Northeast dairy farmers losing milk contracts

Presented by

With help from Catherine Boudreau, Jenny Hopkinson and Megan Cassella

NORTHEAST DAIRY FARMERS LOSING MILK CONTRACTS: About 180 members of the National Farmers Organization, mainly in New York, Vermont and Pennsylvania, are at risk of having no place to sell their milk on Dec. 1 unless they can find a buyer other than Dairy Farmers of America. The NFO members had their contracts terminated due to the overabundance of milk and decreased processing facilities in the region, said Brad Keating, senior vice president and COO of the Eastern Fluid Group at DFA.

“In some cases, plants are closing because there is less demand for product. Also, business has transferred out of the Northeast,” Keating told MA. While DFA and other dairy companies like HP Hood are investing in several plants to increase processing capacity, including in western New York and northern Pennsylvania, many of those projects won’t be completed until next year. For the past 15 years, NFO has contracted with DFA’s Dairy Marketing Services in the Northeast to market its members’ milk. Another 700 independent dairy producers in the region whose milk has been handled by DFA’s Dairy Marketing Services also face the same problem as the NFO members, though they have the option to join the cooperative under certain terms.

National oversupply problem. Brad Rach, NFO’s national dairy director, said his organization is doing everything it can to find a new home for the farmers’ milk, but things are looking bleak. He added that the oversupply problem is impacting dairy farmers and cooperatives in every region of the country, not just the Northeast. He is hoping the U.S. dairy industry can come together to figure out how to manage the milk supply to prevent a repeat of the nationwide glut. Otherwise, “farmers going out of business will be our supply-management program,” he said.

Consolidation and cow sales. Richard Hodge, who milks 36 Holstein cows in Fairlee, Vt., a town on the New Hampshire border, told MA there has been a lot of consolidation as DFA has purchased various co-ops, leaving few other buyers in the region. DFA in 2014 merged with Dairylea Cooperative Inc., for example, making it the ninth co-op to do so. Hodge said St. Albans Cooperative Creamery, a member of DFA that also has an ownership interest in its Dairy Marketing Services, may accept new members. “I’ve heard of farmers who are selling their cows, and some will go bankrupt,” Hodge said. “For me, I will probably wait another week or two to see if there is any chance that DFA may pick up NFO producers.”

HAPPY TUESDAY, SEPT. 12! Welcome to Morning Ag where your host is saddened to read about the devastation of Hurricane Irma across the Caribbean. These images are kind of mind-blowing. You know the deal: Thoughts, news, tips? Send them to [email protected] or @hbottemiller. Follow the whole team at @Morning_Ag.

MCEVOY URGES ORGANIC UNITY IN NEXT CHAPTER: A changing of the guard is coming to USDA’s National Organic Program as Miles McEvoy announced Monday he’ll be stepping down at the end of September after eight years at the helm. In a letter to organic groups, the Agricultural Marketing Service deputy administrator said he plans to return to his home in Olympia, Wash., to spend more time with his family. But he also laid out what he sees as the challenges and opportunities on the horizon for the expanding — and often politically heated — organic sector.

Big tent organics: “Embracing this diversity of production is critical as the organic sector grows. Organic farms come in all sizes and shapes,” McEvoy wrote. “All types of people of varying cultural, religious, and political perspectives participate. It is critical that we embrace organic diversity in all its size, shape and color.”

Kumbaya organics: “We will be much more successful if we support each other as we confront challenges of water availability and climate change,” McEvoy added. “We will be more successful if we treat each other with respect and dignity.”

Everywhere organics: McEvoy also touched on accessibility of organics, which are often associated with urban, upper-income consumers: “Organic food should be available to everyone from the cities to the countryside,” he wrote. “We need all systems and scales of production to transform the agricultural system.”

Growing pains: McEvoy oversaw USDA’s organic efforts during a key time in the development of the National Organic Program, now in its 17th year. His tenure coincided with a boom in organic production and demand. There was plenty of progress in administering the program, but the industry’s growth also led to serious growing pains, especially as domestic production levels spurred companies to rely on imports, some of which were found to be fraudulent — threatening the integrity of the organic seal. And the program’s funding remained flat, even as the market expanded and the number of players in it rose steadily, straining enforcement efforts.

Holding down the fort: Until Agriculture Secretary Sonny Perdue picks McEvoy’s replacement, AMS acting Administrator Bruce Summers and acting Deputy Administrator Jenny Tucker will oversee the program.

NEW GRASS-FED DAIRY STANDARD PRIORITIZES ANIMAL CARE: A nascent standard for organic grass-fed dairy products launched by Organic Valley and Maple Hill Organic on Monday calls for animals to be raised with maximum access to pasture and for the health of the animal to be a priority. Its aim is to reduce fraudulent grass-fed claims in the marketplace.

Under the third-party certification system, which the companies laid out at an event in Washington, DC, on Monday night, farmers are prohibited from feeding their livestock grain, and cows must follow the standard for 90 days before their milk can be accepted. The companies are still working on what the label will look like. The launch party for the standard was also a going-away party of sorts for McEvoy, who was in attendance and cheered by a crowd drawn mostly from the organic community.

Recommended reading: HuffPost has a Q&A with the owner of Maple Hill Creamery about how he went from struggling dairy owner to organic grass-fed pioneer. Read that here.

IRMA LEAVES UNINSURED PRODUCE GROWERS EXPOSED: Many of Florida’s fresh produce growers, particularly those who cultivate citrus fruits and winter vegetables, were in Hurricane Irma’s path as it tore up the Sunshine State’s Gulf coast. As these farmers assess the damage in coming days and weeks, the storm’s destruction is likely to reveal gaps in the federal crop insurance program and put pressure on lawmakers to make improvements for specialty crop growers as they debate the farm bill, Pro Ag’s Sabrina Rodriguez and Catherine Boudreau report. The high cost of insuring fruits, vegetables and tree nuts has led many growers to forgo coverage, while others have not been able to buy coverage because the specialty crops they grow are not eligible under the program.

All he could do was hope: The former situation is the case for organic fruit grower Jonathan Gambino, who predicted pre-landfall that his farm in Homestead, Fla., could be decimated. If most of his trees are destroyed, he said as the storm approached, he wouldn’t get an insurance check to replace them. “We’ll be at square one,” said Gambino, owner of Three Sisters Farm. “We do not have insurance since we can’t afford it. We’re just trying to come out alive and rebuild.”

The program has expanded in recent years to cover about 73 percent of fruit and tree nut acreage and 32 percent of vegetable crops nationwide, while major commodities like corn, soybeans and wheat are about 85 percent covered, according to the USDA Risk Management Agency, which oversees the program. In Florida, most sugarcane (98 percent), cotton (91 percent) and citrus (87 percent) is insured, while only 59 percent of fresh tomatoes, 57 percent of sweet corn and 44 percent of bell peppers have coverage. Pros, full story here.

D-SNAP GREENLIGHTED FOR HARVEY VICTIMS: The Disaster Supplemental Nutrition Assistance Program will roll out this week after USDA and Texas state health officials on Monday announced they’d settled the logistics necessary to implement the food assistance program for Hurricane Harvey victims.

Texans who would not normally be eligible for food stamp benefits may qualify for Disaster SNAP, commonly referred to as D-SNAP, if they live in an identified disaster area, meet certain income limits and have qualifying disaster-related expenses. Households eligible for D-SNAP will receive two months of benefits equal to the maximum amount normally distributed to SNAP families of equal size, USDA said.

“Texas is moving quickly to finalize sites with our local officials,” Texas Health and Human Services Executive Commissioner Charles Smith said in a statement, noting officials would start to announce D-SNAP dates and locations on Monday. “We are committed to rolling out D-SNAP quickly to serve all of the impacted areas.”

Time check: The move comes more than two weeks after Harvey made landfall in Southeast Texas and produced catastrophic flooding. Damages are projected to top $180 billion. Last week, The Texas Observer reported on USDA and the state’s inability to reach an agreement on approving D-SNAP. Agriculture Secretary Sonny Perdue hinted at some of the matters that needed to be worked out. “D-SNAP timing varies with the circumstances of each disaster, but always begins after commercial channels of food distribution have been restored and families are able to purchase food to prepare at home,” he said in the release. “Before operating a D-SNAP, a state must ensure that proper public information, staffing and resources are in place.”

SNAP NOT SUFFICIENT TO MEET DIETARY GUIDELINES: While we’re here, a new study has found that the SNAP benefits the government provides to more than 40 million Americans to help them buy groceries each month isn’t enough to get them to meet U.S. Dietary Guidelines.

The study, published in the Journal of Nutrition Education and Behavior this week, notes that the average monthly SNAP benefit is $125 per person and $254 per household, but the tab for feeding a family of four with foods recommended by federal health officials came in between $1,000 and $1,200 per month, depending on the number and age of children in the household. The study also took into account the time needed to prepare meals as part of its cost calculation.

“Although SNAP is meant to be a supplementary aid program and is not intended to finance the entire cost of eating a healthy diet, recent federal budget proposals suggested decreasing the amount of SNAP benefits available for food,” the researchers wrote. “Reducing the amount of SNAP benefits available for eligible individuals may decrease the program’s ability to support healthier diets among food-insecure individuals and families.” The study can be found here.

MEXICO-U.S. RELATIONS TAKE A TURN: The Mexican foreign ministry has rescinded its offer to help Texans recover from Hurricane Harvey as Mexico wrestles with its own efforts to rebuild after an earthquake killed nearly 100 people late last week and left millions of others in need of assistance. “Given these circumstances, the Mexican government will channel all available logistical support to serve the families and communities affected in the national territory,” the foreign ministry said in a statement.

The decision comes after the Trump administration took more than a week to accept Mexico’s offer to help Harvey victims, a delay that many viewed as a snub to the government. President Donald Trump himself has also yet to speak publicly about the earthquake, a point that Mexican media has seized on.

The awkward back-and-forth underscores the increasingly fraught relations between Washington and its southern neighbor as the Office of the U.S. Trade Representative pushes for tough concessions in the NAFTA talks and Trump continues to reference the need for a Mexico-funded border wall. Attitudes in Mexico toward the U.S. have grown more sour in recent months, with many Mexican nationals feeling that any concession their political leaders or candidates make to Trump “will be seen as cowering and politically unacceptable for any party,” Jorge Guajardo, a Washington-based former Mexican ambassador to China, wrote in a POLITICO op-ed on Monday.

The risk there, Guajardo cautioned, is that the political dynamic has painted Mexico’s NAFTA negotiators into a corner, where the growing understanding is that President Enrique Peña Nieto would have “no choice” but to leave the agreement if Trump continues to threaten and humiliate Mexico.

S. KOREAN ENVOY: DON’T JUMP THE GUN ON KORUS TALKS: South Korea’s ambassador to the U.S. said on Monday that Washington and Seoul have yet to establish the scale of potential renegotiation of the U.S.-Korea free trade deal or set a date for a second attempt at discussing possible changes.

“Let’s go step by step, rather than just jumping the gun,” Ambassador Ahn Ho-Young told reporters after a speech to the Washington International Trade Association, when asked whether Seoul would agree to a full-scale renegotiation along the lines of what the Trump administration is pursuing in NAFTA talks. “We had only the first round, so let us see how it goes.”

While it’s possible the Trump administration could seek a complete renegotiation, to do so it would first have to notify Congress — a step that has not been taken, Ahn noted. Read more here.

MA’S INSTANT OATS:

— A Wisconsin State Farmer editorial considers arguments biofuels groups are making for the Trump administration to take action after Brazil slapped tariffs on U.S. ethanol.

— Former Sens. Max Baucus (D-Mont.) and Richard Lugar (R-Ind.) write in a Bloomberg op-ed that the U.S. must rebuild consensus on agricultural trade to thwart rivals in Asia and elsewhere that are vying “to assume the mantle of global supplier the U.S. has long occupied.”

— Israel and China inked a $300 million trade agreement intended to increase the flow of Israeli environmental and advanced agricultural technologies to Beijing, Reuters reports.

— The floodwaters in Houston are contaminated with bacteria and toxins, The New York Times found.

— Startups are looking at how to use technology with food stamps, Wired reports.

THAT’S ALL FOR MA! See you again soon! In the meantime, drop your host and the rest of the team a line: [email protected] and @ceboudreau; [email protected] and @jennyhops; [email protected] and @hbottemiller; [email protected] and @jmlauinger; and P.J. Joshi, at [email protected] and @pjoshiny. Follow @POLITICOPro and @Morning_Ag on Twitter.