You’re busy milking cows, thawing water pipes and attending dairy conferences. With that in mind, Progressive Dairy
 looks at issues in the news impacting you and your dairy business.

In recognition of your time, we’ll attempt to summarize recent events or actions making dairy headlines and reported in our weekly digital newsletter, Progressive Dairy Extra. Then we’ll try to put that news into perspective and briefly describe how it might affect you.

CWT LAWSUIT

What happened?

The National Milk Producers Federation (NMPF) will pay $220 million in a settlement agreement to close a class-action lawsuit concerning a herd retirement program that ended in 2010. The herd retirement program was administered through NMPF’s Cooperatives Working Together (CWT) initiative between 2003-10. Under the herd retirement program, CWT announced invitations for dairy producers to submit bids to sell their dairy herds and cease milk production in an attempt to bring milk supply in closer balance with demand and help financially struggling dairy farmers.

During CWT creation, NMPF leaders said they believed the program fell under provisions of the Capper-Volstead Act. CWT’s activities were vetted with the USDA, and no Capper-Volstead concerns were raised. The U.S. Department of Justice also raised no concerns.

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However, defendant lawyers alleged the herd retirement program was not covered under Capper-Volstead protection because it controlled pre-production milk supply by removing cows from production. The plaintiffs – generally larger retailers and companies who directly purchased butter and cheese from CWT member cooperatives – alleged the co-ops and their producer members conspired to raise milk and dairy product prices.

What’s next?

NMPF agreed to the settlement in exchange for a release from all claims. Neither NMPF nor any of its member cooperatives admitted any wrongdoing as a result of this settlement. NMPF was the sole defendant to be a party to the settlement, but the settlement extinguishes claims against all the defendants.

The settlement amount will be paid through existing CWT mechanisms, ensuring no disruption to other business operations, according to NMPF.

Bottom line

According to NMPF officials, the decision to enter into the settlement recognized the uncertainties inherent in any jury trial, the very large damages sought by the plaintiffs and the fact that the CWT Export Assistance Program is unaffected by the settlement. If the case had gone to trial and plaintiffs prevailed, antitrust rules mandate a tripling of any damages. The settlement is less than 6% of the damages sought by plaintiffs, according to NMPF.

USMCA RATIFICATION

What happened?

Thirteen months after negotiators from the U.S., Mexico and Canada first signed a trade agreement – called the U.S-Mexico-Canada Agreement (USMCA) – a deal between the Trump administration and U.S. House Democrats raised the hopes among U.S. dairy organization leaders that the agreement would be implemented soon. House Democratic leaders approved the plan on Dec. 10, 2019, after additional labor, environment and prescription drug provisions, among others, were added to gain their support.

What’s next?

At Progressive Dairy’s press deadline, the full House was expected to vote on the measure before heading home for the holidays through Jan. 7, 2020.

If approved in the House as expected, a vote on the agreement moves to the U.S. Senate, where Majority Leader Mitch McConnell (R-Kentucky) told reporters the Senate would not likely take up the trade deal until 2020, after a highly anticipated impeachment trial for President Donald Trump.

Outside the U.S., Mexico was expected to ratify the changes by mid-December. A bill to pass USMCA was unlikely to be introduced in Canada’s Parliament until late January because its House of Commons was set to break for the holidays and not scheduled to return until Jan. 27, 2020.

Bottom line

USMCA replaces the 25-year-old North American Free Trade Agreement (NAFTA). In general, it preserves the U.S. dairy market in Mexico and increases market access to the Canadian dairy market. U.S. dairy exports to Mexico and Canada totaled more than $2.1 billion in 2018, or roughly 40% of total U.S. dairy exports.

The U.S. dairy industry is seen as a winner under the agreement, even though some of the provisions are scheduled to be phased in over more than a decade. For example, the agreement phases in Canadian market access for various U.S. dairy products over periods of 6 to 13 years, in most cases in 1%-per-year increments. According to NMPF, USMCA will add an estimated $548 million to dairy farm revenues in its first six years after implementation.

Of more immediate requirements, Canada must eliminate milk price Classes 6 and 7 within six months after the trade agreement is implemented. Creation of Class 7 pricing resulted in the loss of markets for U.S.-produced ultrafiltered milk in spring of 2017 and ultimately forced termination of milk contracts for some U.S. dairy farmers. Few anticipate the U.S. will regain that market.

DAIRY’S LABOR NEEDS

What happened?

The Farm Workforce Modernization Act (H.R. 5038), an attempt at immigration reform with a focus on addressing U.S. agriculture’s farm labor crisis, was approved in the House on Dec. 11, 2019. Touted as a bipartisan measure, it was approved on a 260-165 vote, with 34 Republicans joining 226 Democrats in favor of passage.

What’s next?

The bill now moves to the Republican-controlled Senate, where bipartisanship will be put to the test. Besides a schedule that will include the impeachment trial, critics already charge the plan creates amnesty for immigrants in the U.S. illegally.

Bottom line

Among its provisions, the bill would provide a path to legalization for current farm workers and expand the H-2A foreign guest worker program.

Applicants would be required to show at least 180 days of agricultural employment over the last two years and pass a background check. Qualified applicants are provided five-year renewable agricultural work visas. Those applying for a Lawful Permanent Resident (LPR) status must pay a $1,000 fine and meet and maintain minimum agricultural work status. It would cap wage increases and establish a mandatory, nationwide E-Verify system to ensure a legal workforce.

FARM WORKFORCE DEVELOPMENT

What happened?

The Farmers Assuring Responsible Management (FARM) Program released a proposed Workforce Development Evaluation Tool for input from industry stakeholders. To review the draft evaluation tool and provide feedback, visit nationaldairyfarm.com/workforce-development-evaluation

What’s next?

The FARM Program is getting direct feedback from dairy producers through a pilot program that runs through the end this year. Nine cooperatives, involving about 60 producers, have volunteered to test the evaluation tool.

Public comment will complement the pilot program. After the comment period closes on Jan. 20, FARM staff, the Workforce Development Task Force and the NMPF executive committee will review and consider, then present a final proposal for approval by the NMPF board of directors in March 2020.

Bottom line

FARM Workforce Development is the FARM Program’s newest initiative, focusing on human resources and safety management. The on-farm evaluation tool is meant to help farms learn about human resources and safety management best practices, identify which best practices will be most useful to implement on their farm and track improvement over time. By performing on-farm evaluations, FARM participants can also provide important assurances to supply chain customers: dairy product buyers and retailers.

Dave Natzke