Digest Highlights

Poll shows consumers want FDA to end misleading ‘milk’ labels

New national survey data finds that consumers – by a nearly 3-1 margin – want the FDA to enforce existing regulations and prohibit nondairy beverage companies from using the term “milk” on their product labels. FDA is soliciting public comment regarding front-of-package dairy labeling regulations through Jan. 28. (Read: FDA extends plant-based label comment period, summarized in the Nov. 19, 2018, Progressive Dairyman Extra enewsletter.)

Natzke dave
Editor / Progressive Dairy

The national survey was commissioned by the National Milk Producers Federation (NMPF) and conducted by IPSOS, a global market research and consulting firm. Survey results indicated 61 percent of consumers believe FDA should restrict nondairy beverage companies from using the term “milk” on their product labels. Only 23 percent said FDA should not limit the term “milk” to dairy products, while 16 percent were uncertain.

“Consumers have spoken, and they are clear in their desire for FDA to enforce its own rules,” NMPF President and CEO Jim Mulhern. “FDA must listen to their voice and end deceptive labeling by plant-based beverage manufacturers.”

Dairy proponents contend plant-based beverage brands regularly exploit lax label regulatory enforcement regarding the use of “milk,” and that consumers are widely misinformed by mislabeling.

An August 2018 survey by IPSOS showed that 73 percent of consumers erroneously believe that almond-based drinks had as much or more protein per serving than milk. In a separate poll, released in October 2018 by the International Food Information Council Foundation, found one-quarter of consumers either thought almond drinks contained cow’s milk or weren’t sure.


Newton: Take a look at Dairy Margin Coverage program

Once (if) the government shutdown ends, the USDA implementation of 2018 Farm Bill dairy provisions will begin in earnest. John Newton, chief economist with the American Farm Bureau Federation (AFBF), urges dairy producers to review the farm bill dairy safety net program and other tools to prepare to make risk management decisions.

In his Market Intel blog, “Reviewing Dairy Margin Coverage: Revamped Dairy Program is Worth a Second Look,” Newton summaries the Dairy Margin Coverage (DMC) program. He also analyzes how the program would have performed under dairy and feed price conditions had it been implemented in 2018.

“The improvements made in DMC would have provided much-needed financial support to dairy farmers during the recent downturn in the dairy economy,” Newton said. At Tier 1/$9.50 per hundredweight (cwt) margin coverage, monthly net benefits under DMC would have averaged more than $1 per cwt, he detailed.

Current projections are for milk income over feed cost margins to remain below $9.50 per cwt through November 2019, making DMC worth looking at in conjunction with other risk management tools.

Court rules against Iowa ‘ag gag’ law

There’s been another court ruling striking down a state law attempting to protect farmers from anti-animal agriculture activists. (Read: Ag gag litigation update, by Tiffany Dowell Lashmet, assistant professor and extension specialist with Texas A&M.)

On Jan. 9, the U.S. District Court for the Southern District of Iowa struck down a so-called “ag gag” law in Iowa, ruling a ban on undercover investigations violates the First Amendment.

The Iowa law, passed in 2012, criminalized “agricultural production facility fraud,” making it illegal to obtain access to an ag operation by false pretenses or making false statement on employment applications with the intent to take action not allowed by the employer, including obtaining video or photographs.

Plaintiffs in the lawsuit included the Animal Legal Defense Fund, Iowa Citizens for Community Improvement, Bailing Out Benji, People for the Ethical Treatment of Animals (PETA) and the Center for Food Safety.

ECONOMICS: Northwest dairy profitability to remain a struggle

Dairy farmers in the Northwest will struggle with profitability over the next 12 months, according to the latest Northwest Farm Credit Service dairy market snapshot. Futures markets suggest unprofitable prices through the first half of 2019, with increasing prices into the third quarter. There’s more optimism for Class IV milk prices, as butter and milk powder inventories are forecast to shrink.

Mild fall and early winter weather was favorable for milk production in the region (covering Idaho, Oregon and Washington), with November 2018 production up 4.3 compared to November 2017. The rate of growth was substantially stronger than the national average of 0.8 percent. Year over year, Idaho and Washington cow numbers grew, while Oregon remained stable.

According to the report, Idaho milk producers continue to report a surplus of about 2 million pounds of milk per day. One company has plans to construct a processing facility in the Magic Valley, but the construction timeline has not been released and is not likely to help in the short term.

With projections showing milk supplies will remain surplus for the first half of 2019, the report goes on to say processors in Idaho and Washington have announced the potential enforcement of milk production quotas, implementing penalties of $1 to $2 per cwt for any production over base levels.

While dairies are reducing heifer-raising costs and extracting additional value from calves by breeding to beef semen, there are worries the resulting crossbred calves could flood the beef market.

2018 a solid year for farm equipment sales

Commodity prices and farm income may have been down, but U.S. tractor and combine sales closed out 2018 stronger, according to the Association of Equipment Manufacturers (AEM).

  • Sales of self-propelled combines totaled 616 in December, up 30 percent from December 2017; total 2018 sales rose to 4,849, an 18 percent increase over 2017.

  • December sales of four-wheel-drive tractors were down 9 percent from a year earlier at 257. However, full-year 2018 sales in this category hit 2,741, up 13 percent from 2017.

  • Overall, December 2018 U.S. sales of two-wheel-drive tractors grew about 6 percent to 18,085. Total sales of two-wheel-drive tractors for 2018 hit 233,115, up 7 percent from the year before. Tractors under 40 horsepower showed the biggest growth in sales, up 9 percent on the year to almost 155,000. Sales of two-wheel-drive tractors in the 100-plus-horsepower category grew 5.5 percent in 2018 to 17,958.

Weather, trade tariffs impact crop inputs

Farmers and chemical crop input suppliers will feel the impact of last fall’s wet weather and ongoing trade/tariff wars when they hit the fields this spring, according to the Northwest Farm Credit Services (FCS) quarterly report.

Inclement weather and a slow harvest across the Midwest negatively impacted fall fertilizer applications, meaning more fertilizer will be applied in a tighter window this spring. Amid fieldwork delays, urea and phosphate prices weakened slightly. In contrast, potash prices moved higher on tighter supplies. With demand simply delayed, fertilizer prices are widely expected to move higher when spring applications begin. Nitrogen fertilizer prices will also be supported by the expectation of higher corn acres in 2019.

Crop protection products were impacted by a 10 percent retaliatory trade tariff imposed by China (the active ingredients in dicamba, glyphosate and glufosinate were exempt). With the U.S. and China negotiators working on a new trade agreement, the countries declared a truce in additional tariff increases, allowing some U.S. importers to build inventories at the lower tariff rate.

However, unless an agreement is reached, that truce on tariffs is scheduled to expire on March 15, 2019, triggering another 25 percent hike. In this scenario, importers would likely seek out alternative suppliers in other countries, shift imports to exempted active ingredients or attempt to raise prices to buyers down the supply chain, according to the Northwest FCS report.

INDUSTRY: Chobani launches nondairy, plant-based products

Chobani became the latest dairy product manufacturer to announce it has created a nondairy, plant-based product line.

Starting this month, Chobani is offering nine new “Non-Dairy Chobani” cultured organic coconut products in single-serve “cups” and drinks, according to the company’s press release. The products will contain probiotics, no lactose, and less sugar than other nondairy brands, be available in several flavors, and be nationwide at grocery and retail stores.

FirstEnergy Foundation grant aids ‘Fill a Glass with Hope’ milk program

The FirstEnergy Foundation has donated $25,000 to support Fill a Glass with Hope, a Pennsylvania charitable fresh milk program. The grant was presented Jan. 9, in conjunction with the Pennsylvania Farm Show.

Since it began in 2015, Fill a Glass with Hope has helped Pennsylvania’s food banks provide more than 10 million servings of milk to needy families across the state. The program is a partnership between Feeding Pennsylvania, the American Dairy Association Northeast and the Pennsylvania Dairymen’s Association.

The 2019 Fill a Glass with Hope campaign kicked off with a ceremony during the Pennsylvania Farm Show held in Harrisburg, Pennsylvania.

STATES: Hawaii’s Big Island Dairy to cease operations

Big Island Dairy will stop milking cows no later than Feb. 28 and cease all operations by April 30 under a consent decree approved in the U.S. District Court for the District of Hawaii.

The decree settles a lawsuit filed in 2017 by nonprofit organizations Kupale Ookala and the Center for Food Safety, alleging Big Island Dairy LLC was guilty of violating the federal Clean Water Act.

In addition to site cleanup, the schedule includes the incremental removal of about 2,700 mature cows and 2,975 youngstock, according to court documents. Big Island Dairy may explore the possibility of selling its assets at the site to a buyer that may undertake dairying and milk processing in accordance with its own permits and regulatory approvals.

Under the agreement, plaintiffs will not pursue further civil action against the dairy farm’s owners, due to the potential insolvency of Big Island Dairy as it winds down dairying operations. However, Big Island Dairy must pay the plaintiffs’ attorneys’ fees and costs in the amount of $450,000. The Hawaii Department of Health (HDOH) will retain oversight and the right to inspect the facility during the closure, and assess any civil penalties.

Idaho dairy safety program earns nationwide recognition

Idaho dairy farmers are pioneering a new program to educate and train employees on workplace safety and awareness.

Ryan DeWit joined the Idaho Dairymen's Association (IDA) in 2017 to develop and implement an on-farm training program dairy farm owners can apply with their employees. The training, which is done in person in Spanish or English, is provided on iPads to provide individual pace and learning.

"This training program is meant to give employees knowledge and information to help them not only do their jobs in a safe way, but to identify possible safety issues and address them proactively," DeWit said.

Some of the key elements of the training program include:

  • General safety awareness around the dairy
  • Understanding animal behavior and safe animal handling
  • Understanding safety regulations and recordkeeping for management
  • Promoting personal safety and proactive measures to prevent injury
  • The program was developed in collaboration with New Mexico State University Dairy Extension Specialist Dr. Robert Hagevoort and University of Texas School of Public Health Associate Professor Dr. David Douphrate. Hagevoort founded the U.S. Dairy Education and Training Consortium.

NMPF has partnered with IDA to create safety resources for dairy producers as part of the FARM Program. NMPF created a video featuring the worker safety and training program as it was implemented on Moo-Riah Dairy in Melba, Idaho.

"One accident on a farm is one too many," Idaho Dairymen's Association CEO Rick Naerebout said. "We strongly believe this program will give dairy owners and their employees the knowledge and awareness to take proactive steps to reduce the likelihood of an injury and give consumers confidence their food is being produced in a responsible way by dairy farmers who care about their employees and their animals."

Vermont offers dairy education program grants

The Vermont Agency of Agriculture, Food & Markets (VAAFM) is seeking proposals from qualified organizations or individuals for the Dairy Education in School Communities (DESC) initiative. This program utilizes support from the Vermont Dairy Promotion Council to enhance dairy-related educational programming and fostering a stronger connection between Vermont dairy farmers and students in pre-K through 12th grade.

Proposals must be submitted via email by Jan. 22. Two grants are available:

  • A $10,000 grant is available for the selected proposal to research and develop recommendations for dairy education and career development programming to serve Vermont students in grades 7-12. The organization submitting the selected proposal will be under contract from February 2019 to October 2019.

  • A $25,000 grant is available for the selected proposal to deliver support services, technical assistance and professional development for Vermont educators to provide dairy-related education to students in pre-K through 6th grades from February 2019 to December 2019.

New Hampshire proposal would create state label, dairy fund

Proposed legislation would create a Dairy Premium Fund in New Hampshire, generated from sales of milk bearing the “New Hampshire’s Own” label.

As written, a surcharge on milk carrying the “New Hampshire’s Own” label would be collected by processors and sent to the state ag department. A portion of the premiums – restricted to that produced on New Hampshire farms – would be distributed quarterly to the state’s farmers participating in the program.

The proposal, HB 476-FN, came from the New Hampshire Department of Agriculture, Markets and Food. Proponents say the label and premium would allow New Hampshire consumers to support local dairy farmers.

Iowa land values post modest decline

Impacted by lower commodity prices, higher interest rates and trade disruptions, the value of Iowa farmland declined for the fourth time in five years, according to an annual statewide survey. However, despite the decline, farmers don’t need to worry about a sudden collapse of the U.S. agricultural sector similar to the 1980s farm crisis, the author of a report summarizing survey results said.

The average statewide value of an acre of farmland is now estimated to be $7,264. This represents a modest decrease of 0.8 percent, or $62 per acre, from the 2017 estimate. The estimate represents a statewide average of low-, medium-, and high-quality farmland. The survey also reports values for each land quality type, crop reporting district (district hereafter) and all 99 counties individually.

In nominal value, the statewide average for an acre of farmland has fallen 17 percent since 2013.

“Limited land supply and strong demand by farmers still seems to hold up the land market,” said Wendong Zhang, assistant professor of economics at Iowa State University, who led the annual survey. “For five consecutive years, survey respondents have reported fewer sales than the year before, and the ag economy is still robust with 82 percent of the land in Iowa fully paid for.”

Land values were determined by the 2018 Iowa State University Land Value Survey, conducted in November by the Center for Agricultural and Rural Development (CARD) at Iowa State University and Iowa State University Extension and Outreach. CARD offers a web portal that includes charts and interactive county maps, allowing users to examine land value trends over time at the county, district, and state level.

Interest rates move higher in Dallas Federal Reserve District

The 11th Federal Reserve District released results of its fourth-quarter 2018 lender survey, indicating interest rates continue to move higher. The Dallas district covers all of Texas and portions of New Mexico and Louisiana.

Within the district, fourth-quarter 2018 interest rates on variable-rate loans are now the highest since 2008, led by feeder cattle, operating and intermediate loans, all near 6.7 percent; interest rates on variable-rate real estate loans averaged 6.3 percent.

Interest rates on fixed-rate loans are the highest since 2011, topped by operating loans at 6.95 percent. Interest rates on fixed-rate real estate loans averaged nearly 6.6 percent.

In addition to higher interest rates, bankers indicated continued tightening of credit standards.

Lenders said overall demand for agricultural loans decreased for a 13th consecutive quarter. Relative to other loan types, dairy loan volume showed the largest decline compared to a year earlier, followed by loans for machinery and feeder cattle.

District cropland values ticked up during the quarter, while ranchland values declined. Texas nominal cropland and ranchland values increased year over year. Southern New Mexico lenders responding to the survey indicated an increase in irrigated cropland and ranchland values, but a decline in dryland values.

Pacific Northwest ag land values stable

Northwest agricultural real estate values remained stable in 2018, but lower commodity prices, lower net income and higher interest rates are concerning factors in land purchase decisions in 2019, according to the latest Northwest FCS Land Values Market Snapshot.

As in previous quarters, agricultural property listings generally remained low for a fourth consecutive year, with many transactions occurring between landlords and tenants. Reports indicated strong investor interest for high-quality land. As a result, irrigated and dry cropland values are strong despite lower prices for some crops.

In Washington, sale prices for irrigated land classes remained stable. In Oregon, the supply of good-quality agricultural properties remains limited, and most purchases were made by agricultural producers interested in expansion.

In Idaho, competition for good agricultural parcels was strong. In Montana, real estate sales volume decreased, but values remained stable to strong. Anecdotal evidence suggests slightly declining rental rates. Two years of dry conditions and lower commodity prices in eastern Montana could result in more lender-encouraged sales in 2019.  end mark

Dave Natzke