Dairy Pitfalls, Opportunities to be Analyzed

November 14, 2001

The National Milk Producers Federation will create a special team of dairy experts to analyze both the threats and opportunities facing the dairy industry in the future, according to NMPF Chairman James P. (Tom) Camerlo.In his speech at the NMPF annual meeting last week in Orlando, Camerlo announced the creation of a dairy "SWOT Team" – an industry group led by NMPF staff that will analyze the (S)trengths, (W)eaknesses, (O)pportunities and (T)hreats to the marketing and economic environment of the dairy sector.

"About a month ago, the three chairman of Dairy Management Inc., the U.S. Dairy Export Council and National Milk sat down with key staff to identify and discuss a number of threats that may displace U.S.-produced milk in products such as cheese and ice cream," Camerlo said. "As a result, our organizations have created a task force to create a strategic plan to identify ways to remedy these potential threats."

The dairy SWOT team will be made up of NMPF and DMI staff, dairy cooperative staff, and outside experts. The team will examine emerging technologies, trends in imports and trade policy, the use of non-dairy ingredients and the challenges to current dairy standards of identity. All of these areas could detrimentally impact the use of domestic milk and prices paid to American farmers.

Also, the SWOT team will develop strategies that potentially could lead to the development of a domestic milk protein concentrate industry, increase the use of alternative dairy-based ingredients, and re-examine marketing methods for the products marketed by the U.S. dairy industry.

"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," said Camerlo. "We must be mindful of the impact of these technologies on producer prices. It will be crucial in shaping the activities of this organization in the future."

The dairy producer community's victories in the 2002 House farm bill are a direct result of the efforts made last year by dairy farmers to agree upon a list of policy items to be included in the farm bill, according to NMPF's President and CEO Jerry Kozak.

He told the NMPF membership that the House farm bill contained many items that were first identified as policy priorities during the Dairy Producer Conclave last year. The Dairy Producer Conclave was a year-long effort to obtain grassroots farmer input on the national policy items of greatest importance to dairy producers.

The conclave called for reauthorization of the dairy price support program at a level sufficient to minimize market volatility, while balancing supply and demand. With that goal in mind, "NMPF asked for extension of the price support program for 10 more years at a level of $9.90 per hundredweight – and that's what was included in the House farm bill," Kozak said. "The consensus was that the Federal Milk Marketing Order system should be supported, and not further reformed by Congress in the near future. There was no effort made by the House Ag Committee to tinker yet again with federal orders," he said.

Also, the conclave called for the continuation of the Dairy Export Incentive Program for as long as other countries maintain their export subsidies. NMPF testified to the need for a continued DEIP program, and the House Ag committee included a 10-year reauthorization of the DEIP program as a result. Funding for the Market Access Program was also reauthorized as part of the House farm bill at an increased funding level

In addition, the conclave called for an evaluation of the current tariffs on dairy products, as well as an ongoing analysis of the effects of dairy imports. "NMPF did an extensive evaluation of the impact on imported dairy proteins in the U.S. dairy producer sector. As a result of the concerns raised by that report, we worked with members of Congress to get legislation introduced that will impose tariffs on MPC and casein used in the food industry," said Kozak.