cows in field

From the NODPA Desk March/April 2020

By Ed Maltby, NODPA Executive Director

The headline in the September 2020 NODPA News will be: “Astounding growth in organic milk sales as consumers recognize the nutritional benefits of organic milk in increasing immune resistance with its high quality protein, vitamins, and calcium and yes, it is also good for the environment. The publication of the Origin of Livestock Final Rule on July 2nd stopped the continuous transition of conventional dairy animals and with buyers having to deal with the existing organic dairy herd, pay prices are predicted to increase as supply is short.”

While I have never been good at predictions, and most of the time they do not happen, there is some science behind my prediction. A recent report called ‘Milk and milk related products, consumption for Chinese residents’ written by among others the Chinese CDC as a recommendation to fight COVID 19, praises the nutritional qualities of milk to fight the novel coronavirus. While panic buying may be why all the milk in the dairy case is gone (even organic!- according to one newspaper report) initial analysis by marketers is that it ties in with the increase sales of beef by 8% as consumers look for comfort food. There is nothing like a medical, economic and social crisis to stimulate the examination of one’s lifestyle and eating habits, especially if you have to cook and prepare the food. Every crisis has a silver lining!

As the Federal government gives away our children and grandchildren’s future with recklessness that ordinary folks would be jailed for in their trillion dollar packages, there are many programs within SBA and USDA that temporarily are open for those of you who have the mental space to refinance or restructure your loans with lower debt service. SBA-backed loans from your existing lenders or banks can provide interest free loans to pay operating expenses with deferred repayments.

The final comment period on the proposed rule on Undue and Unreasonable Preferences and Advantages under the Packers and Stockyards Act (P&SA) ended on March 13, 2020. While these protections are tied to poultry and livestock producers, the need for them do relate to the current situation within the organic dairy. NODPA sent in comments that addressed the fact that organic dairy producers exist in what has been described by the US Department of Justice as a supply monopsony and have faced harassment and intimidation from their buyers. Producers have a right to lawfully join producer associations or speak to the media or elected officials about their milk contract without suffering retaliation from a buyer. It is common for organic dairy producers who speak out about issues within the industry to receive lower pay price and quotas and to be the first to be terminated from truck routes. The two major buyers have practiced this discrimination without any recourse. There was hope in the beginning of organic that the different production methods and market would result in more transparency and fairness in contracts. While the consumer was led to believe that was the case, increasingly that fairness has disappeared, to be replaced with buyer-controlled contracts that have conditions which allow buyers to cancel contracts arbitrarily or impose un-economic pay prices. Organic dairy producers need the protection afforded other producers under the Stockyard and Packers Act.

The NOP have been instructed by Congress to publish a Final Rule on the Origin of Livestock on or before June 16, 2020. While the COVID 19 virus does affect almost everything, those who are writing the rule can do so remotely with perhaps more time if they have less distractions of endless meetings. One concerning aspect of the Proposed Rule comments received from processors and their trade organizations, is their advocacy for tying the one time transition exemption to an operation rather than a person (as defined by USDA). The National Milk Producers Federation stated their opinion that “NMPF and many others in the organic industry are not supportive of changing the rule to only allow one transition to organic per producer as this would be overly restrictive and unnecessary.” They used CROPP Cooperative comments in 2015 to support their argument and also inaccurately stated that “Organic milk sales have continued to increase over the years, creating a need for more organic fluid milk.” Comments from Horizon, WhiteWave, Danone and the International Dairy Foods Association (IDFA) agree with that provision. IDFA stated that ‘we recommend that the one-time transition be assigned to a “certified dairy operation” rather than a “producer.” IDFA members include Aurora Dairy, Lactalis, DFA, Organic Valley, Organic West and Scott McGinty, CEO Aurora Dairy is a Director on the executive Council.

NODPA and many others supported not tying the exemption to the operation. Tying it to the operation means any one individual can set up new operations repeatedly to make use of the exemption multiple times. New operations owned by the same individual/LLC/company are then either managed separately in 2-3,000 cow milking ‘operations’ or joined together once the one-year transition period is up. The NOP can still receive opinions and comments on the rule, as can the Small Business Administration and the Office of Management and Budget. Please pressure your buyer to correct the statement that their trade associations have made which imply all of organic dairy supports this interpretation of the exemption. The Final Rule will probably not be perfect but we need to keep the pressure on for the best we can get.

I wish you all the best of health as you continue to be the heroes that we know you are, providing the best of food, services and support that the country relies on during this crisis. Remember when you visit with your neighbors, keep the pick-up truck between you!