Dave Natzke

Editor / Progressive Dairy

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SCHOOL MILK

What happened?

The USDA announced updates to school nutrition standards. Among provisions, the rule allows schools to continue to serve low-fat (1%) flavored milk with meals without needing to secure a waiver.

What’s ahead?

As described in a USDA fact sheet, “Child Nutrition Programs: Transitional Standards for Milk, Whole Grains and Sodium,” the standards include:

• School and childcare providers receiving federal reimbursement for meal programs will be allowed to serve participants (ages 6 and older) flavored low-fat (1%) milk in addition to nonfat flavored milk and nonfat or low-fat unflavored milk.
  
  
• Potentially affecting cheese, the weekly sodium limit for school lunch and breakfast will remain at the current level in school year 2022-23 but then be reduced by 10% in school year 2023-24 to align with FDA guidance.
  
  
• At least 80% of the grains served in school lunch and breakfast each week must be whole grains. All other nutrition standards, including fruit and vegetable requirements, will remain the same as those established in 2012.

With the new rule effective through the end of the 2023-24 school year, the USDA is also planning to engage with school meal stakeholders to establish long-term nutrition standards beginning in school year 2024-25.

Bottom line

The USDA is required to update school nutrition standards based on recommendations from the latest Dietary Guidelines for Americans. The USDA previously updated the school nutrition standards in 2012 in a rule that has largely been seen as detrimental to dairy.

Under the Obama administration, the USDA eliminated low-fat flavored milk as an option in the school meal and a la carte programs. Consumption of school milk declined, as did overall participation in the school lunch program. According to the National Milk Producers Federation (NMPF), 1.1 million fewer school students drank milk with their lunch during the first two years of the new rule.

An in-depth look at fluid milk consumption by members of the USDA’s Economic Research Service estimated that between 2011-12 and 2017-18, average milk consumption at school among children aged 12 and younger declined by about 0.08 cup per student per day. The report was summarized in the Nov. 25, 2021 issue of Progressive Dairy.

The USDA estimates 30 million children participate in school lunch and breakfast programs.

In 2017, the Trump administration published an interim rule allowing schools to serve low-fat (1%) flavored milk in school breakfast and lunch programs. Under the interim rule, a school needed to demonstrate either a decline in student milk consumption or an increase in school milk waste to receive a waiver.

In 2019, a petition drive to make whole milk available for school children was circulated by Grassroots Citizens for Whole Milk for Healthy Kids. At last count, a petition website estimated about 24,610 signatures had been gathered. The Whole Milk for Healthy Kids Act was introduced in Congress in 2019 and again in 2021 but did not advance to a vote.

The 2012 rule also reduced sodium levels allowed in school meals. The International Dairy Foods Association (IDFA) has sought an exemption for cheeses under that rule, charging overly stringent sodium targets could effectively remove cheese from school lunch menus since sodium is necessary in cheesemaking.

Michael Dykes, IDFA president and CEO, noted that a 2020 federal Dietary Guidelines Advisory Committee report found 79% of 9- to 13-year-olds were not meeting the recommended daily intake of dairy foods.

DAIRY EXPORTS AND LOGISTICAL HURDLES

What happened?

The U.S. Dairy Export Council (USDEC) and the USDA’s Foreign Agricultural Service provided final numbers regarding December 2021 and full-year U.S. dairy exports. Whether measured in terms of product volume, total milk solids or value, it was a strong year. Dairy export sales hit a record $7.75 billion in 2021, accounting for over 17% of U.S. milk production.

What’s ahead?

Latest trade forecasts estimate 2022 dairy exports could be even stronger thanks to global demand and tightening competitor supplies. Headwinds include higher U.S. prices, affecting the competitiveness of U.S. products on global markets, as well as the logistical problems that have plagued U.S. exporters. Some steps to address those logistical problems have already been announced.

In mid-January, the IDFA, the Port of Los Angeles, and shipping and logistics company CMA CGM announced the formation of a Dairy Exports Working Group. Created to identify and address supply chain issues hampering U.S. dairy product exports, the group will focus on seeking opportunities to streamline the movement of products from the interior of the U.S. to West Coast seaports, where a majority of dairy products disembark on their export journey. Action items include finding ways to consolidate U.S. dairy exports from multiple suppliers and working to increase rail availability to non-coastal exporters.

A main focus of the group will be the seaports themselves, finding ways to reduce the number of empty containers leaving the U.S. and determining the viability of a “fast lane” concept for vessels agreeing to depart full or with fewer empty cargo containers.

Separately, on Jan. 31, Agriculture Secretary Tom Vilsack announced that the USDA would provide financial support for a 25-acre “pop-up” site at the Port of Oakland, designed to streamline the export of dairy and other agricultural commodities. Vilsack released the information in conjunction with a “supply chain crisis” webinar hosted by the NMPF and USDEC.

Using Commodity Credit Corporation funds, the USDA will cover 60% of the start-up costs of the site, expected to be operational in March. The site will have a dedicated gate to reduce bottlenecks at the port’s main entrance, allowing ag companies and cooperatives easier access to shipping containers and the ability to pre-cool refrigerated shipping containers. Following establishment of the site, the USDA will provide $125 per container to cover movement logistics costs.

In early February, several U.S. Senators representing major dairy states joined to co-sponsor the Ocean Shipping Reform Act (S. 3580), designed to alleviate delays and disruptions at U.S. ports. The House version (HR 4996) of the bill passed by a wide bipartisan vote in December. The Senate proposal gives the Federal Maritime Commission (FMC) greater rule-making authority to make it harder for ocean carriers to refuse goods ready to export at ports and set rules on what fees carriers can reasonably charge shippers.

Bottom line

Commonly cited by the dairy industry and measured in baseline terms, the U.S. milk production from one day per week is exported. In a report, “Modernizing U.S. Milk Pricing Policy: An Exploration,” authors Marin Bozic, University of Minnesota dairy economist, and staff with Blimling and Associates estimate any growth in annual U.S. milk production above 0.75% to 1% must be exported due to declining domestic fluid sales and slowing demand growth.

Despite the strong year in 2021, Jim Mulhern, president and CEO of NMPF, estimated export shipping delays and disruptions had cost the U.S. dairy industry more than $1.3 billion through the first three quarters of the year.