by Sally Colby
In her role as vice president of government relations for Dairy Farmers of America (DFA), Mary Knigge is keenly aware of what’s happening in all aspects of the dairy industry. Knigge aids the organization’s legislative affairs team in supporting dairy policy, and recently addressed the Dairy Girl Network on a variety of topics that directly affect dairy farmers.
“We’re a farmer-owned cooperative with more than 8,500 members,” said Knigge, explaining the organization. “The average dairy farm with DFA has 75 cows. We have 42 manufacturing facilities and we’re a diversified manufacturer, so we make dairy products, food components and are a leader in formulating shelf-stable dairy products.”
Knigge said the last several months have been busy in the nation’s capital. Although the current administration stressed “America First” on the campaign trail, agriculture isn’t the same as other industries. “We’re dealing with a trade surplus with a lot of our trading partners,” she said. “When we look at negotiating and renegotiating these trade deals, agriculture stands to lose quite a bit.”
The U.S.’s top trading partners include Mexico, Canada and China, and Knigge noted that the U.S. has made a major effort to increase exports. “The dairy industry has done a great job growing our export market,” she said. “In 2017, we exported nearly 15 percent of our domestic production. We’ve set a goal of increasing that to 20 percent in 2018.”
However, agriculture seems to bear the brunt of retaliatory tariffs, which Knigge explained is because every state has agriculture. “They can’t target cars because they’d only be hurting a few states,” she said. “If you target agriculture, you are able to make everybody hurt. That’s why it feels like agriculture is always on the front burner of these retaliation tariffs.”
Knigge said the administration realized these tariffs are hurting middle America, so the USDA announced an agricultural relief package of $12 billion on June 24. “This is going to be divided into three buckets: the first, and largest, will be direct payments to producers,” she said. “I caution you to recognize the other list of commodities that are on this list – soybeans, sorghum, corn, wheat, cotton, then dairy and hogs.” Knigge added that she believes this administration is prioritizing those they believe have been hurt the worst by tariffs, and that soybeans, sorghum and corn are at the top of the list. While second-tier commodities have been hurt as well, they won’t receive as much relief.
The second effort is USDA’s purchase of fluid milk for food banks. “The USDA just made an announcement about a 50 million dollar fluid milk purchase,” she said. “That isn’t part of this package – that’s in addition to what they will announce along with the other commodities. We’re excited about USDA purchasing fluid milk and it going to food banks because we all know it’s the most requested product. I don’t believe we’re going to be displacing sales, but we have challenges – not all food banks have refrigeration. It’s exciting that USDA is trying something new because they haven’t done fluid milk buys in the past. They’ve mainly done cheese going to schools. We’re anxious to see how this works and excited that more people will have access to this great nutrition.”
The third, and smallest, bucket includes additional funds for trade promotion. Several USDA programs, such as the Market Access Program (MAP), will be improved.
What will direct payments mean for dairy producers? “We’ve had lots of conversations with USDA to better understand how this is going to work and make sure producers get the biggest bang for their buck,” said Knigge. “We do expect payment limits on the amount of funds going to each farm, and we know the USDA model is looking at tariff lines on what products will be hurt by these tariffs. We’re making the case that the dairy industry has been suffering from these retaliatory tariffs for quite some time, and that started when Canada started playing games.”
Knigge explained that Canada has an interesting export for reimport program, but it’s unclear whether the program benefits the U.S. “We send them products, they process them and send them directly back to the U.S.,” she said. “What percentage that is, we don’t know because Canada won’t tell us. But it’s a very large portion of what we send to Canada.”
In regard to trade agreements with other countries, Knigge noted that the EU, New Zealand and Australia have sizeable dairy industries and have negotiated significantly more trade agreements compared to the U.S. She added that it’s going to be more difficult for the U.S. to get into different markets if we’re battling an existing free-trade agreement with the EU, New Zealand or Australia.
The topic of farm labor continues to challenge both politicians and farmers. Knigge said the dairy industry is in a real pickle because there’s no current visa program for long-term workers and seasonal programs aren’t working as they should. “Not much good progress is being made,” she said. “The Democrats tried to do it on their own and didn’t get it done. The Republicans have taken a stab and couldn’t get it done. Maybe Congress will realize they need to work together to figure out a solution.”
Knigge urged dairy farmers to defend the milk label and not tolerate false and misleading labels on non-dairy products in the dairy case. She said there’s a standard for what “milk” is, and the FDA has conceded that the standard of identity hasn’t been enforced. She explained that years ago, the soy industry sent a letter to FDA asking if they could call soy products milk, and the FDA never responded. The result has been more non-dairy products in the dairy case, including products such as non-dairy yogurt and butter.
“You know the other side is going to be using all sorts of arguments about why they should be able to label their product ‘milk,’” said Knigge. “People think it’s more nutritious if it’s labeled ‘milk.’ FDA is focused on public health, and this is clearly a public health concern, especially when we’re talking about kids and necessary nutrition.”
Knigge realizes dairy farmers are busy, but urged them to make themselves heard. “It matters to the dairy industry that we’re engaged and we understand what’s happening in Washington, D.C. and in your state,” she said. “Others are telling our story for us if we aren’t out there talking about the good things about the dairy industry.”