washington st - southern dairy conference working together ... rising us milk production and falling...

WashingtonUpdate

41st AnnualSouthern Dairy Conference

January 20, 2015Atlanta, GA

Jim MulhernPresident & CEO

National Milk Producers Federation

C o n n e c t i n g C o w s , C o o p e r a t i v e s , C a p i t o l H i l l , & C o n s u m e r s


2Southern Dairy Conference | Connecting Cows, Cooperatives, Capitol Hill, & Consumers | January 20, 2015

Importance of Margin Coverage

$2

$3

$4

$5

$6

$7

$8

$9

$10

$11

$12

$13

$14

$15

$16

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Do

llars

per

Hu

nd

red

weig

ht

MPP Margin and Coverage Levels, 2004-2014

MPP Margin

$8.00 / cwt.

$7.00 / cwt.

$6.00 / cwt.

$5.00 / cwt.

$4.00 / cwt.

Current 2015 Margin Forecast

$2

$3

$4

$5

$6

$7

$8

$9

$10

$11

$12

$13

$14

$15

$16

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Do

llars

per

Hu

nd

red

weig

ht

Source: USDA Farm Service Agency, 1/16/2015


MPP Margin

Forecast

$8.00 / cwt.

$7.00 / cwt.

$6.00 / cwt.

$5.00 / cwt.

$4.00 / cwt.

Gridlock on Immigration Reform


7

Dairy Trade Issues

Southern Dairy Conference | Connecting Cows, Cooperatives, Capitol Hill, & Consumers | January 20, 2015


8

4.4%

3.7%

4.6%4.7%5.0%5.2%

5.7%5.3%

5.8%

8.2%8.6%

9.4%9.8%

11.0%

9.3%

12.7%13.3% 13.2%

15.5%15.6%

2.4%2.7% 2.9%

3.7%4.0% 4.0%

4.3% 4.3%4.6% 4.6% 4.9%

4.6% 4.5%4.1%

3.4%2.9% 3.0%

3.2% 3.0% 3.1%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Milk S

olid

s, %

of

U.S

. P

rod

ucti

on

2014: January-November

U.S. DAIRY TRADE BALANCE, 1995-2014 ytd

Exports: Percent of U.S.Total Milk Solids Production

Imports: Percent of U.S.Total Milk Solids Production

Trans-Pacific Partnership (TPP)

Key Focal Point: Japan

Japan vigorously fighting to

avoid tariff elimination on 5

“sacred” commodities

• Canada watching negotiations with

Japan -- likely to follow their lead if

market access outcomes are low

Weak market access offer by

Japan unacceptable

NMPF pressing for most

ambitious package possible

• TPP letter by dairy companies

Southern Dairy Conference |Connecting Cows, Cooperatives, Capitol Hill, & Consumers | January 20, 2015

9

Trans-Atlantic Trade & Investment

Partnership (TTIP)

US & EU Still “Sparring”

– Negotiations underway but little real

engagement yet to find solutions

• Particularly problematic on SPS/NTB issues

Past EU deals on ag typically poor

– Any agreement must expand US market

access, not one-sided in EU’s favor

• Must address current $1.3 Billion EU-US

dairy trade deficit

• Generated strong House letter on dairy

TTIP issues to USDA/USTR

• USDA Secretary Vilsack delivered strong

US ag message to EU ag ministers


10

Geographical Indications

Recent Successes in Combatting

EU Attacks on Common Name

Usage

House Letter on GIs in TTIP &

export contexts: 177 signatures

55 Senators signed letter

opposing EU cheese GIs

Favorable initial responses to

U.S. legal & political challenges

in Latin America

U.S.-China agreed to protect

certain GI’s in EU-China FTA

negotiations

Continued Concerns

EU aggressive TTIP efforts

EU FTAs w/ Asian nations

including Japan, Singapore


11

CWT PROGRAM – IMPACT


13

Cooperatives Working Together (CWT) benefits all U.S.

dairy producers by:

Helping maintain U.S. exports when world prices are below

domestic prices

Making U.S. a more reliable export supplier

Helping maintain domestic milk prices when world prices

are lower

Focusing on milkfat-containing products: Butter, WMP and

American-type cheese

75%

100%

125%

150%

175%

200%

225%

Oct-14 Nov Dec Jan-15 Feb Mar Apr May

U.S

. P

rice

as %

of

Wo

rld

Pri

ce

, fo

b U

.S.

Source: CME, Rabobank, NMPF

U.S. and World Prices, 2014-2015Butter

Cheese


2014 CWT Export Assistance

15

Another strong year: 1,285 requests from member coops 582 requests/offers accepted: 102.5 Mil. Lbs. Cheddar, Jack, Gouda cheese

About 2/3rd of American-type cheese exports

53.8 Mil. Lbs. Butter Nearly half of total US butter exports

34.7 Mil. Lbs. Whole Milk Powder Largest ever WMP exports

2.5 billion pounds milk equivalent, milkfat basis

CWT 2014 Cheese Exports

CWT 2014 Butter Exports

CWT 2014 WMP Exports

2015 May Be CWT’s Most Important Year Yet Thanks to continuing investment of dairy farmer

members of 37 cooperatives and many individual farmers: CWT will provide needed assistance to maintain and

grow exports in 2015 Will be important to offset:

Weaker world prices Rising US milk production and falling domestic prices

Unlike 2009, CWT export assistance will be active, helping maintain US share of world markets

Animal Care


20



Environmental Issues

| Connecting Cows, Cooperatives, Capitol Hill, & Consumers

21


EPA “Waters of the U.S.” Proposal

22

Waters of the U.S. definitions Conform with U.S. Supreme court cases

Scientific basis for connectivity

Need certainty in regulation

Broad agricultural opposition

Interpretive Rule on 56 NRCS Conservation

Practices NMPF requests withdrawal


Yakima Valley, WA Court Case

23

Federal court ruling last week would apply

federal RCRA law to manure Would treat manure as solid waste subject to RCRA

regulations on disposal

RCRA exempts manure when applied as fertilizer

Court said defendants applied beyond agronomic rates

and improperly stored manure – allowing it to leak into

ground water

Precedent setting decision with broad

agricultural implications if it stands

Case now moves to trial phase where Court will

order remedies

Environmental Issues


24

With the growth and

consolidation of farms,

how can we turn “waste”

from a cost to a benefit?

Increasing State & Federal

Regulations

Customer Concerns

Anaerobic Digesters &

Nutrient Recovery Plans

NACWA MOU



Thank you


$23.50

$24.90

$25.20 $25.30

$24.20

$23.20 $23.30

$24.10

$25.70$24.90

$23.00

$20.30

$18.00

$16.50

$15.50$15.20 $15.30 $15.50

$16.00

$16.70$17.20

$17.70 $17.80 $17.60

Based on CME Group futures settlement prices, January 16,

2015$14

$15

$16

$17

$18

$19

$20

$21

$22

$23

$24

$25

$26

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Do

llars

per

cw

t. a

t avera

ge t

est

U.S. All-Milk Price: 2014-2015

2014 actual

2014 forecast

2015 forecast

Pre-2014 record = $22.10

2009 Forecast vs. Actual

$2

$3

$4

$5

$6

$7

$8

$9

$10

$11

$12

$13

$14

$15

$16

2004 2005 2006 2007 2008 2009

Do

lla

rs p

er

Hu

nd

red

we

igh

t


MPP Margin

9/30/08 forecast

11/28/08 forecast

$8.00 / cwt.

$7.00 / cwt.

$6.00 / cwt.

$5.00 / cwt.

$4.00 / cwt.

washington st - southern dairy conference working together ... rising us milk production and falling...

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