Friday, August 21, 2020
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Lawmakers
urge
enforcement
of USMCA
dairy
provisions
By CAROL RYAN DUMAS
Capital Press
A bipartisan coalition of
104 House members is call-
ing on the Trump adminis-
tration to hold Canada and
Mexico to their commit-
ments on dairy trade in the
new U.S.-Mexico-Canada
Agreement.
In a letter to U.S. Trade
representative Robert Ligh-
thizer and USDA Secretary
Sonny Perdue, the lawmak-
ers urged the administration
to swiftly use consultation
and enforcement measures
to ensure Canada and Mex-
ico deliver on all their obli-
gations related to dairy
products.
The effort was led by
House Agriculture Commit-
tee Chairman Collin Peter-
son, D-Minn., and Reps.
Ron Kind, D-Wis.; Tom
Reed, R-N.Y.; Glenn “GT”
Thompson, R-Pa.; Anthony
Brindisi, D-N.Y.; Russ Ful-
cher, R-Idaho; Xochitl Torres
Small, D.-N.M; and Anthony
Gonzalez, R-Ohio.
Of specific concern are
Canada’s administration of
dairy tariff rate quotas and
elimination of its Class 6 and
7 dairy pricing programs and
Mexico’s compliance to mar-
ket access for U.S. cheeses
with common names.
Those concerns have been
raised by the U.S. Dairy
Export Council and National
Milk Producers Federation
even before USMCA was
implemented.
In
June,
Canada
announced TRQ allocations
that appear to run counter to
several USMCA provisions,
Shawna Morris, vice presi-
dent for trade for both orga-
nizations, told Capital Press
in July.
The TRQ are “overly
tilted toward Canadian pro-
cessors who in many cases
have a disincentive to import
competing product, particu-
larly higher value products,”
she said.
For example, 80% to 85%
of the quantities for all the
dairy TRQ have been granted
to Canadian processors, leav-
ing a small amount for dis-
tributors and cutting out
retailers who have the stron-
gest incentives to purchase
U.S. product, she said.
The Class 6 and 7 pricing
programs artificially lower
prices for Canada’s domestic
milk ingredients to domes-
tic processors to discourage
imported ingredients.
As for Mexico, the U.S.
industry wants to be sure it
abides by its commitments
to protect access for U.S.
cheeses with common food
names, such as parmesan.
Two USMCA side letters
established new protections
for those products to com-
bat efforts by the EU to seize
exclusive use of common
names in the Mexican market.
Strong demand for U.S.
dairy abroad drives economic
growth and creates jobs in the
U.S., Tom Vilsack, president
and CEO of USDEC, said in
a press release following the
congressmen’s letter to the
administration.
“USMCA is designed to
allow the U.S. industry to ful-
fill this demand from two of
our largest dairy customers,
and we cannot allow Canada
or Mexico to undermine the
important gains secured in
this trade deal,” he said.
USMCA represents new
opportunities for dairy farm-
ers and processors after years
of rural recession and the new
challenges of the current cri-
sis, Jim Mulhern, NMPF
president and CEO, said.
“We must utilize USM-
CA’s enforcement mecha-
nisms to bring home its hard-
fought wins for America’s
dairy farmers,” he said.
If implemented as nego-
tiated, the International
Trade Commission estimates
USMCA will increase U.S.
dairy exports by more than
$314 million annually.
Dairy
Farm Bureau proposes milk pricing reform
By CAROL RYAN DUMAS
Capital Press
The American Farm Bureau
Federation is leading the charge
to improve dairy policy and
milk-pricing provisions to give
producers a stronger voice and
more equitable position in the fed-
eral order system.
The process started early in
2019 when Farm Bureau dele-
gates requested the formation of
a grassroots task force to examine
the Federal Milk Marketing Order
system and develop recommenda-
tions to modernize it.
Delegates approved those rec-
ommendations in early 2020 and
planned to release the proposals
in March. But the COVID-19 pan-
demic took priority, and the release
was delayed until just recently.
“We were finally able to come
back up for air,” John Newton,
AFBF’s chief economist, said.
While the effort preceded the
pandemic, “the volatility we’ve
seen in cheese prices has brought
Carol Ryan Dumas/Capital Press File
Jersey cows look up from their
feed on the Ballard Dairy in
Gooding, Idaho.
renewed attention to reform in fed-
eral orders,” he said.
The recommendations address
a few high-level issues, including
the voting process in federal orders
and price discovery, he said.
Farm Bureau’s policy supports
a voice and a vote for dairy farm-
ers during federal order rulemak-
ing, he said.
Currently,
only
indepen-
dent dairy farmers are allowed to
cast individual ballots. Cooper-
atives can allow their members
to vote independently, but they
lose their ability to bloc vote on
behalf of their non-participating
members.
Farm Bureau supports allow-
ing modified bloc voting, which
would allow cooperative members
to vote individually while allow-
ing cooperatives to cast ballots for
producers who choose not to cast
an individual vote.
The recommendations also
include enhancing price dis-
covery. Current milk pricing is
based on survey prices for four
dairy commodities — cheddar
cheese, butter, nonfat dry milk
and dry whey. But many products
and ingredients aren’t surveyed,
he said.
USDA data reveals less than
10% of the milk solids produced in
the U.S. are included in the survey.
Expanding price discovery to
more products would bring a bet-
ter understanding of what the
value of milk truly is, he said.
That can be done within the cur-
rent surveyed commodities, such
as changing specifications to get
more cheddar cheese in the sur-
vey, or expanding outside the cur-
rent survey to include such prod-
ucts as mozzarella cheese, he said.
Other recommendations are
aimed at better risk sharing
between producers and processors,
he said.
One issue in that arena is make
allowances, which are meant to
cover processors’ manufacturing
costs and effectively come out of
the milk payment to producers.
They are currently fixed by milk
class across federal orders and
represent about $4 billion a year,
he said.
“Having a fixed processing cost
doesn’t reflect the different types
of operations out there or encour-
age efficiency,” he said.
Dairy farmers say processors
“are always trying to find a way
to cut costs to be profitable, yet
the plants have a guaranteed make
allowance,” he said.
Darigold moves forward with strategic plan
By CAROL RYAN DUMAS
Capital Press
Darigold will build a
large-scale global ingredi-
ents plant as part of its long-
term strategic plan, the com-
pany announced.
“We are still in the early
stages of planning for this
new plant,” Erin Byrne,
Darigold leader of corporate
communications, told Capi-
tal Press.
The selection of the loca-
tion for the plant is ongo-
ing and will be announced
in 2021 along with more
specifics about the intended
final products for commer-
cialization, she said.
Without knowing the
location and intended prod-
ucts, Darigold can’t share an
exact investment number,
but it will be substantial, she
said.
“It will be the co-op’s
Darigold
Darigold has announced plans to build a new ingre-
dients plant and expand its warehouse space, among
other changes.
largest capital project to
date, and we are very excited
to get to work,” she said.
Darigold is also mak-
ing sweeping changes in its
leadership structure as part
of its strategic plan. The
changes announced include
leadership transitions, new
hires, acquiring additional
warehouse capacity and cap-
ital investments.
Grant Kadavy, Darigold
COO, will transition to chief
growth and risk officer. He
will spearhead the effort to
launch the new plant and
integrate new products, ser-
vices and processes into the
rest of the company’s net-
work and
functions.
Duane
Naluai,
Darigold
senior vice
president
and leader
Duane
of consumer
Naluai
products,
has been promoted to pres-
ident of consumer products.
The company has also
hired Joe Coote as president
of global ingredients, a new
position. He has 28 years of
experience including more
than 11 years with Fonterra,
a globally recognized leader
in the dairy business. He led
large commercial organiza-
tions as part of Fonterra’s
senior team.
“Joe will be instrumental
in leading the development
and execution of our global
ingredients business,” Stan
Ryan, president and CEO
of Darigold, said in a press
release.
The company has also
hired Matthew Sagendorf
to lead the construction and
start-up of the ingredients
plant. He has more than 20
years of experience in engi-
neering and growth projects
and has managed projects at
companies such as Conagra
and Kraft Foods.
Darigold is continuing
to search for a new head of
engineering to partner on
designing the new plant and
to lead other engineering
projects. It hopes to com-
plete that search this fall.
The company is also
streamlining its international
distribution capabilities to
complement
production
investments. It has signed
a lease for about 284,000
square feet of warehouse
space in a planned develop-
ment near the Port of Seattle.
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