Digest highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

USDEC, NMPF seek retaliatory tariffs on Canada

The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) have called on the U.S. government to levy retaliatory tariffs on Canada for failing to meet dairy market access obligations under the U.S.-Mexico-Canada Agreement (USMCA).

In January, a USMCA dispute resolution panel found that Canada’s dairy tariff-rate quotas (TRQs) system violated the terms of USMCA. A revised Canada TRQ proposal, issued in March, was rejected by the U.S. organizations.

This month, Canada announced policies affecting dairy TRQs for 2022-23, but in statements released by USDEC and NMPF, the U.S. organizations said the latest announcement gave no indication that Canada intends to comply with its USMCA commitments on dairy TRQs.

“Unfortunately, Canada simply refuses to institute real reform, and such actions must have consequences,” said Krysta Harden, president and CEO of USDEC. “Retaliatory tariffs are both fair and necessary in this circumstance, as clearly provided for by USMCA.”

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“Canada made a clear choice to thumb its nose at both the United States government and its international treaty obligations. It has completely disregarded the USMCA agreement signed just a few short years ago,” said Jim Mulhern, president and CEO of NMPF. “That decision demands retaliatory action by the U.S. government. Otherwise, our trade agreements will be seen as toothless before the ink is dry.”

Spring hay inventories mixed

With a new harvest season getting underway, hay inventories stored on U.S. farms as of May 1 were about 7% lower than a year ago. The situation was somewhat better among major dairy states, where hay inventories were up 2% from May 1, 2021, according to the USDA’s Crop Production report, released May 12.

As of May 1, 2022, all hay stored on U.S. farms was estimated at 16.8 million tons, down 1.24 million tons from the same date a year ago and the smallest inventory since May 1, 2019.

Among the 24 major dairy states, on-farm hay inventories on May 1 were estimated at 9.76 million tons, up 199,000 tons from May 1, 2021.

However, there was a wide variation among individual dairy states: South Dakota hay inventories were down 1.1 million tons compared to a year earlier. In contrast, inventories were larger in Texas (+400,000 tons), Colorado (+350,000 tons), Iowa (+290,000 tons) and New York (+260,000 tons).

Among other major hay-producing states, inventories were down 520,000 tons in Montana and 430,000 tons in North Dakota.

U.S. hay disappearance, a proxy for use, totaled 62.2 million tons for the period of Dec. 1, 2021, to May 1, 2022, down 6% from the same period a year earlier.

March fluid sales lower

Here’s an update on U.S. fluid milk sales data from the USDA Agricultural Marketing Service for March 2022.

  • Total sales: Sales of packaged fluid milk products totaled about 3.79 billion pounds, down about 3.4% from the same month a year earlier. At 11.08 billion pounds, year-to-date (January-March 2022) sales of all fluid products were down 2.7%.
  • Conventional products: Monthly sales totaled 3.54 billion pounds, down 3.3% from the same month a year earlier. Year-to-date sales totaled 10.35 billion pounds, down 2.5% from January-March 2021.
  • Organic products: Monthly sales totaled 253 million pounds, down 4.3% from a year earlier. At 724 million pounds, year-to-date (January-March 2022) sales of all fluid products were down 4.6%. Organic represented about 6.6% total fluid product sales in March and year to date.

The U.S. figures are based on consumption of fluid milk products in Federal Milk Marketing Order (FMMO) areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

Regulatory overreach? SEC extends climate disclosure rule comment period

The U.S. Securities and Exchange Commission’s (SEC) has extended the comment period on a proposed rule some fear will subject farmers to additional environmental and sustainability regulations.

As proposed in March, “The Enhancement and Standardization of Climate Related Disclosures for Investors” rule mandates extensive climate disclosures by public companies, including disclosure of direct and indirect greenhouse gas emissions for their entire supply chain.

While farmers and ranchers would not be required to report directly to the SEC, they provide almost every raw product that goes into the food supply chain. The American Farm Bureau Federation (AFBF) has expressed concern over the 510-page rule could lead to increased costs, legal liabilities and privacy concerns for farmers. For farmers to stay compliant with the companies that purchase their products downstream, this could mean producers will need to track and disclose on-farm data regarding individual operations and day-to-day activities.

Read: Overreach of SEC proposed climate rule could hurt agriculture.

The comment period, which was scheduled to close on May 20, has been extended until June 17.

Dairy Defined: U.S. well-positioned to serve the globe

As its competitors move to constrain – if not roll back – their own dairy production, U.S. dairy producers are well-positioned to become the preferred supplier to growing international dairy markets, two top dairy economists said in a recent NMPF Dairy Defined podcast.

New Zealand and the European Union, the main U.S. competitors on global dairy markets, aren’t as focused on sustainably feeding the world as the U.S., said William Loux, vice president of global economic affairs for the U.S. Dairy Export Council.

“You see countries like the Netherlands driving programs to reduce dairy cows by 30 percent,” he said. “That's not really necessarily in the spirit of, ‘Hey, there's a globe right now that is demanding dairy products. How do we do that sustainably?’ which I think is the U.S. perspective. So as we go forward, the U.S. really should be the one to capture this global dairy demand as we increase our exports overall.”

Loux is joined in the podcast by Stephen Cain, director of economic research and analysis at NMPF. Cain detailed current trade challenges U.S. producers face, including continued supply chain difficulties involving China.

“We're still having some issues getting product out of the West Coast of the United States, but a growing issue that's taken place over the last six weeks has really been the buildup and the backlog into Chinese ports, especially outside Shanghai,” Cain said. “COVID-induced lockdowns throughout the region have grown in number and intensity and the amount of people that are being locked down. That's effectively shut down some of these ports.”

Chobani donates $1 million to Idaho research dairy

Chobani announced a $1 million gift to the University of Idaho-led Center for Agriculture, Food and the Environment (Idaho CAFE) to help fund construction of a large research dairy.

Located in Idaho’s Magic Valley, Idaho CAFE spans three counties with a 2,000-cow research dairy and 640-acre demonstration farm in Rupert, a public outreach and education center in Jerome, and collaborative food science efforts developed in partnership with the College of Southern Idaho in Twin Falls.

University of Idaho will break ground in June on the first construction phase of the $22.5 million research dairy, which includes facilities to house the milking and nutrient management operations. Plans call for completion of the first phase of construction in 2023, when University of Idaho will begin milking cows at the Rupert location. The research dairy will be operated like a commercial farm and will host a variety of ongoing research experiments managed by University of Idaho faculty and staff.

New York program seeks dairy innovation for Gen Z

The New York State Department of Agriculture and Markets, the New York Dairy Promotion Order (DPO) Advisory Board and VentureFuel announced this year’s MilkLaunch startup competition.

MilkLaunch will encourage entrepreneurs, startups or existing companies to introduce new dairy products that specifically target Gen Z consumers (ages 10 to 23 years old), with a focus on sustainability.

The competition offers over $200,000 in awards, including $10,000 stipends for up to six finalists to perfect their product via lab time, consumer insights, research and mentorships. The grand prize of $150,000 will be used to accelerate the winners of the competition to get to market and drive dairy sales.

The competition is intended for early stage products ranging from ideas to existing new products. Products must contain at least 50% fluid dairy milk, have sales of less than $250,000, and the winners must commit that all milk will be sourced from New York producers for at least 12 months. Entries are open to dairy farms, processors, producers, entrepreneurs, academics and others.

The deadline to apply is June 15. Competition rules and application documents are available here.

USDA ‘climate-smart’ commodity program update

With the first round of funding through the USDA’s new  Partnerships for Climate-Smart Commodities program receiving over 450 proposals, the agency has opened a second round of applications through June 10.

The first round of applications came from more than 350 groups and included large-scale proposals ranging from $5 million to $100 million each. Over the next few months, the USDA will evaluate the applications, with funding awards anticipated later this summer.

The second funding pool is accepting proposals from $250,000 to $4.9 million that emphasize the enrollment of small and/or underserved producers, and/or monitoring, reporting and verification activities developed at minority-serving institutions.

Information on how to apply, frequently asked questions and additional information is available here.