This November’s national election was historic. Not only did the Republican candidate, Donald Trump, win the presidency, both the Senate and House held their Republican majority. In rural areas of the country, voters cast ballots by a 3-to-1 margin for President-elect Trump.

Given these election results, political agendas both nationally and internationally will be reshaped to some degree. To gain more insight on what the future might hold, we reached out to a number of dairy trade associations from coast to coast. The International Dairy Foods Association, representing dairy processors; the National Milk Producers Federation, representing dairy-farmer owned cooperatives; and the Cooperative Network, representing Wisconsin and Minnesota cooperatives, went on record regarding their thoughts.

On the campaign trail, President-elect Trump shared a strong desire to not approve the Trans-Pacific Partnership (TPP) trade deal. He also has spoken out against the North American Free Trade Agreement (NAFTA). However, the U.S. dairy industry now exports 14 to 16 percent of its milk production in the form of dairy products compared to just 3 to 4 percent two decades earlier. What does the future for U.S. dairy exports hold and how might a new look at U.S. trade reshape dairy exports?

IDFA: International trade is vital to the future growth of America’s dairy industry. While the U.S. market for dairy products is substantial, over 95 percent of the world’s consumers live outside our borders.

At a time when the U.S. market is mature, U.S. dairy exports have grown dramatically over the last decade with over 15 percent of U.S. farm milk production going into dairy products for export.

The U.S. dairy industry, with its innovative product lines, is highly competitive internationally, and overseas markets represent a vital source of future growth opportunities with the rise of large numbers of middle-class consumers. Enforcement of current trade agreements, whether bilateral or multilateral in nature, is vital to creating U.S. jobs and opening new markets.

Cooperative Network: President-elect Trump has shared his opposition to the TPP but not his opposition to trade; he has said he will negotiate better deals. What that will look like remains to be seen. We have concerns that if nothing is done, Asian countries will form their own trade agreement dominated by China.

In addition to TPP and NAFTA, Cooperative Network is concerned about the Trans-Atlantic Trade and Investment Partnership (TTIP) and the European Union’s (EU) push to have geographic indicators as part of TTIP. Given New Zealand’s erratic production due to weather and the EU’s implementation of production-reducing strategies, we feel exports will always be an important market for U.S. dairy products. It is important to get good trade agreements in place so that trade is more predictable and stable.

NMPF: The future for the U.S. dairy farmer community will be much more challenging if we cannot continue to grow our exports. Most of the growth in production in the past 15 years has been made possible by the expansion of overseas markets, so we must guard against a retreat from world markets.

Indeed, because of the tremendous productive capacity of the U.S. dairy industry, and virtually all of U.S. agriculture, export markets are essential for a healthy ag economy. Our message to Congress and the incoming trade team for the Trump administration, is that carefully negotiated deals have been, and will continue to be, good for American agriculture, not a threat. The new administration will be hearing that from a large assortment of farm groups, so I believe we will make a compelling case that we cannot afford to go backward on this issue.

The current farm bill will expire in 2018, and the Republicans could reshape its vision by moving away from conservation programs and looking more closely at business sustainability (disease indemnity, safety nets and ag research, and others). From your experience, what might a future farm bill look like in 2018?

IDFA: IDFA supports robust risk management programs that help dairy farmers manage milk price volatility. The Margin Protection Program (MPP-Dairy) for dairy producers, which was created during the last farm bill, will undoubtedly be reviewed and evaluated during the upcoming farm bill debate to ensure that it provides dairy farmers with the same type of risk management program that is available for other agricultural commodities.

The funding baseline associated with dairy programs will need to be restored, which will necessitate financial trade-offs. Agriculture research merits continued support as this area benefits everyone in the dairy and agriculture sectors. Existing regulations, including those in the environmental and food safety areas, could face additional scrutiny, and regulatory relief could be included in the farm bill package without imposing additional costs on taxpayers.

Cooperative Network: Cooperative Network and its Farm Credit members have supported a strong Crop Insurance program as a safety net for corn and soybean producers. Our resolution on Federal Dairy Policy supports a “comprehensive, national dairy policy that addresses the needs of producers in all regions and does not discriminate against producers on the basis of location, size, or type of dairy operation.” For that reason, we supported the creation of the Margin Protection Program for Dairy. We realize that MPP-Dairy may require some tweaking, especially in the areas of feed ration cost and premium rates.

NMPF: We have been working across our membership at NMPF to develop the best approaches for improving the Margin Protection Program for Dairy, with the goal of presenting a recommended list of changes to Congress early in 2017.

We don’t want to wait till 2018 to see those changes implemented, and key players in both the House and Senate have already heard our message on the need to move sooner rather than later on this key safety net program. We are heartened that there is growing recognition in Congress on the need to improve several programs in the current farm bill.

At the same time, Congress has yet to take action on Food and Nutrition Programs, what might the future look like for flavored milk and nutrient-dense dairy products?

IDFA: Federal feeding programs will very likely continue to be guided by the latest Dietary Guidelines for Americans (DGA); however, we expect that the new administration may allow more flexibility to states and localities with respect to interpreting the DGA as it relates to nutrient-dense milk and dairy products.

The use of Supplemental Nutrition Assistance Program (SNAP) benefits to purchase sweetened beverages will continue to be scrutinized, but it is unlikely that Congress will further restrict SNAP purchases. Incentivizing healthier SNAP purchase choices will continue to be the focus, and the dairy sector could benefit from such an approach.

Cooperative Network: Cooperative Network has opposed efforts to reduce the container size of dairy products and to reduce them in nutrition programs. We encourage the use of low-fat flavored milk and yogurt in school nutrition programs.

NMPF: The Child Nutrition Act was to be reauthorized in 2016, but that did not happen in the lame duck congressional session in early December. So we will work again with Congress in 2017 to find a way of bolstering the role for milk in schools and federal feeding programs, and correcting the current USDA policy that only allows for nonfat flavored milk.

This contradiction needs to be solved so that kids get the nutrition they need in the package they want. Fortunately, the emerging medical science continues to reinforce our point that dairy fat is not a health threat for kids (and adults) that it was believed to be.

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(c) Hoard's Dairyman Intel 2017
January 16, 2017
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