Dairy product sales, both at home and abroad, have changed more in the past 12 months than in any previous five- or 10-year time frame. “Last year at Dairy Forum, I said, ‘We’d see more change in the next five years than we’ve seen in the last 15 years.’ Oh my goodness, I had no idea what we would encounter during the year of 2020, but we have certainly seen change,” said Michael Dykes, the president and CEO of the International Dairy Foods Association (IDFA).
“Our dairy industry, I think, ends 2020 in pretty good shape and far better than any of us would have guessed back in April, May, and June,” continued Dykes in his opening comments at this year’s virtual Dairy Forum. “We came together to do the things we thought we needed to do, and it turned out better than we even expected. Some will even tell you that we turned out in 2020 better than 2019.”
“I think people are understanding the importance of agriculture in a different way than they have in the past,” explained ranking Senate Ag Committee member John Boozman (R-Ark.), who spoke later during the event. “Again, it’s making people aware that you don’t get your food from the grocery store. There’s a supply chain.
“One of the things we learned during COVID-19 is that the supply chain is pretty fragile,” said Boozman. “You (the dairy industry) certainly have experienced that firsthand in so many different ways such as dumping milk. That’s one of the things we need to look at to see how we can strengthen that (supply chain) going forward,” said the senator, who happens to hold an A.I. training certificate to breed his beef herd.
What about this year?
“I would say that the commercial demand is a little wobbly,” Dykes said to global attendees steeped in dairy processing expertise. “We are still in lockdowns. Schools remain closed, and our exports are kind of mixed because our No. 1 trading partner (Mexico) is battling COVID-19 and its economy.”
“One of the biggest things we have now is the U.S. government demand. What happens when the food boxes end in April?” he asked rhetorically. “The U.S. government was about 40% of the net farm income in 2020. So, we have some significant challenges that lie ahead.”
Consumers hold the keys
“The consumer is the boss of all of us,” Dykes advised everyone. “They trust the food industry more than they trust the government. We have to reward that trust with innovation, affordability, and wholesome and nutritious products. We (dairy) can be a food for all occasions,” he went on to explain.
“We have to focus on some of the emerging trends,” Dykes said with an eye on the future. “Consumers are very interested in animal welfare. How well are we treating our animals? How well are we treating our people?
“Consumers are concerned about climate,” he continued, noting the issue tops the list in many consumer product polls. “What are we doing to the environment in terms of carbon, in terms of methane, the amount of water we use, and the amount of energy we use?
Senate ag chair sets expectations
“I am hopeful that we’re going to be able to help support a return to stability in dairy markets and provide additional support going forward as we come out of this very difficult challenge around this health pandemic,” explained Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.).
After focusing on ways to continue navigating the pandemic, the 20-year Senate veteran went on to discuss creating a new commodity market for farmers and the food industry. That centers around carbon and tackling the climate crisis.
“We have a real opportunity to have agriculture, the food industry, and forestry lead the way and at the same time create new revenue streams, which is really important,” said the senator. “I start with the idea that whatever we do will be voluntary, it will be producer led, and it will be bipartisan,” she continued.
“I am really pleased that the dairy industry is leading the way and pushing for net zero,” she added. The Senate Ag Committee held two hearings on the topic last year. “Tom Vilsack, in his capacity at the U.S. Dairy Export Council, testified and talked about all the strides your industry is making, and it was actually very impressive,” she said of Biden’s choice for USDA secretary.
“The 2018 Farm Bill contains a lot of areas in which we want to build upon in terms of climate and ag policies, including the landmark Soil Health Demonstration trials,” Stabenow continued. “What we really want to do is help farmers scale up sustainable practices and tap into this new economic opportunity through voluntary carbon markets.”
“I think we all agree, for all kinds of reasons, we need to address climate. It’s the right thing to do as far as air, water, and all those things. But I am concerned about heavy handedness,” said Boozman during a separate one-on-one interview with Dykes. “My concerns are, certainly as we go down the path, I want it to be voluntary,” he continued. “I don’t want a bunch of mandates on farmers that drive the cost up even higher, then you are going to get increased consolidation.”
The Senator then went on to speak of dairy’s already impressive record on doing more with fewer inputs. “You are all such a tremendous example of having fewer cows and so much increased production than when you go back to the 1960s.”
An actionable plan
“The trust and values that consumers are looking for in the companies they do business with have really changed over time,” explained Heather Anfang, senior vice president of U.S. dairy foods for Land O’Lakes. “We all have terrific stories to tell in this area around sustainability.
“We started our own sustainability division about four or five years ago called TruTerra,” Anfang said while speaking during Dairy Forum. From that foundation, Land O’Lakes took the sustainability concept one step further.
“One area I would say that we have really pushed on, and this is new as a program that is being introduced this week actually, is TruCarbon. It’s really where we are leveraging back into our farmer network to provide carbon credits to private sector buyers who are looking to make their own offsets. Our first customer buyer in 2021 will be Microsoft,” she continued.
“When you think about Microsoft, it’s a huge corporation. It has significant and aggressive goals around carbon reduction and to be carbon negative by 2030. It’s really seen the value of a company like Land O’Lakes that can leverage all the way back to the farmer.
“Farmers are the original environmentalists,” Anfang reminded the mixed crowd of dairy producers and processors. “You are working that land for your livelihood, and you are also entrepreneurs. Think about the opportunity to put an environmentalist and an entrepreneur together. The runway is long!
“Farmers have reinvented themselves for generations. That needs to happen again, right now in a really accelerated way,” she said of the future. “We have the structure in place to help do that, and we are making considerable inroads here as we think about the carbon market sequestration and how we take that to scale.”
Dykes took the future one step further. “I think . . . in the very near future, we will need to make sustainability relatable at the point of purchase,” he said.