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Capitol Hill considers taxing sugar based sweeteners, milk products
In politics, Washington’s spend-then-tax mentality has quickened the need to raise revenue and one of the insane ideas being put forth is a federal excise tax on, of all things, flavored milk drinks that contain sugar-based sweeteners.

National Milk and the International Dairy Foods Association have teamed up to oppose it and the Federation’s Chris Galen charged in Thursday’s DairyLine, “We think the federal government may be unwise in lumping sugar sweetened milk with other beverages which don’t have any nutrition.”

Senators were told “It’s bad nutrition policy and bad tax policy to tie milk together with other drinks sweetened by sugar,” Galen reported, “a beverage the government actually encourages children to consume.”

When asked why this is even being considered, Galen answered, “I could give a trillion reasons,” referring to the trillion dollar deficits that Congress and administration is racking up over the next few years.

The other reason is concern over the obesity rate among adults and children, he said, so perhaps the thinking is that, “if they tax things which have sugar in them, that will take care of the problem of having fat kids.”

Galen countered that research shows children who consume milk and dairy products “have better body weight and appropriate body mass than kids who under consume dairy products.” Even the American Academy of Pediatrics believes flavored milk is “not necessarily a problem or a bad thing,” he said. Taxing flavored milk because it has a small amount of sugar in it is what the Federation calls, “penny wise and pound foolish.”

The meltdown in global and U.S. economies has led to a sharp downturn in milk prices and dairy farm income this year and has farmers reconsidering ways to manage the milk supply and price volatility, according to Dairy Profit Weekly Editor, Dave Natzke. He reported in Friday’s broadcast that U.S. dairy farm receipts from milk sales were

estimated at about $35 billion annually for 2007 and 2008. However, based on recent USDA forecasts, 2009 U.S. milk sales will generate nearly 35 percent less, or about $23 billion at the farm level.

Put on a per-cow basis, each “average” U.S. cow generated about $3,800 in 2007 and 2008. This year, however, based on current price and production estimates, each cow will earn less than $2,500, according to Natzke, and this is gross income. It doesn’t factor in higher production costs.

The Cooperatives Working Together (CWT) program is in the middle of “retiring” about 103,000 cows from the U.S. dairy herd to reduce overall milk production, Natke reported, and two other proposals are gaining momentum.

Similar in nature, the California Milk Producers Council’s Growth Management Plan, and Holstein USA’s  Dairy Price Stabilization Program, would establish historical base milk production levels for all dairy farmers, factoring in small percentages of growth to meet increased consumer demand. Farmers who produce milk above and beyond that base level would be required to pay a market access fee on all milk. Farmers who keep production within the base level would receive payments from the pool.

“It remains to be seen whether the dairy industry will ride out the current storm, or create a long-term plan to level some of the peaks and valleys we’ve seen in the past decade,” Natzke concluded.

Meanwhile, Select Milk Producers, Inc. Continental Dairy Products, Inc., and United Dairymen of Arizona announced this week that they oppose any government run supply management program for U.S. dairymen, stating that such a program would “hinder our members in sizing and locating their family owned operations to meet the ever changing needs of the markets they serve.”

Know that U.S. dairy is not alone in financial stress. The Downes-O’Neill dairy brokers report that Dairy Farmers of Britain has entered into receivership. The co-op represents 10 percent of the country’s milk, and is “indicative of the situation that all livestock commodities are in and a reflection of just how dire things are in the global dairy market,” according to dairy economist, Bill Brooks.

New CEO takes on
milk mustache campaign

Vivian Godfrey is the new CEO of the dairy processor’s MilkPEP program and she said in Wednesday’s broadcast that she’s excited to head up MilkPEP and its Milk Mustache “Got Milk” campaign.
Godfrey grew up in London, England and after living briefly in France, Germany and Canada, she moved to Minneapolis, Minn. in 1992. She worked for Pillsbury for nine years including four years as CEO of Haagen-Dazs ice cream.

“Every single person that I’ve met over the past few weeks has given me a warm welcome,” Godfrey said, and she will visit several dairy farms and processing operations as well.

Producers and processors are sharing great ideas, Godfrey said, and she said it’s clear to her that the milk mustache program has “significantly improved milk’s image and market position over the years,” pointing to the various celebrities that have donned the milk mustache as a “tremendous asset” to “remind consumers about the benefits of milk.”

“People today are looking for foods that are naturally nutrient-rich,” Godfrey concluded, and “Nothing tops milk in that regard.” “I think in these tough economic times it’s even more important that MilkPEP remind Americans that milk is number one when it comes to providing value. Joe O’Donnell, director of the California Dairy Research Foundation, turned his attention to milk in Monday’s “DMI Update” and pointed out that milk culturing to make yogurt and cheese has gone on for decades but now we’re understanding more about milk’s components, specifically the carbohydrates in milk, and how important they are in promoting proper bacteria development in human GI tracts.

This concept is being marketed by some yogurt manufacturers, according to O’Donnell, but it’s relatively new, due to new technology that is unlocking this information and “These carbohydrates are very important for the good bacteria that live in our GI tract. Without them they just don’t survive as well and they contribute to our good health.”

“Again, milk in ways we never knew before,” O’Donnell said, “We’re now finding out promotes good health.” Telling this story is very important to the dairy industry, according to O’Donnell, as “It’s all about good health and that’s the key for dairy products.” “That’s one thing we have above every other product is that we are there to deliver nutrition and health.”

One of the key components, he said, is turning out to be the carbohydrates that are in milk. Not just lactose but others that we weren’t even aware that were there, he concluded, but “now we have the technology to tell us about it.”
6/10/2009