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CapitalPress.com
Friday, June 11, 2021
Dairy
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Expert: Dairy export
challenges plentiful
By CAROL RYAN DUMAS
Capital Press
It’s been a challenging
year in the dairy industry,
and preserving and grow-
ing access to foreign mar-
kets is key to keeping it on
an even keel.
Unfortunately, the chal-
lenges are always plentiful,
said Shawna Morris, senior
vice president of trade for
the National Milk Produc-
ers Federation.
“One of the big chal-
lenges our exporters are
dealing with has been the
crisis through some of our
ports,” she said during
the latest “Dairy Defi ned”
podcast.
The shipping backlog
and higher costs have had
a signifi cant impact that’s
beginning to show up in
trade fl ows, she said.
There’s always a host of
diff erent challenges export-
ing into various markets,
such as Canada playing
games with its U.S.-Mexi-
co-Canada agreement com-
mitments, she said.
“On a couple of other
fronts, we’re working to
preserve access into key
markets such as Mexico
and the European Union as
they’ve gone through var-
ious regulatory changes,”
she said.
The European Union has
rewritten all of its import
certifi cates that need to
accompany dairy, meat
and other products as they
arrive at European ports.
National Milk has worked
extensively with the U.S.
Dairy Export Council and
the U.S. government to
navigate that issue and
press for more time from
Europe and more fl exibil-
ity to avoid trade disrup-
tion, she said.
“On the Mexican side,
what we’ve really been
contending with has been
a huge surge in regulatory
changes across a number of
diff erent dairy products,”
she said.
One example is Mexi-
co’s proposed cheese con-
formity assessment to
ensure exporters are com-
plying with Mexico’s
cheese stan-
dard
and
regulation.
National
Milk sup-
ports mak-
ing
sure
Shawna
people are
Morris
complying
with cheese
standards, but Mexico has
been proposing a process
that is onerous, costly and
complicated, she said.
One of the biggest issues
on the radar for National
Milk and the Dairy Export
Council is simply the drum
beat about the importance
of pursuing new market
opportunity. The USMCA
is a piece of that, she said.
“We want to make sure
the market opportunities
we got in that agreement
just last year, we maxi-
mize. But it’s a big wide
world out there,” she said.
The dairy groups have
been encouraging the
administration to resume
and move forward with
negotiations on a free-trade
agreement with the United
Kingdom. It’s a really big
dairy importing market, but
virtually all of its imports
come from the European
Union, she said.
“European Union has
much lower non-tariff hur-
dles compared to us and
has essentially an open
door on tariff s, so we’re at
a huge disadvantage. Clos-
ing that gap could open up
a lot of opportunity there,”
she said.
The other area of focus
on free-trade agreements is
Asia, she said.
“Europe and New Zea-
land have been just going
to town in terms of pursu-
ing negotiations with a lot
of the countries through-
out that region and that’s
an area where, in particu-
lar, we’re sliding backward
by simply standing still,”
she said.
A big piece of what the
groups are emphasizing to
the administration is that
the U.S. dairy industry
needs to be in these mar-
kets to make progress and
even to maintain its current
position, she said.
Federal judge tosses out lawsuit
to overturn raw butter prohibition
By MATEUSZ PERKOWSKI
Capital Press
A federal judge has
rejected a lawsuit that sought
to overturn the U.S. Food
and Drug Administration’s
pasteurization requirement
for butter sold in interstate
commerce.
Last year, organic dairy
producer Mark McAfee fi led
a lawsuit challenging the
FDA’s prohibition against
interstate raw butter sales
with the help of the Farm-
to-Consumer Legal Defense
Fund nonprofi t.
The complaint’s allega-
tion that FDA’s rule is sci-
entifi cally arbitrary “com-
pletely misses the mark”
while its legal arguments
against the regulation are
“baseless,” according to U.S.
District Judge Rudolph Con-
treras in Washington, D.C.
“Not only does the pas-
teurization requirement fi t
well within the federal gov-
Capital Press File
Mark McAfee of Organic Pastures Dairy Farms in Fres-
no, Calif., has lost a lawsuit seeking to overturn the
federal prohibition against interstate sales of raw
butter.
ernment’s broad power to
combat the spread of infec-
tious diseases, but there is
also a great deal of scien-
tifi c research showing that
pasteurization is eff ective at
doing so,” Contreras said.
Though heating milk to
kill bacteria was pioneered
in the 1860s, pasteurization
didn’t become popular in the
U.S. until the early 1950s, he
said. The federal government
encouraged the practice but
only began requiring pasteur-
ization for milk in 1987 and
other dairy products in 1992
for interstate sale.
The plaintiff s claimed that
low levels of pathogens don’t
cause illness and pasteuri-
zation can’t eliminate them
all anyway, so FDA’s rule
is arbitrary in violation of
administrative law, the judge
said.
However, the “rare possi-
bility” that pasteurized dairy
products will still be contam-
inated with bacteria “does
not mean pasteurization is
useless,” Contreras said. “At
bottom, there is little doubt
that pasteurization minimizes
the ‘documented risks’ posed
by pathogens in dairy prod-
ucts like butter. The FDA
thus reasonably concluded
that requiring pasteurization
would ‘result in some benefi t
to the public health.’”
The government has also
adequately backed up its
rationale with studies and
data that tied unpasteurized
butter to disease outbreaks,
the judge said. The FDA is
owed a high level of defer-
ence in making such scien-
tifi c decisions.
Economist warns of milk oversupply
By CAROL RYAN DUMAS
Capital Press
The world is emerging
from the COVID-19 pan-
demic, and that’s good news
for dairy demand.
Global economic growth
is forecast at 6% year over
year in 2021 and 4.4% in
2022. In the U.S., that growth
rate is expected to be 6.4%
this year followed by 3.5%
in 2022.
“In general, growth both
domestically and internation-
ally is good for demand for
ag exports from the United
States and dairy exports in
particular,” Marin Bozic, an
economist with the Univer-
sity of Minnesota, said in a
webinar sponsored by North-
west Farm Credit Services.
In addition, U.S. food-
service demand is returning,
and aggressive government
stimulus in the U.S. in 2020
increased personal income,
he said.
Not surprisingly, that gov-
ernment stimulus has resulted
in more milk
production,
he said.
“ We ’ v e
actually
been seeing
some quite
Marin Bozic impressive,
and I should
maybe even say concern-
ing, growth rates in 2021,”
he said.
U.S. milk production is
showing growth rates of 3%
year over year, and that is not
sustainable unless the growth
is export-driven, he said.
“The number of (dairy)
cows in the United States is
the highest it has been since
1994 … and we don’t see the
stopping signs yet,” he said.
“I think that a lesson
learned from the previous
two decades is that you don’t
get away from consequences
of rapid herd growth,” he
said.
Despite economic growth,
the increase in foodservice
demand and all the recovery,
dairy farmers’ bullishness is
concerning, he said.
“People are expanding.
They are well positioned to
expand fi nancially, and we
usually end up, you know,
eating our shoe 12 to 24
months later whenever we
have such booming optimism
in the industry,” he said.
In this case, feed costs
will curb milk production
from what it would be oth-
erwise. But there’s still likely
to be oversupply given the
herd size and protection for
smaller producers under
the Dairy Margin Coverage
program.
He’s expecting the pro-
gram to pay between $2 and
$3 per hundredweight this
year on milk protected at
the $9.50 per hundredweight
margin, he said.
That means dairies with
about 200 cows or less,
whose annual milk produc-
tion qualifi es for lower pro-
gram premiums, can be very
profi table because they’re
not buying all their feed on
the open market, he said.
That entire channel that
was a relief valve in previous
times of oversupply won’t
be under pressure to exit if
there’s oversupply and milk
prices decline,” he said.
So it’s the dairies with 500
cows or more that are going
to have to carry the burden,
he said.
“The good news is that we
still have exports,” he said.
Oversupply would lower
U.S. product prices, and a
good part of the oversupply
burden would be borne by
U.S. competitors, he said.
“So we’ll be able to
export our oversupply, if you
will, to some extent — but I
wouldn’t bet my farm on it,”
he said.
Larger dairies that can
only protect a small portion
of their milk under Dairy
Margin Coverage need to
have a risk-management plan
in place, he said.
“The traditional relief
valve will not be there or at
least it will be muted this
time around,” he said.
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