November 13, 2001
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Phone:(703) 243-6111
email:CGalen@nmpf.org
Any celebration or commemoration must be tempered by an acknowledgement of the sobering new reality our country faces in light of what happened two months ago. The events of September 11th have created a “new normal” for all of us. The way we conduct our lives is different now, and will be from here on out. Dairy farmers are great patriots, and I know we all support our President, our military, and our government during this challenging time. I think it's great everyone is displaying the lapel buttons we are distributing for those who make contributions to the Dairy Relief 911 Fund. Please be generous. Your donations will be given to the Red Cross's victim assistance efforts.
What I want to do with my time this morning is provide a brief review of some of the accomplishments of our Federation during the past year. I also want to pose some new challenges to our industry – and the opportunities presented by these challenges. So much has happened in the past two months that it's easy to overlook our own corner of the world. Dairy policy, and trends within the dairy industry, aren't exactly headline-makers right now. But it's important to acknowledge our victories – and illustrate where more work is needed – if we are to build on our track record.
First, let me discuss the development of the 2002 Farm Bill. Jerry Kozak will talk more about this in a moment, but the one thing I must mention is the contrast between how the 2002 Farm Bill is being developed, and how the 1996 Freedom to Farm Act was created. We still have a way to go on the new Farm Bill; the Senate Agriculture Committee is still working on its own version, and anything can happen. There were some controversial elements in the House last month, including the proper level of conservation funding, and even the outline of a completely new dairy pricing system. We'll probably hear more about those during the Senate debate.
But the House is done with its work, and guess what? With the exception of the issue of regional dairy compacts, dairy policy was not a stumbling block. We weren't the problem kids. In fact, our efforts to gain a national consensus on a variety of issues paid off. Other commodities were the controversial items this time around.
Why such a difference between 1996 and now? Because we were able to get our ducks in a row before we were asked to testify before the House Agriculture Committee. And as a result, our recommendations were, by and large, adopted as is. Jerry will discuss in greater detail how this happened, but the bottom line is, by working together – by achieving consensus where possible – we were able to accomplish great things. And that's a tremendous tribute to you, the membership of this UNITED organization.
Now let's look at some of the other priority areas for National Milk in the past year.
In the area of economic policy, we have remained steadfast in our support of measures that boost producer income, even while we steadfastly oppose measures that will erode producer income.
That's why one of our biggest disappointments was when the USDA decided to adjust the price support program's butter/powder tilt, (lowering the support price for powdered milk by ten cents, while raising it for butter). NMPF and other dairy farm organizations had repeatedly asked USDA not to tilt the price support level in a way that would reduce farmer income. This is an issue that affects all farmers, all across the country.
More importantly, it sent a disturbing signal about how the new team at USDA is going to view the operation of the dairy price support program. In response to this action, NMPF members made hundreds of phone calls to the USDA to protest the tilt decision. I think we sent a very clear message about the fact that we can not tolerate decisions that gut the value of our only safety net program.
Another area where National Milk has been very busy this year, is in working with the government to prevent the introduction of foreign animal diseases such as mad cow, and foot and mouth disease. In fact, we prompted the USDA to form a foot and mouth disease, Dairy Working Group, made up of government and industry experts. They are examining a range of issues relating to the foot and mouth virus and how it could impact the U.S. dairy sector. We need to update government regulations on the production, movement and processing of milk, so that in the unlikely event of an FMD outbreak, we have a workable plan in place to deal with the host of challenges such an outbreak would present. We'll have more on that effort tomorrow.
In the area of environmental compliance, NMPF has continued to work with federal regulators as they develop new regulatory standards for the management of animal waste. I'm pleased to let you know that the USDA has recently provided a staff person to work with NMPF in the development of a detailed dairy producer handbook on environmental best management practices. When the handbook is completed next year, it will be a very important tool to help producers understand the variety of practices available to them to address their environmental challenges.
Another area where we have been steadfast is in trade policy. We have opposed any talk of free trade agreements that could undermine U.S. dairy farm interests. Most importantly, we are working very hard to pass legislation creating tariffs on imports of Milk Protein Concentrate and casein. This has been a challenging effort, because we have lots of opposition to this legislation – not just from foreign importers, but also from U.S. dairy processors.
But we must continue our efforts to get this MPC tariff legislation passed. NMPF formed a special coalition called Dairy Producers for Fair Trade, made up of dozens of national and local farm groups. We have worked together to let lawmakers know that the status quo can't stand. Foreign dairy exporters are exploiting a loophole in U.S. trade laws, and flooding our markets with products that our current trade regulations don't even recognize. There can be no talk of free trade, until we have fair trade in dairy products.
I personally want to thank the many Young Cooperators who have risen to the challenge of lobbying their members of Congress on this issue. We had thousands of letters sent to Congress from our YCs. Our “Mission: MPC” will bear fruit if we keep it up.
A related issue – a much broader one – is the need to focus a great deal of effort on analyzing and then dealing with long-term challenges to the integrity of our products. Currently, we have standards of identity for many cheeses, frozen desserts, and related dairy items. These federal standards spell out what can and can't be used to make such products. But those standards are under assault – and we have to be careful about where that may lead us.
Let me give you an example. After two years of attempting to liberalize the cheesemaking standard of identity, the National Cheese Institute finally has agreed not to petition the FDA to allow for dried forms of ultrafiltered milk in the manufacture of standardized cheeses. They had been trying to get the FDA to approve the use of both liquid and dried forms of UF milk. NMPF agreed that liquid forms of filtered milk should be allowed, but we opposed letting dry ingredients also pass muster. By being very clear about what we could and could not support, we were able to get the processors' lobby to back off on their petition to the FDA. As a result, we will not water down the U.S. standard of identity for cheese in a way that would allow imports of MPC to find even more uses.
All of this illustrates a bigger challenge. This victory applies only to cheeses that have a standard of identity – varieties such as Cheddar, Swiss, and Mozzarella. Many other cheeses, and cheese products, don't have standards of identity. Processors can use practically any ingredient they want in these products; in many cases, this includes imported MPC; in some cases, it may include imitation ingredients.
That's why we have to think long and hard about further challenges to the future of our industry. About a month ago, the three chairmen of DMI, USDEC and National Milk sat down with key staff to identify and discuss a number of threats that may displace U.S.-produced milk. As a result, our organizations have created a task force to develop a strategic plan to identify ways to remedy these potential threats. We're calling it the “Dairy SWOT Team” – that's short for Strengths, Weaknesses, Opportunities and Threats. And that's just what we'll be examining: not only the potential threats to the integrity of our industry's products, but also the opportunities we have.
This dairy SWOT team will be made up of NMPF and DMI staff, dairy cooperative experts, and even some outside experts. What they'll do is examine emerging technologies, trends in imports and trade policy, the use of non-dairy ingredients, the challenges to current dairy standards of identity – all of these areas that could impact the use of domestic milk, and obviously, producer prices. The SWOT Team will also develop strategies that will lead to the development of a domestic MPC industry, increase the use of alternative dairy-based ingredients, and re-examine marketing and promotion methods for the products we target.
We are at a critical juncture – we need to embrace new technologies that make our industry more efficient and productive, while maintaining the integrity and quality of our dairy products. We also must be mindful of the impact of these technologies on producer prices. This will be a delicate balancing act, but we must more forward. We can't pretend all these factors don't exist, in the hope they'll go away. We must be proactive, not reactive. This is going to be a multi-year effort, and result in a strategic and concrete plan for action. It will be crucial to shaping the activities of this organization in the future.
One of the things of which I'm most proud is that these efforts, and a lot of other hard, behind-the-scenes work by NMPF, is really helping to unite the producer community. Evidence of this can be found in our growing membership; we had three former members from the upper Midwest rejoin National Milk this spring. We welcome you back, and look forward to your help and input. At this meeting, we have a delegation from the California Dairies Incorporated coop. We also want to welcome you, and we'd like you to play an active role in our proceedings this week. I hope we can look forward to adding your organization to our roster. In fact, NMPF now represents 16 of the 20 largest coops, including 8 of the top 10. At the same time, we have added an additional at-large seat for our small member caucus. It is critically important for NMPF to balance the needs of all of our members, regardless of size or milk volume. I hope our Board continues to operate in a collegial fashion that recognizes we have strength in diversity.
As the number of dairy farmers continues to shrink, we need to work together within NMPF if we are to accomplish sometimes difficult objectives. There is no alternative to cooperation.
In closing, let me thank the efforts of the Board and delegates, the NMPF staff, and all of the support you have given National Milk this past year. We are doing great things for our industry, and we should feel proud of the strength of our industry and your association.
America was founded by farmers. Agriculture today represents a huge portion – as much as 15% - of the national economy. We will do our part to help in this conflict against terrorism, just as farmers have fed soldiers, sailors and diplomats during previous conflicts. What we do matters. There is no more important job in the world than dairy farming – providing nutrition and sustenance to others. Never lose sight of that important fact.
We are experiencing a new era in our nation. Never before have we had to defend our soil in this way, or worry about our personal safety. But I am firmly convinced that we will prevail in the end – if we are strong, and if we cooperate.
As Mark Twain once said, “Courage is resistance to fear, mastery of fear – but not the absence of fear.”
Let's let our courage show. God Bless America.
Thank you.