central California dairy families who owned Jersey cows, Hilmar Cheese Company has grown to include a second manufacturing site in Dalhart, Texas. Hilmar Ingredients, created in 2004, is the company’s whey protein and lactose products division. Still privately held, the total organization employs almost 1,000. Hilmar Cheese Company is committed to continuous improvement and innovation. The Company’s mission is to produce high quality products within a framework of environmental sustainability.  In addition to caring for its customers and the environment, Hilmar Cheese Company is committed to improving the communities in which it operates through support for education, community activities and food bank programs.

‘Fuel Up to Play 60’ campaign grows

USDA has joined a campaign to fight and defeat childhood obesity in cooperation with the NFL, National Dairy Council, multiple health organizations and several major corporations. The campaign, known as Fuel Up to Play 60, is funded with an initial private sector financial commitment of $250 million over five years by America’s dairy farmers. Funding is expected to grow as government, business, communities and families join this effort to improve nutrient-rich food choices and achieve 60 minutes of physical activity each day among children. More than 58,000, or 60 percent, of the nation’s 96,000 private and public schools are currently enrolled in Fuel Up to Play 60.

It is possible that today’s children could become the first American generation with a shorter life expectancy than their parents.[1] One-third of American children are overweight or obese.[2] The obesity prevalence is about three to four times that of just one generation ago, according to the Centers for Disease Control and Prevention.2,[3]

“Today is a significant milestone in the fight against childhood obesity because this unprecedented partnership will help educate our youth about steps they can and should take to lead healthy lives,” said Agriculture Secretary Tom Vilsack. “Increasing access to more nutrient-rich foods and physical activity in America’s schools is no simple task, and will require the combined effort of private and public interests. Partnerships like these, combined with a strong reauthorization of the Child Nutrition Programs, can make a significant difference in our battle against childhood obesity.”

Vilsack joined Roger Goodell, NFL Commissioner, and Tom Gallagher, CEO of Dairy Management Inc., the managing organization for National Dairy Council, at a New York City public school to support and promote the initiative. Other speakers included: Eric Goldstein, Chief Executive Officer, Nutrition and Transportation, New York City Department of Education; Dr. David Satcher, Action for Healthy Kids founding chair and 16th U.S. Surgeon General; and Maurice Jones-Drew, #32 running back for the Jacksonville Jaguars. Also attending the event were leaders from Action for Healthy Kids, American Academy of Family Physicians, American Academy of Pediatrics, American Dietetic Association, National Hispanic Medical Association, National Medical Association and School Nutrition Association, and hundreds of students from Central Park East Middle School in New York City.

As an initial step, these partners will work together to promote and expand Fuel Up to Play 60. Based on the 2005 Dietary Guidelines for Americans, the program empowers students in grades 4 through 10 to engage their peers to “fuel up” with nutrient-rich foods they often lack – particularly low-fat and fat-free milk and milk products, fruits, vegetables and whole grains – and “get up and play” with 60 minutes of daily physical activity. Components, developed for and by youth – such as program curriculum, in-school promotional materials, a Web site and youth social media partnerships – are customizable and non-prescriptive. The program’s design allows youth and schools to determine which tools and resources best help schools meet local youth wellness goals and school wellness policies. Partner-supported school grants will help schools make long-term healthy changes.

Fuel Up to Play 60 also gives leaders in health, business, government and communities nationwide the opportunity to be a part of a movement that relies on participation, collaboration and action by youth and adults to help develop and maintain healthy habits to last a lifetime.

The program taps the power of the NFL and its teams, players and physical activity programming to add recognition and value for students. National Dairy Council’s trusted school relationships are crucial in sustaining the program. All 32 NFL teams are participating in the program through local dairy councils and schools in their respective markets.

“The National Football League is strongly committed to helping the next generation of youth achieve healthier lifestyles. In 2007, we launched NFL PLAY 60 to encourage kids to get active and play 60 minutes a day. We are excited that Fuel Up to Play 60 extends that message to include healthy eating,” said NFL Commissioner Roger Goodell. “Through Fuel Up to Play 60, we want young people to discover that healthy habits can be both fun and empowering.”

“For nearly 100 years, child nutrition research and education has been a major commitment for dairy farm families and a cornerstone of National Dairy Council,” Gallagher said. “Fuel Up to Play 60 realizes our commitment to child health and sustaining the future. It will continue to expand in the coming years through bold leadership and new partnerships with organizations and industry leaders that no single organization could achieve alone.”

By giving students both a voice and a valuable role in shaping the future of their generation, National Dairy Council, the NFL and USDA are providing concrete opportunities for children to lead real change in the fight against childhood obesity. Fuel Up to Play 60 also gives leaders in health, business, government and communities nationwide an opportunity to be a part of a movement that relies on participation, collaboration and action by youth and adults alike to help youth develop and maintain healthy habits to last a lifetime.

Player participation for the event was scheduled by NFL Players.  More information about Fuel Up to Play 60 is available at FuelUpToPlay60.com.

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About Fuel Up to Play 60

Fuel Up to Play 60 is a youth-led social marketing initiative designed to help prevent childhood obesity and help youth develop life-long healthy eating and daily physical activity habits. As part of the program, student teams work with adult leaders in each school to make kid-appealing, good-tasting, nutrient-rich foods more available. They also create opportunities for daily physical activity, such as noon walking clubs and after-school sports and dance clubs. Fuel Up to Play 60 encourages kids to get involved and make changes that will help make their schools healthier places. The program reaches youth directly and engages their help in leading and inspiring their friends.  The United States Department of Agriculture, NFL and National Dairy Council are partners in the program, and it is further supported by several health and nutrition organizations: Action for Healthy Kids, American Academy of Family Physicians, American Academy of Pediatrics, American Dietetic Association, National Hispanic Medical Association, National Medical Association and School Nutrition Association.  Visit www.FuelUpToPlay60.com to learn more.

About National Dairy Council

National Dairy Council® (NDC) is the nutrition research, education and communications arm of Dairy Management Inc™. On behalf of U.S. dairy farmers, NDC provides science-based nutrition information to, and in collaboration with, a variety of stakeholders committed to fostering a healthier society, including health professionals, educators, school nutrition directors, academia, industry, consumers and media. Established in 1915, NDC is dedicated to educating the public on the health benefits of consuming milk and milk products throughout a person’s lifespan. For more information, visit www.nationaldairycouncil.org.

About NFL PLAY 60

Designed to help tackle childhood obesity, NFL PLAY 60 brings together the NFL’s long-standing commitment to health and fitness with partner organizations like the National Dairy Council. NFL’s PLAY 60 is also implemented locally, as part of the NFL’s in-school, after-school and team-based programs. For more information, visit www.NFLRush.com. © 2009 NFL Properties LLC. All NFL-related trademarks are trademarks of the National Football League.

USDA is an equal opportunity provider, employer and lender. To file a complaint of discrimination, write: USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW, Washington, DC 20250-9410 or call (800) 795-3272 (voice), or (202) 720-6382 (TDD).

[1] Kluger, J. How America’s children packed on the pounds. TIME, June 23, 2008; 68.

[2] Ogden, CL, Carroll, MD, Flegal, KM. High body mass index for age among US children and adolescents, 2003-2006. Journal of the American Medical Association. 2008; 299 (20): 2401-2405.

[3]Centers for Disease Control and Prevention, National Center for Health Statistics, 2006, Prevalence of Overweight Among Children and Adolescents: United States, 2003-2004.

What milk components can tell you about your herd

The milk check not only provides a lot of information about your herd’s production, components and quality counts, but also gives you insight to monitor health and nutrition.

Butterfat

Healthy butterfat levels can be achieved with the right balance of forages and concentrates in the diet. When rumen bugs break down forage, they produce volatile fatty acids (VFAs). One VFA, butyrate, is used to synthesize half of the fat destined for the udder, which means high-quality forages can dictate butterfat levels.

Low butterfat (<3.0%)

Rations high in energy from grain concentrates often cause low butterfat levels. These feeds bypass the rumen quickly and provide minimal nutrients for the rumen microbes. Adding forage to the ration can slow feeds from quickly passing through the rumen and allow for proper and complete breakdown by rumen bugs to boost VFA levels.

Very high butterfat (>4.0%)

High butterfat levels are often seen shortly after freshening, which can be a sign of ketosis. While this is common in early lactation, monitor this group closely to ensure milk fat levels decline to normal level—between 3.5% and 4.0%—and production levels increase. This shows cows are using energy from the diet, rather than fat reserves, to meet production levels.

Protein

The right balance of ration protein and energy is needed to ensure optimal milk protein levels. A fully functioning rumen with a thriving microbial population can provide the essential amino acids and energy needed for enhanced protein production.

Low milk protein (<2.8%)

Rumen bugs convert dietary protein to bacterial protein, which is the primary source of essential amino acids for the cow. Once converted, these amino acids can be used by the mammary gland to produce milk protein. Energy is needed to complete this process and without the proper levels of energy, amino acids are used as the energy source. This can reduce the supply of amino acids for milk protein synthesis.

In some cases, supplemental amino acids are needed to complement those produced by the cow.

Butterfat: Protein Ratio

In a healthy cow butterfat levels should always be higher than milk protein. If this ratio is inverted, meaning the percentage of milk protein is greater than that of butterfat, the most common cause is rumen acidosis.

The next time you get your milk check, evaluate butterfat and protein levels to ensure your herd is performing optimally and receiving nutrients needed to meet production potential. Work with your nutritionist to maintain and boost component levels, ensuring rumen health is optimized to allow you to reap the greatest component benefits.

Source: Dr. Elliot Block, Senior Manager of Technology, Arm & Hammer Animal Nutrition. For more information, visit www.ahdairy.com.


Vilsack names Dairy Industry Advisory Committee members

Vilsack names Dairy Industry Advisory Committee members
U.S. Ag Secretary Tom Vilsack announced the appointment of 17 members to a federal Dairy Industry Advisory Committee. Over the next two years, the committee will review the issues of farm milk price volatility, dairy farmer profitability and consolidation, and offer suggestions on ways USDA can best address the needs of a struggling dairy industry. It is not limited to federal milk marketing issues.
The advisory committee will review farm milk price volatility and dairy farmer profitability and provide suggestions and ideas to Vilsack on how USDA can best address these issues to meet the dairy industry’s needs.
Representatives, nominated last fall, include: producers and producer organizations, processors and processor organizations, handlers, consumers, academia, retailers, and state agencies involved in organic and non-organic dairy at the local, regional, national, and international levels.
Producer members appointed to the committee are: Erick Coolidge (Pa.), Timothy den Dulk (Mich.), Debora Erb (N.H.), James Goodman (Wis.), James Krahn, (Ore.), Edward Maltby (Mass.), Manuel Souza (Calif.), Ed Welch (Minn.), and James Williams (Ga.).
Representatives from the processing industry include: Jay Bryant (Va.), Patricia Stroup (Calif.), Sue Taylor (Colo.), and Robert Wills. (Wis.).
Members representing state government, retail, academia and consumers are: Rodney Nilsestuen (Wis.), Robert Schupper (Pa.), Andrew Novakovic (N.Y.), and Paul Bourbeau (Vt.).
All members will serve two-year terms, beginning in January 2010, and expiring Jan. 1, 2012. The committee was expanded this year from 15 members to 17 and will hold its first meeting in early 2010. The meeting will be open to the public and USDA encourages public participation.
For additional information check the Dairy Industry Advisory Committee website, http://www.ams.usda.gov/AMSv1.0/DairyAdvisoryCommittee.
Dairy Industry Advisory Committee
Name State Business
Paul Bourbeau VT Paboco Farms, Inc.
Jay Bryant VA Maryland and Virginia Milk Producers Cooperative Association
Erick Coolidge PA Le-Ma-Ra Farm
Timothy Den Dulk MI den Dulk Dairy Farm, LLC
Debora Erb NH Springvale Farms/Landaff Creamery, LLC
James Goodman WI Northwood Farm
James Krahn OR Oregon Dairy Farmers Association
Edward Maltby MA Northeast Organic Dairy Producers Alliance
Rodney Nilsestuen WI Wisconsin Department of Agriculture, Trade and Consumer Protection
Andrew Novakovic NY Cornell University
Robert Schupper PA Giant Food Stores
Manuel Souza CA Mel-Delin Dairy
Patricia Stroup CA Nestle
Sue Taylor CO Leprino Foods Company, Inc.
Edward Welch MN Associated Milk Producers Inc.
James Williams GA Williams Dairy Trucking, Inc.
Robert Wills WI Cedar Grove Cheese Inc.

U.S. Ag Secretary Tom Vilsack announced the appointment of 17 members to a federal Dairy Industry Advisory Committee. Over the next two years, the committee will review the issues of farm milk price volatility, dairy farmer profitability and consolidation, and offer suggestions on ways USDA can best address the needs of a struggling dairy industry. It is not limited to federal milk marketing issues.

Representatives, nominated last fall, include: producers and producer organizations, processors and processor organizations, handlers, consumers, academia, retailers, and state agencies involved in organic and non-organic dairy at the local, regional, national, and international levels.

Producer members appointed to the committee are: Erick Coolidge (Pa.), Timothy den Dulk (Mich.), Debora Erb (N.H.), James Goodman (Wis.), James Krahn, (Ore.), Edward Maltby (Mass.), Manuel Souza (Calif.), Ed Welch (Minn.), and James Williams (Ga.).

Representatives from the processing industry include: Jay Bryant (Va.), Patricia Stroup (Calif.), Sue Taylor (Colo.), and Robert Wills. (Wis.).

Members representing state government, retail, academia and consumers are: Rodney Nilsestuen (Wis.), Robert Schupper (Pa.), Andrew Novakovic (N.Y.), and Paul Bourbeau (Vt.).

All members will serve two-year terms, beginning in January 2010, and expiring Jan. 1, 2012. The committee was expanded this year from 15 members to 17 and will hold its first meeting in early 2010. The meeting will be open to the public and USDA encourages public participation.

For additional information check the Dairy Industry Advisory Committee website, http://www.ams.usda.gov/AMSv1.0/DairyAdvisoryCommittee.

Dairy Industry Advisory Committee

Name State Business

Paul Bourbeau VT Paboco Farms, Inc.

Jay Bryant VA Maryland and Virginia Milk Producers Cooperative Association

Erick Coolidge PA Le-Ma-Ra Farm

Timothy Den Dulk MI den Dulk Dairy Farm, LLC

Debora Erb NH Springvale Farms/Landaff Creamery, LLC

James Goodman WI Northwood Farm

James Krahn OR Oregon Dairy Farmers Association

Edward Maltby MA Northeast Organic Dairy Producers Alliance

Rodney Nilsestuen WI Wisconsin Department of Agriculture, Trade and Consumer Protection

Andrew Novakovic NY Cornell University

Robert Schupper PA Giant Food Stores

Manuel Souza CA Mel-Delin Dairy

Patricia Stroup CA Nestle

Sue Taylor CO Leprino Foods Company, Inc.

Edward Welch MN Associated Milk Producers Inc.

James Williams GA Williams Dairy Trucking, Inc.

Robert Wills WI Cedar Grove Cheese Inc.

Checkoff partnerships and innovation helped grow sales in 2009

By Tom Gallagher

In a year of economic turmoil for the dairy industry, your investment in the dairy checkoff helped drive sales through targeted partnerships and innovation in 2009. The dairy checkoff took immediate action to help increase demand for and sales of U.S. dairy products by adjusting more than $35 million to further focus on immediate- and long-term sales.

These efforts, aligned with long-term strategies to grow sales, worked with and through the dairy and food industries to extend producers’ investment. As a result, dairy checkoff efforts – along with low retail prices – helped drive between 2.5 and 3.5 billion pounds of additional milk sales in 2009. Examples include:

• Partnering to create a “Legend.” Dairy producers began a partnership with Domino’s Pizza® to help revitalize the pizza category and build cheese sales. In February, Domino’s introduced its American Legends™ pizzas, which are six specialty pizzas that use up to 40 percent more cheese than the chain’s traditional pizzas. Domino’s invested four to five times the amount dairy producers invested, and due to the success of the specialty pizzas other chains are increasing cheese on their pizza offerings as well.


• Reformulating school pizza. National and local dairy checkoff organizations are working with industry partners to create a school pizza that will meet increasingly restrictive school nutrition guidelines, while also meeting kids’ taste preferences. School pizza is the most popular entrée in schools, and therefore is an important priority for growing long-term sales.

Growing dairy sales at McDonald’s®. As part of a multi-year partnership between dairy producers and McDonald’s, the chain launched its McCafe® specialty coffee offerings – which use up to 80 percent milk – in its 14,000 restaurants across the country. McDonald’s also launched its Third Pounder Angus Burgers, three new burger options with two slices of cheese per sandwich, resulting in additional 6 million pounds of cheese sold.

• Creating new opportunities for lactose-free milk. Dairy producers partnered with milk processor HP Hood® and its Lactaid® brand to make innovative milk products available to the nearly one in four Americans who have either left or are at risk of leaving the milk category due to actual or perceived lactose intolerance. Bringing these lapsed consumers back to milk could require an additional 2.5 to 5 billion additional pounds of milk each year.

• Bringing new products to new locations at retail. Dairy producers worked with General Mills Yoplait® brand to develop a new line of frozen fruit and yogurt smoothies that use an innovative yogurt chip technology and require 8 ounces of milk. In 2009, General Mills rolled out the smoothies at grocery stores across the country – and for the first time featuring the yogurt chips in the frozen foods section. The company said the new yogurt smoothies were among its most successful product tests ever.

• Growing ingredient sales at foodservice. The dairy checkoff worked with Starbucks® Coffee Company to build U.S. dairy ingredient sales with the help of a third flavor in the Vivanno™ Smoothie line, which uses whey protein and fluid milk. In all, these smoothies account for more than 3.7 million pounds of whey protein and 550 million pounds of fluid milk annually.

• Maintaining momentum for single-serve milk. Dairy checkoff staff continues to work with individual processors, schools and foodservice chains to ensure that consumers have the fluid milk products they want, when and where they want it. Today, more than 70,000 restaurants across the country and 11,000 schools offer white and flavored milk in single-serve, plastic, resealable bottles.

• Focusing on dairy health and wellness. The National Dairy Council®, the nutrition education and research arm of the dairy checkoff, maintains and grows support for dairy’s nutrition and health benefits by working with health and marketplace leaders. The “Fuel Up to Play 60” program, a partnership among dairy producers, the U.S. Department of Agriculture and the National Football League® , helps combat childhood obesity by encouraging schools to implement physical activity and good nutrition, including dairy.

• Fostering industry collaboration. In 2009, the Innovation Center for U.S. Dairy (established by dairy producers through their checkoff) brought industry leaders together to develop action plans, which are aligned with dairy producer priorities. The Innovation Center, which focuses on health and wellness, product development and information, sustainability, consumer confidence, and globalization, has brought together more than 180 companies and nearly 400 individuals to protect and grow sales.

• Strengthening global markets. Dairy producers, through the U.S. Dairy Export Council® (USDEC) continue to help protect global markets for U.S. dairy. Despite the global economic recession, more than 9 percent of U.S. milk production was exported (through October 2009).

• Enhancing dairy farmer image. In 2009, national and local dairy checkoff organizations helped recruit thousands of dairy producers to tell their story to the public. Dairy checkoff staff developed and enhanced training workshops that help dairy producers and allied industry communicate on on-farm issues, including animal car and environmental stewardship, through community relations, presentations to local organizations, one-on-one communications, and social media.

          Despite ongoing challenges, the U.S. dairy industry’s future is bright. By engaging industry partners, leveraging dairy’s health and wellness benefits and fostering industry innovation, we can grow sales.

          Tom Gallagher is chief executive officer of Dairy Management Inc. (DMI), the domestic and international planning and management organization that works to increase sales of and demand for U.S.-produced dairy products and ingredients on behalf of America’s dairy producers. For more information on dairy checkoff programs, visit www.dairycheckoff.com.


          Dairying in a flatter, globalized world

          By Tom Suber

          Dairy producers enter a new year and decade with no shortage of challenges. Perhaps topping the list: dealing with an increasingly globalized playing field.

          The proportion of our milk supply sold overseas is close to double what it was a decade ago. But that’s just part of the story. Globalization affects everyone in the supply chain, from cow to consumer, according to a new report titled “The Impact of Globalization on the U.S. Dairy Industry: Threats, Opportunities and Implications.” The study was conducted by the Innovation Center for U.S. Dairy, with support from Bain & Co., an internationally recognized management consulting firm.

          “Global dairy trade has undergone a significant transformation,” the report said. “The dairy industry is an increasingly integrated network of markets and suppliers. The confluence of increased demand for dairy products in non-producing regions, reduced trade barriers, improved production, processing and logistics capabilities of suppliers, and emergence of global dairy companies has led to increasing levels of global dairy trade from an unprecedented number of sources. Although the majority of dairy is consumed locally or regionally as fluid milk – leading to relatively thinly traded global markets focused mainly on ingredients – increased global trade nonetheless has influenced the dynamics of domestic markets in dairy producing regions.”

          As we saw in 2009, even if you don’t directly export, the survival of your business can be heavily influenced by economics, weather conditions and policy decisions on the other side of the world.

          One problem, the Globalization report concluded, is the American dairy industry is not set up to accommodate a global market. Structural constraints, many of which took hold decades ago when the world was a very different place, get in the way. Major challenges cited include severe price volatility, market-distorting price mechanisms and, generally speaking, insufficient customer focus, leading to narrow product ranges, fickle customer service and inconsistent product quality.

          Don’t expect a return to the “good ol’ days.” In a globalized dairy world, “supply and demand imbalances will drive continued volatility,” impacting domestic and international players in the United States.

          What can the U.S. industry do about it? More of the same is an option, but not a good one. “Maintaining the status-quo will likely result in a weakened U.S. industry,” the report said, characterized by limited growth opportunities, continued volatility and erosion of U.S. competitiveness both here and abroad.

          Instead, the industry would be better served by strengthening specific competitive weaknesses and developing a “consistent exporter” strategy. To do this, the industry must transition from production-centric to customer-centric.

          Armed with this analysis, the Innovation Center board, made up of 32 CEOs, general managers and chairs from all industry segments, is addressing the structural barriers that prevent the industry from being customer-centric. It identified priorities, developed a focused plan and created a Globalization Operating Team. Groups are moving forward with plans to engineer policy, promotion and innovation adjustments better suited to accommodate a globalized competitive landscape.

          Potential changes are aimed at improving suppliers’ commercial focus, developing capabilities to deliver on customer product specifications. Other initiatives will help suppliers address crippling price volatility, with new mechanisms for risk management. There could be reform of the current pricing regime as well, with many taking a look at whether the support program and classified pricing system impede global competitiveness.

          Change always creates new challenges, but “a ‘do-nothing’ strategy is both insufficient and dangerous to the health of the sector,” the Globalization report said. “The underlying trends that are likely to create a global demand gap in dairy run deeper than today’s business cycle and are broader than current U.S. dairy policy,” it concludes.

          FYI

          Tom Suber is president of the U.S. Dairy Export Council. Contact him via e-mail: tsuber@usdec.org or visit www.usdec.org.

          USDA, IRS to partner on farm payment eligibility data

          Agriculture Secretary Tom Vilsack announced USDA is partnering with the Internal Revenue Service to reduce fraud in farm programs and streamlining payment limits for family farmers. The actions are intended to strengthen the integrity and defensibility of USDA farm safety net programs and help the agricultural industry to meet requirements included in the 2008 Farm Bill.

          “Today’s announcement will ensure that the producers who depend upon the safety net of USDA programs will have future access to these programs by enhancing the overall integrity of the programs,” said Vilsack. “It will also provide more flexibility for family farm operations across the country.”

          As part of the announcement, USDA finalized a Memorandum of Understanding with the Internal Revenue Service to establish an electronic information exchange process for verifying compliance with the adjusted gross income provisions for programs administered by USDA’s FSA and Natural Resources Conservation Service. This agreement will ensure payments are not issued to producers whose adjusted gross income (AGI) exceeds certain limits. The limits set in the 2008 Farm Bill are $500,000 nonfarm average AGI for commodity and disaster programs; $750,000 farm average AGI for direct payments; and $1 million nonfarm average AGI for conservation programs.

          The electronic process USDA developed with IRS reviews data from tax returns, performs a series of calculations, and compares these values to the AGI limitations from the 2008 Farm Bill FSA and NRCS will receive a record that indicates whether or not the program participant appears to meet the income limits. Written consent will be required from each producer or payment recipient for this process. No actual tax data will be included in the report that IRS sends to USDA. As part of the review and evaluation process, participants whose AGI may exceed the limits will be offered an opportunity to provide third-party verification or other information to validate their income.

          Meanwhile, beginning with the 2010 program year, USDA amended the rules that govern  requirements to be ‘actively engaged’ in farming. These rules apply to eligibility for payments under the Direct and Counter-cyclical Program (DCP) or Average Crop Revenue Election (ACRE) program administered by the USDA Farm Service Agency (FSA).

          USDA has implemented the following change to permit certain operations, most often family-run operations, to meet ‘actively engaged’ in farming requirements under less restrictive rules.

          Every stockholder or member of a legal entity, such as a corporation, does not have to contribute labor or management if both of the following apply:

          • at least half of the interest in the legal entity is held by stockholders or members who are providing active personal labor or active personal management that altogether qualifies as a significant contribution to the farming operation;
          • the total direct payments received, both directly and indirectly, by the legal entity and each of the members does not exceed $40,000.

          Organic MOOMilkCo formed in Maine

          After many months of organization and planning, Maine’s Own Organic Milk Company (MOOMilkCo) is a reality. The 10 organic dairy farms – previously dropped by H.P. Hood – have joined with Maine Farm Bureau and the Maine Organic Farmers and Gardeners Association (MOFGA) to form a limited liability corporation. Support was provided by the Maine Department of Agriculture.

          Production is expected to begin at the first of 2010. Schoppee Milk Transport will truck milk to Smiling Hill Dairy, Westbrook, where it will be processed and packaged in half-gallon paper cartons under the MOOMilkCo label, which will include use of Farm Bureau’s “Maine Produces” logo. The milk will be homogenized and pasteurized, not ultra-pasteurized, and sold in retail grocery stores in Maine and New Hampshire, available in whole, 2%, 1% and skim. Other products may be added later.

          Oakhurst and Crown O’ Maine Organic Cooperative will distribute the product. Hannaford, Associated Growers and a number of natural food stores have agreed to stock it, and sales negotiations are in process with Shaw’s and Wal-Mart.

          When fully operational, the farms will be paid an advance price of $24/cwt. a week after they ship the milk. Farms will receive an additional payment the month following shipment after all expenses have been paid. The short-term goal is to have the two payments total $30/cwt, with a long-term goal of $40/cwt. In all, 90% of company profits will go directly to the farms as payment for their milk. The remaining 10% will be retained for expansion, maintenance and balancing cash flow.

          What will make this possible is the fact that the farms are part owners of the company – and thus owners of the milk from the time it is produced until the time the consumer buys the product. The farms will self-balance, and will be responsible for returns of unsold product through reductions in the company’s profits. The farms collectively own 45% of the voting units of the company and elect three of the seven board members. An additional 45% will be owned by investors now being sought to provide half-a-million-dollars in equity. Farm Bureau and MOFGA will each own 0.5%; 4% will be owned by the three-person team – all Farm Bureau members – who formulated and executed the development plan; and 5% is being withheld for future employee performance incentives.

          The business model was common in earlier times, when individual farms bottled and sold their own milk. What makes this project different is that 10 farms are working together in all aspects of the company management.

          MOOMilkCo is not a cooperative. In a cooperative, the members pool their production and attempt to maximize the profits of the cooperative, sometimes at the expense of the individual members. In MOOMilkCo’s case, the goal is to provide a stable and profitable market for the individual farms, with the company maintaining only a fraction of the profits. The goal is to use the company to make the farms profitable.

          Currently, while final agreements and production renovations are being completed, the 10 farms are being picked up by Schoppee Milk Transport and trucked to Oakhurst Dairy in Portland, where the milk is being processed with Oakhurst’s conventional production. Oakhurst will pay MOOMilkCo the conventional federal-order-based price for the milk. Using a start-up grant from Stoneyfield Farms, MOOMilkCo will pay the farms the difference between the $24/cwt. contract floor and the conventional price.

          Technically the company is incorporated as an L3C company — a legal name for a low-profit, limited liability corporation, but one which is eligible to receive grants and endowments in the same way as can a cooperative or non-profit. Because the Maine Legislature has not yet approved L3Cs, the company incorporated in Vermont to obtain L3C status. It then registered in Maine as Maine’s Own Organic Milk Company, L3C, LLC. The three-person development team who put the project together is Agricultural Consultant Bill Eldridge of Bar Harbor; Farm Bureau Aroostook County staffer Rommy Haines; and David Bright, a member of the Farm Bureau Marketing Committee.

          The board of directors includes Eldridge, chair; and farmers Vaughn Chase of Mapleton, Aaron Bell of Edmunds, and Richard Lary of Clinton. Haines, Bright, and Russell Libby, executive director of MOFGA, are serving as interim board members until the investor pool is established. At that point, the investors may elect three board members. Once the company is up and running, and operations stabilized, a search for a permanent general manager to replace Bill will commence. Attorney Paul Dillon of Corinth and Accountant George Richardson of Auburn have been retained to provide legal and financial assistance. Both work with many farm clients.

          For more information, visit http://MainesOwnOrganicMilkCompany.com.

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