The 2023 Farm Bill--What you can do

By Ed Maltby, NODPA Executive Director

Whether you believe what the House of Representative conservative Republican Study Committee has proclaimed in “Blow up the Farm Bill”, or that the farm bill is one of the main opportunities for stakeholders to engage on the federal policies that shape our food and agricultural system, or that it’s too slow and only for policy nerds, the negotiations for the 2023 Farm Bill in the U.S. Congress have begun. Passed every five years, the Farm Bill sets the stage for many farm support programs and SNAP (Supplemental Nutrition Assistance Program) which have been key elements in bills that include food aid, export promotion, agricultural research, rural economic development and crop insurance. The 2023 Farm Bill might be even more complicated if the House and/or the Senate switch from Democrat control to Republican, with different committee Chairs and members.

When it comes to dairy, the assumption has been that organic dairy would benefit from the conventional programs and other general organic provisions but this year CROPP cooperative successfully advocated for one of its leading executives, Travis Forgues, to be a panelist and present testimony in person to the House Agricultural committee on dairy. CROPP’s testimony covered a broad spectrum of energy programs and an investment in conservation, plus many other areas. His testimony is available on NODPA’s website or by request.

NODPA is a member of the National Organic Coalition (NOC), Organic Farmers Association (OFA) and the National Sustainable Agriculture Coalition (NSAC). NODPA supports their Farm Bill platforms plus in-person advocating in Congress. These organizations represent many different interests and all help move the process of support for organics forward. Only occasionally will a priority that directly benefits only organic dairy make it to the list of priorities that these organizations necessarily have to develop from a wide variety of urgent issues – the Origin of Livestock was one case in point where that priority became one for all organic organizations.

Below is a short introduction followed by a list of priorities, as identified by NODPA for organic dairy. Why would you be interested in such boring stuff that will take a long time to work its way into practice? We received a call today from an irate woman that wanted to know why the neighboring organic dairy was using sprays and fertilizer and stopped being organic. The farmer told her it was because they were losing too much money. “But I pay more for my organic milk, she said. Organic milk is more expensive to produce. Doesn’t the government provide support?” “Why no,” we said. “Why not?” she asked. She ended by saying that she was sorry that the farmer was telling the truth, which she wasn’t expecting, and that conditions were so dire.

The following are potential remedies that can be implemented as soon as possible to begin to address the disadvantages facing American Organic Dairy Farm Families.

• Develop an Organic Dairy Margin Coverage (DMC) Program
• Address the Lack of Competition in Organic Dairy: Congress should instruct USDA to work with DOJ to investigate the effect of the lack of competition in New England and eastern New York in light of Danone’s decision to exit the region.
• Expansion and investment in dairy processing
• Consistent Regulation Enforcement: The issues around sustainability for the small to mid-size operations (80-1,000 organic cows) hang on how well the USDA’s NOP enforces the regulations. Inadequate and inconsistently implementation for regulations has allowed the supply side of organic dairy to be exploited by low cost operations that exploit loopholes.
• Request for more detailed organic milk data to reflect the depth of information provided for non-organic milk production: We request that the committee instruct USDA to establish mechanisms for publishing data for organic milk so that organic farmers can understand their market in ways similar to the conventional market.
• Financially reward the good work that organic farmers are doing regarding climate change
• FSA/Organic Certification Cost Share Program (OCSSP)

1. Develop an Organic Dairy Margin Coverage (DMC) Program

Develop a program that analyzes organic milk price and feed cost data to determine possible benefits of an organic counterpart to the existing Dairy Margin Coverage (DMC) Program which has been used effectively in conventional dairy. We are asking that FSA, in coordination with NASS and AMS, use available organic price and feed data to develop an organic DMC program. To the extent possible, USDA should use organic data that is as comparable as possible to the data sets used under the DMC program. If there are data sets used for the DMC that have no comparable organic data set, we urge USDA to note that deficiency and provide analysis of the potential to start collecting those organic data.

• The Dairy Margin Coverage (DMC) Program, developed as part of the 2018 Farm Bill, is a national risk management program that offers margin protection to dairy farmers, defined as the difference between the national all-milk price and national average feed costs. The program is particularly targeted to benefit small-and-medium scale dairy farms, since these sized operations are the ones that are suffering the most in organic dairy. Producers can choose their level of coverage. While premiums increase based on level of coverage chosen, those premiums are highly subsidized for a producer’s first 5 million pounds of milk production annually, which is the mechanism used by Congress to target the benefits to small-and-medium-scale conventional dairy farms. Producers can buy coverage for production above the 5-million-pound threshold, but the premiums for coverage above that are significantly higher, by design.

• The factors used to calculate the monthly margin DMC payments are the average national all-milk price minus national average feed costs (including corn, soybean meal, and alfalfa hay). The all-milk price is reported monthly by the National Agricultural Statistics Service (NASS). The corn and alfalfa hay prices are also reported monthly by the National NASS, and the soybean meal price is reported monthly by the Agricultural Marketing Service (AMS). USDA’s Farm Service Agency (FSA) uses those data to administer the DMC program.
• Conventional and organic dairy producers are eligible for the program. However, the price factors used to calculate the margin are based on conventional prices. While in some circumstances this can be beneficial to organic producers, the current and future situation will have an adverse effect on organic dairy as the pay price is low and inputs high in organic but the conventional price has a high pay price even though inputs have increased in price. In 2022, Class 1 price is, in many cases, higher than the organic base price.

2. Expansion and investment in dairy processing

Congress should make the investment in scale-appropriate dairy processing a priority in the 2023 Farm Bill. Investment must be made in both existing successful track-record processors who are positioned and can scale production quickly and in new scale-appropriate processing facilities to continue to develop system flexibility.

The creation of a new supply-side model for organic dairy is needed that addresses the immediate loss of milk markets for organic dairy producers and provides them with long-term sustainability. It is clear that the major dairy companies in the US are quickly moving away from rural communities in favor of more cost-effective supply chains and huge, vertically integrated operations. It has become apparent that the whole organic milk supply-side model needs to change. The current model for the supply-side of organic dairy is obsolete, with many organic dairy farms facing extinction now, and many more likely to follow. A long-term analysis of the future of organic dairy family farms will be regionally based. A new organic dairy supply-side model is needed, and a successful model will feature regionally owned, scale-appropriate facilities to process regional milk that will be sold into the regional market as a source-identified local product that will give an adequate pay price that ensures a living wage to organic family farms in the USA.

3. Address the Lack of Competition in Organic Dairy:

Congress should instruct USDA to work with DOJ to investigate the effect of the lack of competition in New England and eastern New York in light of Danone’s decision to exit the region. New remedies should be proposed to restore competition in the region. The results of this investigation should inform future updates to federal guidelines on horizontal and vertical merger approvals.

The crisis in New England and eastern New York, caused by Danone with their Horizon brand decision to cancel their supply contracts with 89 farm families, is a vivid regional example of the impacts of consolidation that plagues the entire organic dairy sector. Previous government decisions have allowed this consolidation to worsen and should be revisited. When Danone purchased White Wave in 2017, the Department of Justice mandated that Stonyfield Organic (owned by Danone with a supply contract with CROPP Cooperative) would have to be sold as a remedy to prevent monopsony in the region. Stonyfield Organic was sold to Lactalis, the second largest dairy company in the world. Now, effectively, there is only one buyer of organic milk in New England and eastern New York: Lactalis. Lactalis purchases 80% of its total milk supply from CROPP and purchases the other 20% either directly from Northeast farms or other sources. CROPP milk from New England and eastern New York is also used in packaged product under the Stonyfield Organic label, licensed to CROPP by Lactalis.

4. Consistent Regulation Enforcement

• Increase enforcement to level the playing field with consistent implementation of all regulations
• Finalize the rule to crack down on organic fraud, the ‘Strengthening Organic Enforcement’ Rule.

Fraudulent organic imports and domestic fraud undermines consumer confidence in the organic label and undercuts prices for U.S. organic producers. Congress required USDA to issue a final rule to strengthen organic enforcement by December 19, 2019. The comment period on the Proposed Rule ended on Oct 5, 2020. The rule is still under review by USDA.

This is unacceptable. We are asking that Congress urge USDA to move this rule forward as swiftly as possible.

Strengthen pasture rule enforcement with particular attention to high risk Concentrated Animal Feeding Operations (CAFO)

Particular attention needs to be paid to the following:

• Certifier's inspection reports are inconsistent in detailing the growing season applicable to each operation. There is published data that reflects the growing season for each area. The operation must follow the applicable growing season rather than fall back on the minimum of 120 days.
• In evaluating percentage of dry matter consumption from pasture, each class of animal is required to be assessed separately.
• Attention needs to be paid to the crop rotation within the OSP with pasture as a crop.
• There is a lack of certifier/inspector expertise in evaluating the dairy rations of large-scale dairies thsat use sophisticated technology and teams of veterinarians/nutritionists to prepare reports that may be impossible for the average dairy inspector to interpret when they analyze dairy rations and tie them to production and pasture consumption. NOP needs to mandate that these dairies are inspected by highly qualified dairy nutritionists experienced in pasture management. Surprise inspections of all pasture usage on large-scale dairies during the growing season needs to be required.
• NOP needs to continue to level the playing field in providing inspectors who can interpret the unsophisticated but honest record keeping of small-scale dairies that do not have the technology, money or time for reports to satisfy desk audits. An experienced dairy inspector can take a walk in the pastures, noting the locations of water, shade and access pathways that are well worn by animals and view the unique signs of grazing within pastures, to assist in their evaluation of meeting regulations.

• NOP should continue its Dairy Compliance Program; NOP should provide a detailed update with information that would help identify inconsistent enforcement that may be contributing to economic disadvantages for Northeast organic dairy operation

5. Request for more detailed organic milk data to reflect the depth of information provided for non-organic milk production

We request that the committee instruct USDA to establish mechanisms for publishing data for organic milk so organic farmers can understand their market in ways similar to the conventional market.

• Pay price for organic dairy farmers is set either by direct marketing of products to the consumer; a personal contract with the buyer (organic brand, dairy processor or, in the case of vertically integrated organic CAFO’s, retailer), or as part of a cooperative agreement as a member of a cooperative. There is a scarcity of organic data available for the farmer to make decisions on the state of the organic market, projections on potential changes in supply and demand and the value of their product.
• The Federal Milk Marketing Order program (FMMO) already receives data that allows them to provide information on the organic dairy sector. Statistics on dairy also are found at the USDA National Agricultural Statistics Service (USDA NASS) and the USDA's Economic Research Service (USDA ERS). Every region produces a monthly statistical report that is published up to 2 months in arrears of the usage.
• FMMO data is derived from reports submitted by pooled handlers. The majority of organic milk is processed at FMMO pool plants that also process and manufacture conventional milk and are required to report to the FMMO. Only FMMO 1 (the Northeast order) reports some of this information in its monthly statistical reports, in limited form. The FMMO 1 Monthly Statistical Report breaks out organic Class I fluid volumes for Whole Milk and Reduced Fat Milk (2%), which limits how the report can be used. Providing only part of the needed data, however, the information can also be combined to get an inaccurate picture of utilization of organic fluid milk in the Order and marketplace.
• USDA Dairy Programs asserts that it only has the statutory authority to collect Class I (fluid milk) data in the detail necessary to separate milk produced under organic production. We request that the Committee instruct USDA to identify this deficiency and provide analysis of the potential to start collecting that organic data for all Orders.

The collection of the following data is within the statutory authority of the FMMO but is not published on a regular basis:

a). Utilization of organic Fluid Milk products and cream from Producer Receipts and Other Sources: Class I milk:

i. Marketing Area;

ii. Other Federal Markets;

iii. Non-Federal Markets

b) Utilization of Fluid Milk Products and Cream by Pool Plants for Class 1 Milk, for all Orders:

1. Organic Whole Milk

2. Organic Reduced Fat Milk (2%)

3. Organic Low Fat Milk (1%)

4. Organic Fat Free Milk (Skim)

c) Organic Mailbox Price by region

d) Export of organic dairy products

6. Financially reward the good work that organic farmers are doing regarding climate change

Organic agriculture should be front and center in policies that address the role of agriculture in combating climate change, and organic dairy farmers should be at the table for these discussions. Congress should reward the good work that organic farmers are already doing and should assist others interested in transitioning to organic.

We are asking that Congress should include provisions in the 2023 Farm Bill to:

• Support organic farmers and help others to transition to organic.
• Increase funding for organic research related to climate change.
• Increase funding for USDA conservation programs to reward regenerative organic farming practices.
• Modernize USDA risk management programs to reward, not penalize, regenerative organic farming practices.

Include provisions in the FY 2023 Agriculture Appropriations bill to:

• Increase funding for USDA’s National Organic Program with focus on increased enforcement of existing soil health requirements

• Increase organic research funding related to climate change.

7. FSA/Organic Certification Cost Share Program (OCSSP)

In the previous Administration, USDA’s Farm Service Agency (FSA) unilaterally cut reimbursements to organic farmers under the Organic Certification Cost Share Program (OCCSP), in conflict with the 2018 Farm Bill directive. As a temporary stopgap, USDA created a parallel Organic and Transitional Education and Certification Program (OTECP), which NODPA has supported.

OTECP is currently slated to provide stopgap funding through FY2022.

For FY 2023, it is critical to fully fund the OCSSP. The OCSSP is especially important for small and mid-size farms and for underserved producers. A recent survey conducted by the Organic Farming Research Foundation https://ofrf.org/research/nora/ shows that the cost of organic certification was identified as a major challenge - 29% of all organic farmers listed this as a challenge & 61% of Black, Indigenous and other farmers of color identified this as a challenge. Thus far, USDA has not committed to fully restore the program for FY23, so we are asking Congress to fix the problem through the FY 2023 appropriations process.

Summary

The future for all small to mid-size organic dairies must include regulations that maintain organic integrity, not undermine it for the benefit of large operations, milk handlers, increase sales and retail margins. We must have strong enforcement and certifiers that understand the regulations. We need a well-funded USDA NOP that can ensure consistent enforcement at all levels of production. We must also look at processing infrastructure that is scale-and market-appropriate. If we have regulations that are strongly enforced, the processing, packaging and marketing infrastructure will have a secure base to build on. For organic dairy, that will mean having modern processing facilities that are designed to process and package smaller quantities of milk to meet the needs of the value-added products that have a strong market with discriminating consumers. When the next pandemic or weather crises happens, will the food supply chain be more protected or more exposed with less processing capacity and a smaller rural population? Please go tell your federal representatives that we need their help now, either in the next Farm Bill or in Congressional appropriations.

If anyone is interested in working on these issues, please be in touch with NODPA by calling 413-772-0444 or visiting the NODPA website’s Contact Us page (www.nodpa.com).

Posted: to Policy in the News on Sun, Jul 31, 2022
Updated: Sun, Jul 31, 2022