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IDFA Dairy Forum: Despite challenges, U.S. dairy’s future holds promise, potential

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By Dave Natzke

Despite its challenges, the U.S. dairy industry’s future is full of promise and potential, according to International Dairy Foods Association (IDFA) CEO and president Connie Tipton.  Tipton’s annual address kicked off the 2013 IDFA Dairy Forum, held Jan. 28-30, in Orlando, Fla.

On the heels of the 2012 elections and President Obama’s second inauguration, Tipton noted little had changed politically in Washington, D.C.

“The leadership in both the Senate and the House stayed pretty much the same, as did the profound philosophical gulf between conservatives and liberals on most of the big issues, including how to keep us from tumbling off the so-called fiscal cliff,” she said. “There will be some changes in key cabinet positions. However, although the players may change, don’t expect any major change in policy direction. That likely means more regulations for the food industry coming out of familiar departments and agencies such as USDA, Food & Drug Administration and Federal Trade Commission. That likely means more rules for school meals, more labeling regulations, and possible restrictions on marketing products to children. And the Dietary Guidelines five year update has already begun.”

 

Regulations hurting dairy innovation

“Unfortunately, federal milk pricing regulations, food standards and other dairy laws – some of which date back to the 1930s have not kept pace with the times,” she said. “They are antiquated and still have us in a vise-like grip. They squeeze the life out of product innovation, inflate costs and stifle industry growth both at home and in the global marketplace.”

Tipton said it was time to modernize dairy food standards, many of which were created in the 1970s, that served as roadblocks to innovation.

“Currently there are 97 federal standards of identity for various dairy products out of a total of 262 standards for all foods, including dairy,” Tipton said. “By my math that comes out to a disproportionate 37%. Most of these standards are long past their sell-by dates and need to be pulled from the shelves.

“When these standards were first set, product names were typically the only piece of information available to consumers to help them determine the contents of food packages,” she continued. “But newer laws and regulations have provided modern consumers with access to much more information to guide product choices, including full ingredient and nutrition labeling.

The current formal rulemaking approach required to change dairy standards is cumbersome, inefficient and resource intensive, so the FDA simply throws up its hands and does nothing, Tipton said. In fact, not a single standard has been changed since 1988, a period of 15 years.

“We need clear boundaries,” she said. “But within those boundaries we need the ability to improve our products using 21st century expertise and technology.”

Tipton said IDFA will propose to draft federal legislation that allows meaningful innovation without changing the characterizing ingredients in the food. With such a change, dairy companies could use safe and suitable alternative ingredients and processes and still market their products within the existing dairy food categories that consumers have come to know and recognize.

Another challenge facing the food industry – including dairy – is the push to regulate labels on genetically modified or engineered foods.

“Over the past year, several legislators have encouraged the FDA to require labeling of genetically modified or engineered foods, even though the agency has deemed the products to be safe. At the same time, pressure on the President remains strong as he made a campaign promise in 2007 to support GMO labeling if elected.

While California voters last fall turned down Proposition 37, a ballot initiative requiring labels on foods containing GMO ingredients sold in the state, the drumbeat for GMO labeling has moved to Washington, Vermont, New Mexico, Connecticut and Rhode Island, and even individual cities are pursuing similar ballot initiatives. In addition, Walmart has announced intentions to add GMO ingredient labels to food products, which may force other large retailers to follow that step.

Tipton said the best way to eliminate pressures on GMO labeling campaigns was through consumer education around the benefits of biotechnology and its role in feeding a growing world population in a sustainable manner.

“The United Nations’ Food and Agriculture Organization predicts that global food production will have to increase by 70% by the year 2050 to feed an additional 2.2 billion hungry mouths,” Tipton said. “Although not a solution in and of themselves, GMO crops can certainly play an important role in the war against world hunger. The anti-GMO zealots need to get off their high horses and see what the rest of the world really looks like from the ground up.

The “takeaway” on GMO labeling was that “technology can help marry innovation to new products, but consumers might ask for a divorce if they perceive threats instead of benefits,” she said.

 

Positive trends

The dairy industry is responding to new trends in food and nutrition, Tipton said.

“Lots of Americans are looking for more protein in their diets, especially low-fat sources of protein,” she continued. “Dairy is a naturally good source of protein, including many low-fat and fat-free options: cottage cheese, Greek yogurt, protein-fortified milk. So, look for even more protein claims on dairy products over the next year.”

“2013 might be the year of the ‘lactose-free’ claim,” Tipton said. “While there’s no nutritional reason for most Americans to avoid lactose, if consumers are on the lookout for products with reduced lactose, we have the dairy products to meet their interest. Most cheeses are naturally lower in lactose, while specially formulated lactose-free milks are also available. Years ago, we learned a valuable lesson: one size never fits all. So, we have an incredible variety of dairy products to fit every taste, need and interest.

In addition, Tipton said, dairy had made progress on reducing use of added sugars, and is taking steps to create products that are more convenient.

Citing comments made by Harry Balzer, chief industry analyst at NDP Group, she said yogurt was a poster child for future dairy product consumption growth.

 “If you understand yogurt, you understand what this country wants from its food suppliers,” Tipton said. “It wants a food that satisfies breakfast, lunch, supper; it can be the snack, it can be the main dish or it can be the side dish. You can have what you want, and I can have what I want, and we all have yogurt. And then I think it's good for me. Isn't that what we want?”

She urged dairy product manufacturers to stay attuned to consumer trends regarding healthy eating, aging, affordability and accessibility, and ingredient trends including new colors, flavors and inclusions.

Tipton said more consumers are taking a holistic approach to food purchasing decisions.

“The consumer is not just buying a product because of its taste, ingredients and nutritional composition” she explained. “The consumer is also bringing other factors to bear when making a decision, such as the product’s total impact on the environment. It’s no longer just a carbon footprint, but could also be a water footprint. They want to know if the company employs sustainable practices in its operations and whether it’s socially conscientious, too.”

“We can’t afford to be complacent,” Tipton said. “We can’t afford to be insular. We can’t afford to ignore signs that the old paradigms no longer work. And we can’t afford to stop innovating and building value into our products so consumers will want us as part of their lives and lifestyles . . . today and tomorrow.”

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