Northeast Dairy Magazine | Q4 2019

WHAT TO WATCH IN 2020: Policy, Planning and Best Practices

ON TREND

A Shift in Dairy Retailing

Fourth Quarter 2019

MEMBER PROFILE

Evergreen Packaging

2019 CONVENTION

Cooperstown Highlights

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contents

Fourth Quarter • Winter 2019 • Volume 2, No. 4

FEATURES

POLICY, PLANNING AND BEST PRACTICES FRONT DESK 03

PRESIDENT’S MESSAGE: NDFA

Guest Author: It’s Generational

05

BY RICK SEDOTTO

PRESIDENT’S MESSAGE: NDSA

Help Us Help You

BY OZZIE ORSILLO

EXECUTIVE VP MESSAGE Is Networking Part of Your Plan?

BY BRUCE W. KRUPKE

07

9

LEGISLATIVE REPORT Our Elected Officials Have Adjourned

15

BY BRUCE W. KRUPKE

Study Ranks Milk More Hydrating Than Water

16

23

25

26

30

Changes in U.S. Food Retailing

BY CAROLINE K. REFF

35

Making the Shift: Finding and Keeping the Next Generation

Dairy Industry Needs a Wider View

38

Choose Cheese Wisely

Family Mealtime Includes Dairy

39

DFA Recruiting for Accelerator Program

FDA Extends Label Changes

CONVENTION HIGHLIGHTS 40

42

Dairy Developments to Shape 2020

31

NDFA Defends Flavored Milk

2019 Convention Photo Gallery

43

Sonbyrne Awarded Customer of the Year

Cooperstown Hits It Out of the Park

45

Convention Sponsors

WORKPLACE TOOLS OF THE TRADE

BY GARY LATTA

46 STAY CONNECTED

ilk Shrinkage Cost M More in 2019

49

BY RON MONG, CPA

re You Ready A for a Recall?

52

PA Agency Recomends Fee to Plant-Based “Milk”

53

OSHA Updates

BY JASON WOODRUFF, CIH, CSP

www.nedairyfoods.org www.neastda.org 427 S. MAIN ST, NORTH SYRACUSE, N.Y. 13212 315-452-MILK (6455)

NED Magazine | Fourth Quarter 2019 • 1

contents

Fourth Quarter • Winter 2019 • Volume 2, No. 4

NORTHEAST DAIRY FOODS ASSOCIATION, INC. EXECUTIVE VICE PRESIDENT

Bruce W. Krupke

EXECUTIVE ASSISTANT

Leanne Ziemba

DIRECTOR OF MEMBERSHIP AND COMMUNICATIONS

Alex Walsh PRESIDENT

Mike Suever HP Hood, LLC

VICE PRESIDENT

Daniel R. Lausch Lactalis America Groups, Inc. TREASURER

Michael P. Young Guida’s Dairy SECRETARY

Rick Sedotto Midland Farms

NORTHEAST DAIRY SUPPLIERS ASSOCIATION, INC. PRESIDENT

TREASURER

VICE PRESIDENT

SECRETARY

Ozzie Orsillo Evergreen Packaging Co. Bill Elliott Northeast Great Dane

Melissa Fryer Alfa Laval Ryan Osterhout KCO Resource Management

NORTHEAST DAIRY MAGAZINE TEAM MEMBER NEWS 55

ember Profile M Evergreen Packaging

58

BY STEVE GUGLIELMO

Shelf Life Dependent on Many Steps

60

ember Profile M Black River Valley Natural

BY COURTNEY KLESS

EXECUTIVE EDITOR

Bruce W. Krupke bk@nedairyfoods.org PUBLISHER/DIRECTOR OF SALES

Bill Brod billbrod@nedairymedia.com EDITOR

Caroline K. Reff creff@nedairymedia.com GRAPHIC DESIGNER

62

Member & Industry News

63

New Members

Greg Minix

SALES

Tim Hudsen thudson@nedairymedia.com Hannah Gray hannahg@nedairymedia.com CONTRIBUTORS

Steve Guglielmo, Courtney Kless, Ron Mong, Rick Sedotto, Jason Woodruff PRODUCED BY

Northeast Dairy Media

Editorial correspondence should be directed to editor@nedairymedia.com.

Advertising correspondence and materials should be sent to billbrod@nedairymedia.com.

POSTMASTER: Send address changes to bk@nedairyfoods.org.

An official magazine of the Northeast Dairy Foods Association, Inc., a nonprofit organization. This publication carries authoritative notices and articles in regard to the activities and interests of the associations. In all other respects, neither the association nor the producer of the publication, Northeast Dairy Media, is responsible for the contents thereof or the opinions of the contributors.

The entire contents are © 2019 by Northeast Dairy Media. Nothing may be reproduced in whole or in part without written permission of the publisher. The association and Northeast Dairy Media reserve the right to print portions or all of any correspondence mailed to the editors without liability on its part and no such correspondence will be returned.

Visit Northeast Dairy Foods Association online at nedairyfoods.org for current information on association programs and services, or call the association at 315-452-MILK (6455). Questions and comments may also be sent to the association at bk@nedairyfoods.org.

2 • Northeast Dairy Foods Association, Inc.

FrontDesk

It’s A Generational Thing

BY RICK SEDOTTO, SECRETARY, BOARD OF DIRECTORS, NORTHEAST DAIRY FOODS ASSOCIATION, INC.

M

y perspective on generational differences is that of a Baby Boomer who has managed in the fluid dairy industry for 33 years. Here are a few thoughts on being a consumer and a manager of dairy, while understanding there are always exceptions to my rhetoric.

Depending on when you were born, managers and salaried employees in the dairy industry are extremely different — not better or worse, just different. Managers who have been involved in any operational aspect of the business have profound extremes in how they view their work life.

The older generation would, and still does, live the business. There was always been a sense that the job must get done, sacrificing family, vacations, social engagements and health. There are 24 hours in a day that belong to the dairy, and whatever is left is your free time. And there are seven days in a week, so don’t be shy — why not work them all, either at the plant or home?

Younger managers are acutely aware that they are being paid for a 40 hour work week and just want to work 40 hours. They don’t live the job; they do the job. Work- life balance is important to them. I am not saying that they won’t pitch in when there are extraordinary circumstances, but that can’t be their norm. If it is a regular occurrence, it is time for a new job.

Both younger and older managers have great merit to their approaches. It is not even a question of right or wrong.

It is a question of understanding one another and coexisting.

There must be a realization that each has grown up differently. The days of one company careers are foreign to the younger generation, and even though the older generation thinks they will go on forever, they will have to yield one day. They must impart the knowledge they have accumulated

Both younger and older managers have great merit to their approaches. It is not even a question of right or wrong.

It is a question of understanding one another and coexisting.

— RICK SEDOTTO

throughout their tenure and watch how the new blood makes the industry continue to hum, whether it takes two or three people to cover that 24 hour day.

In a similar way, there is a difference in how these generations approach dairy as consumers. Generational consumers have serious conflicting messages. As a Baby Boomer, the milkman was a significant and welcomed person in my life.

And when his time had passed, there was still a lot of milk (continued on next page) NED Magazine | Fourth Quarter 2019 • 3

FrontDesk

and other dairy consumed in my home. Of course, I drank milk. Didn’t everybody? Milk was the healthiest beverage on the planet. Everything was better with milk. This is what was touted by television, schools, physicians and mom and dad.

Younger consumers, although they have been exposed to milk, have heard a different message. Physicians, television and now the internet, are not extoling the same virtues of milk. Schools are not pushing “the white or chocolate stuff,” as they want to watch calorie intake. Mom and dad have yielded to the loud voices saying milk is not essential, and you can get the same nutrients from other products, too.

Studies have noted how bad milk is for you and how

cows are killing the earth. Many of the studies have been refuted, but the damage has been done. It is like a retraction of a headline news story stuck on page 30 of a newspaper.

(Oh, and by the way, this generation is not reading the newspaper anyway.)

And yet, there is still hope. Although the younger consumers may never consume the exorbitant amount of fluid milk of past generations, consumption of other dairy products is on the rise. The positive voice and advertising of cheese, yogurt and other dairy products is the new message for today.

As for me, I have the best of both worlds. I consume them all. That’s all for now — got to start my next 24.

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services

FrontDesk

NDSA Is Your Organization; Help Us Continue to Help You

BY OZZIE ORSILLO, PRESIDENT, BOARD OF DIRECTORS, NORTHEAST DAIRY SUPPLIERS ASSOCIATION, INC.

Question: Who had a great time at our annual conference this year?

Answer: Everyone who attended!

T

hat’s right, our conference in Cooperstown, New York, with our friends at the Northeast Dairy Foods Association and the Pennsylvania Association of Milk Dealers was a total success.

Besides the quality-packed field of speakers, we had a fantastic few days of networking with the top business leaders of our dairy industry. Capping all that off with a very special guest, Hall-of-Famer Rich “Goose” Gossage, made for one of our most memorable conferences.

Goose, if you happen to be reading this article, on behalf of all of our attendees, I want to extend our thanks for your participation as guest speaker, playing golf with all of our foursomes and simply being a great guy socializing during our event – thank you!

As we look toward next year’s conference, we are happy to report we have secured the Mount Airy Casino Resort in Mount Pocono, Pennsylvania. This nearly brand-new facility has something for everyone. It includes a state-of-the-art gaming floor, great restaurants, excellent spa, historic golf course and a pool area that is really like no other. The dates we have chosen are Wednesday, Aug. 12, through Friday, Aug. 14, 2020. These dates should allow more family participation, so please mark your calendars now, and tell your family and friends that this is a must-attend event!

Before we close out 2019, we had one more event on our schedule, our fall tour. Some of our Northeast Dairy Suppliers Association members attended the tour of the new HP Hood plant facility in Batavia, New York, on Nov. 20. (It was so popular, however, that we weren’t able to accommodate everyone who wanted to attend.) We were treated to some very good hospitality by Plant Manager

It is our job to not only help guide the association but also to try to improve it every year — and the way we do that is through feedback from all of you.

— OZZIE ORSILLO

Mike Corporon and his staff, as we visited the new processing areas, cooler storage and transportation facilities.

Afterwards, we all gathered at Batavia Downs for some more networking, cocktails and dinner. I’d like to thank the HP Hood family for once again allowing our members to interact, network and visit one of the region’s newest and largest facilities.

On the topic of scholarships, our association gave out a total of $15,000 in scholarships this year. If your college (continued on next page) NED Magazine | Fourth Quarter 2019 • 5

FrontDesk

students did not have the opportunity to apply, our association will again be giving away $15,000 in total scholarships in 2020. This program awards five $2,000 scholarships to those college students majoring in dairy and agriculture studies and another five $1,000 scholarships for other majors. Sometime after the first of January, emails and more information will be sent to all our members notifying them that applications are ready to be accepted. You can always check in at our website for this information and other useful news at www.neastda.org.

I want to bring into focus the role of the board of directors of the Northeast Dairy Suppliers Association. It is our job to not only help guide the association but also to try to improve it every year — and the way we do that is through feedback from all of you. We do our best to provide high quality events for the purposes of supporting

the dairy industry and access to high quality networking opportunities for our members. Dues in our association are very reasonable, and we continue to grow. We support and/ or attract processors, producers, distributors and vendors across North America, not just the Northeast region. Suffice it to say, we are an intimate, regional association with a national reach. We think we are doing pretty well, and your feedback is always valuable. Therefore, I ask, help us help you. Please write, call or pull us aside at any event and give us your thoughts on how we can make this association more beneficial to you and your business. Your feedback sets our path forward. Contact us at lz@nedairyfoods.org.

To the truly genuine folks that make up the Northeast Dairy Foods Association and Pennsylvania Association of Milk Dealers, it is our pleasure to serve your businesses.

We all look forward to a prosperous 2020.

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FrontDesk

Is Networking Part of Your Business Plan?

BY BRUCE W. KRUPKE, EXECUTIVE VICE PRESIDENT, NORTHEAST DAIRY FOODS ASSOCIATION, INC.

I

n early September, our association, in conjunction with our suppliers, the Northeast Dairy Foods Association and the Pennsylvania Association of Milk Dealers, held our annual Northeast Dairy Convention. This has been happening in one form or another since we started in 1928! If you didn’t attend the convention, you missed some great opportunities to make connections, do business, meet new friends, relax a bit and do what I call networking.

In today’s busy business world, we are consumed with conducting our affairs with speedy text messages, emails, quick surveys and maybe using a phone call or two. Doing business utilizing the old fashioned “snail mail” U.S. Postal Service — BRUCE is becoming less and less utilized. It is very easy to get caught up in the fast pace of business life in today’s technologically enhanced world.

One of my favorite TV commercials is from United Airlines, where the boss addresses his employees, saying, “We need to get back to basics.” He states that the company lost a big account because the client “doesn’t know us anymore,” and then he hands out airline tickets to his staff to go see their customers. One of the employees asks, “So what

are you going to do boss?” He replies that his first stop is going to see the customer the company lost. This commercial reverberates with me from time to time and makes me reflect.

Business can’t be completely accomplished by emails and texts, or even phone calls. It has to be done in person, and there is a good reason for that. It is easy to dismiss a customer or a supplier when you really don’t know him or her in person. Business should be conducted, as much as possible, in person, face-to-face in a setting that allows both the buyer and seller to really communicate with each other. They learn to trust each other when there are problems and react differently when they actually know the person they are doing business with.

W. KRUPKE At our convention in September, we provided you, our members, with the opportunity to do business face-to-face. We allowed you to network with peers, suppliers and vendors, in addition to listening to some educational topics and relaxing with a spouse or guest. We provided the opportunity to meet-andgreet, in person, those people who are in the same industry as you. It was chance to really network. (continued on next page)

Business should be conducted, as much as possible, in person, face-toface in a setting that allows both the buyer and seller to really communicate with each other.

NED Magazine | Fourth Quarter 2019 • 7

FrontDesk

When we ask for evaluations after the convention, the number one reply we always receive is that the networking is great. The actual quoted comments include: “I remember how much I really appreciate our industry when I meet all the wonderful people associated,” or “I was able to get done in one or two days at the convention what would have taken me six months to do by seeing all the people who attended individually.” Many comment that the time and money utilized in attending our convention is always worth it.

Networking, ladies and gentlemen, is not dead — nor should it be. I know that networking can be used in a variety of ways and methods. Attending workshops, participating in webinars, taking time out to go to an industry dinner or function where others will be from our own or similar related industries makes us much smarter and informed. I learn from networking things I might not have learned by staying in my office. I’m not talking about just attending an educational or instructional program, although these could be considered minor networking. I’m talking about going to an event to see who else might be there to do business with. I’ve always been fond of the saying, “Treat each new idea as though it were royalty, because you never know when one will turn out to be king!”

When was the last time you took time to participate in an industry function, event or gathering? How about your employees? Do you encourage them to network, get out and find what is going on in your industry? Do they belong to a professional organization they can feel

8 • Northeast Dairy Foods Association, Inc.

part of? One good management technique in trusting and treating your employees well is to allow them to spread their wings and network. Do you provide them a budget and expect them to network and learn? The return on that investment is always worth the cost.

By the time you read this article, you might have received a survey sent through the U.S. Postal Service from me regarding our convention and networking. If you received it and responded, thank you. If you didn’t respond, please do so. Because we place networking as one of the most important reasons and benefits for membership in our association, we created the survey to ask you, our members, how we can provide you with a better networking experience. Over the years, our convention format and agenda hasn’t changed much, although the industry has. Sure, we’ve moved it from May to either August or September. We have made the event a day shorter.

But we want to know what would make the experience of networking for you and your employees even more valuable, so please tell us by responding to our survey or just contacting me at the office.

And for those of you who haven’t attended and want to see what this year’s convention was all about, visit the events tab on our website (www.nedairyfoods.org) and look at some of the pictures. You can also mark these dates in your 2020 calendar for the Northeast Dairy Convention, Aug. 12 to 14, 2020, at the Mount Airy Casino and Resort, Mount Pocono, Pennsylvania. It is a networking event you and your employees won’t want to miss!

OUR ELECTED OFFICIALS HAVE ADJOURNED FOR THE YEAR

T

BY BRUCE W. KRUPKE

his time of year is traditionally a slower time for lobbying and politics. That is because fall is election time. Legislators are either sitting idle or running for office when they have to pay attention to getting re-elected. For most states, it is the off-year for elections, so usually we can take a break from the heavy load of lobbying. But not this year.

2019 was one of, if not the most active years for lobbying on our members’ behalf. From my perspective, I observe there has been a shift or change out there in government land. This shift is due to a few factors. First, there is no question that the liberalization of our country is in full swing. The second reason is that Baby Boomers are retiring and moving out of the region. Yes, they still vote, but right on their tails is the Millennial generation, representing an even larger group, 10% more as a whole than their previous Boomer counterparts.

The Millennial viewpoint is maturing, and with it comes a

stronger realization of politics and the role it plays in their lives. The Boomers are still voting but are on their way out.

The Millennials are learning what is important and starting to guide the big ship of politics.

What this has to do with lobbying is concepts, policies and ideals that were not part of our universe 20 years ago are now front and center. We used to have to concentrate on issues that mainly dealt with dairy, such as product content, shipping and nutrition. Today we work on issues that aren’t necessarily product related, such as energy, definitions, animal wellbeing, organic, GMOs, farm worker rights, minimum wages, paid family time off, recycling and human relations.

I’d like to provide you with a look at 2020 and beyond in terms of the key issues we’ll confront at the beginning of the year, both on a state-by-state basis, as well as what’s happening in our nation’s capital. (continued on next page) NED Magazine | Fourth Quarter 2019 • 9

Legislative+RegulationsReport

I’ve reported on many state issues in past editions of this magazine. Now, I’m going to discuss only those that I consider will be red hot at the beginning of the year and those that will require a lot of attention and discussion.

BREAKING IT DOWN: TOP ISSUES STATE-BY-STATE MAINE In 2019, the Maine legislature passed a somewhat obscure law dealing with recycling.

Unfortunately, it was one that didn’t garnish much attention until after it was passed. It is the Resolve To Support Maine Recycling Programs (2019 Resolve Chapter 42), passed by the legislature and signed by the governor, that lays out some requirements, including that producers (you the owner/manufacturer of a product) do the following: • Cover at least 80% of the costs associated with recycling readily recyclable materials • Reimburse municipalities for the cost of managing nonrecyclable packaging • Invest in waste reduction and recycling education and infrastructure • Pay higher fees for packaging materials that are not readily recyclable, are made of multiple materials, or are toxic, and pay lower fees for packaging materials with higher recycling values and recycled content.

Some of the key features include: • Establishing a cost share system managed by one or more nonprofit third-party stewardship administrators that: 1. Internalizes most of the cost of municipal management of end-of-life packaging within the purchase price of a product 2. Provides incentives for producers to use — and, to the extent costs are passed in the purchase price, for consumers to buy — less packaging and packaging that is more recyclable • The cost to a producer is based on the recyclability and recycling value of the packaging it places on the market, and adjusted to reward or disincentivize recycled content, toxicity, labeling for recycling, and tendency to disrupt established recycling streams as determined through consultation between the department and any stewardship organizations.

• Producers only pay when the cost of collecting, trans10 • Northeast Dairy Foods Association, Inc.

porting and recycling a packaging material exceeds its recycling market value; they pay a higher per ton fee for packaging that is not readily recyclable.

• Individual producers will benefit from packaging adjustments in the form of lower program costs in the short-term; all will benefit from lower system costs and better materials management in the long-term.

• Producers can reduce their payment obligations through participation in non-municipal recycling programs. This provides producers additional control over costs. If producers want to recycle their own products instead of using the municipal system, they are free to do so.

• If a producer or group of producers creates a take back program that collects and recycles materials across the state, the quantity recycled will be subtracted from the amount of that material produced for the purposes of paying into the system that covers municipal management costs.

• Take back programs can partner with Maine businesses to take advantage of the commercial recycling that already occurs in the state, promote increased commercial recycling, increase takeback opportunities for consumers or partner with municipalities, among other options.

The Maine Department of Environmental Protection is responsible for implementing this program. During the fall of 2019 it has been receiving comments from the public and business community. Our association has taken the position that the law should be repealed and not allowed to go into place. At the very least, the law should be amended to delay implementation until more information is gathered regarding costs, administration and duplication of services.

We also provided input regarding other recycling program options that should be considered.

This law will make it so that you, the owner of a product packaging company, are responsible for recycling. It doesn’t matter where the product was generated. If it was sold and consumed in Maine and can be recycled, you would now be responsible for the recycling of that product. Here in the details lies the devil.

The state of Maine has more than 400 municipalities with different levels or abilities to recycle or not. They will work with coordinated certified third-party administrators to determine the cost of recycling the product you generate.

Legislative+RegulationsReport

You would be required to work with one or more of these administrators annually to pay for the cost of recycling.

The Maine DEP would tell you that this program is currently in place in Quebec, Canada, and some European countries. It is our association’s content that Maine is not a country or even the size of Quebec, and to mandate this type of program on thousands of producers and businesses is inefficient, wasteful, will increase costs for everyone and, in the end, does not guarantee an increase in recycling. The burden of recycling should fall on the taxpayer who has the ability to vote programs like this in or out. Once this becomes the responsibility of third-party administrators, the ability to amend the law is severely decreased.

NEW YORK In New York, we are watching two major topics. One I’ve reported previously, which is the Farm Workers’ Fair Labor Act, that was passed in 2019 and goes into effect on Jan. 1, 2020. This law would require many new stipulations for all farms in New York state, including dairy, which will become difficult to implement. Included will be a requirement for overtime pay after 60 hours of work, the right to collective bargaining and mandatory time off after six days of work. The overtime pay kicks in at a time when New York state’s minimum wage is also on the rise every year.

It has been reported there may be amendments introduced in 2020 to the law to allow exemptions for direct family members who are employed on the farm. The one key aspect to the law we are monitoring will be the amending of the paying of overtime after 60 hours of work requirement. In the passed law, there was a creation of a three-entity wage board that has the authority to adjust the overtime requirement to fewer hours. Our association would oppose such a change in the law, but, unfortunately, the wage board has authority to make the changes without any amendment to the law. This is what I call obvious lack of representation by a group that was not elected.

The much bigger issue looming way out on the horizon is the concept of healthcare for all, or “single payer,” where all costs related to a person’s health from cradle to grave

is overseen by the government and paid for by taxpayers and businesses. No state has such a system in place. Some, like Vermont, tried to implement one as recently as 2014 but abandoned it in 2017 due to the realization of the huge costs to the public and businesses.

Supporters of such a plan have held few hearings on the topic in 2019, those which were held were by invitation only. Here are some of the details and impacts if passed: • Staggering tax increases: $250 billion in new taxes • Delays in healthcare: 32 weeks to receive a hip or knee replacement • Devastating job losses: 150,000 lost jobs – worse than the 2008 recession • Government-run healthcare: Lose your private health insurance, and let Albany decide your benefits Despite this prescription for disaster, many lawmakers in Albany are still pushing to make New York the first single payer state in the country. Our association is not supportive of this kind of healthcare system mainly because we do not believe it will provide adequate, effective or quality healthcare, and the cost to implement this program will be exorbitant for taxpayers and businesses alike.

NEW HAMPSHIRE I have reported previously about a law passed in the state, Bill 476, which would create a new program designed to return money to dairy farm operations. The law was passed in 2019 and is in the process of trying to be implemented.

Our association opposed this law for many reasons, which I’ll explain further, but first more background is necessary.

The law would create a premium logo to be voluntarily placed on dairy product packaging, although the supporters of the law have mainly focused on gallons of milk. This program would have dairy processors put the design on their packaging to alert consumers if purchased, and the extra money charged at retail would be returned to the dairy farm owner. The supporters would like to set the amount to 50 cents per gallon. They insist consumers in New Hampshire care so deeply about the well-being of their dairy farms that they would be willing to pay the premium. (continued on next page) NED Magazine | Fourth Quarter 2019 • 11

Legislative+RegulationsReport

The main reason our association is not supportive is not because we don’t want dairy farm milk producers to receive money. It is the fact that dairy processors would be mandated to collect and return the money to the state agriculture department, even if the premium wasn’t place on their brand packaging. If one retail customer with a private label package did participate, then the processor would be responsible for the money being collected. This type of system opens up the flood gates for many issues, including the audit process, what to do with customer discrepancies and packaging inventories, among others.

Additionally, our association brought up the legal issue of what happens if the milk processed was to come from farms out of state, as they would not be able to share in the premium dollars. This is a well-tested legal argument seen in the past.

We have advised and provided the state agriculture department with other major concerns that could be addressed by amending the law in 2020. It remains to be seen if any amendments will be considered. In the meantime, we’ll wait and see if there are any willing retailer participants with the current program as written into law.

VERMONT The state has established the Vermont Milk Commission chaired by the Agriculture Department Secretary Anson Tebbetts and made up of representatives from both houses of government. The commission has been very active in past years and continuously holds meetings and discusses issues of importance mainly for the dairy farming community.

Recently, the commission has released a recommendation to support the concept of a national supply milk management program, similar to Canada’s system. Our association opposes this kind of national initiative. A supply management program is not in the best interest of our nation’s dairy farmers.

Supporters would point to the fact it works in Canada, but to what degree? Sales of dairy products, such as milk, are on the decline in that country, as well. Costs for milk are higher for consumers in Canada. Dairy farmers who want to grow and expand are mostly prohibited from doing so. Transitions from one farmer looking to retire to another looking to start 12 • Northeast Dairy Foods Association, Inc.

up an operation are very difficult due to the high costs of a buyout. And, most importantly, having the supply management program in place essentially eliminates the country’s ability to export dairy products. The program does return more money to dairy farmers due to the limiting of supply and by restricing outside competition, The United States has a population of around 330 million people. Canada is 10% of that — around 30 million. The majority of its population lives within a 150-mile swath just north of our U.S. border, and consumption habits are somewhat different than ours. Trying to compare what might work in Canada to the U.S., where we export nearly 17% of milk solids produced here, is not apples to apples.

The Vermont Milk Commission’s support of a national milk supply management system is misguided and, unfortunately, provides false hope to dairy producers for a program that does not have much backing.

UPDATE: WHAT’S HAPPENING ON THE NATIONAL FRONT? WASHINGTON, D.C. As I reported in the last issue of this magazine, one matter that we have supported since inception is the new version of the North American Free Trade Agreement.

Under President Donald J. Trump, a new agreement has been crafted, called the USMCA, or United States-Mexico-Canada Agreement. USMCA, finalized after intense negotiations between the three countries, was approved by the respective presidents or prime ministers in each country.

Here in the United States, the process is currently being held up in the House of Representatives controlled by the Democrat Party and Speaker Nancy Pelosi. Pelosi and her party are requesting amendments to the agreement, which focus on human rights and other similar controls. It is my opinion that the Democrats are not interested in passing something crafted by the Trump administration that would be considered a win for the president.

For our domestic dairy industry, passage of USMCA would be good.

Legislative+RegulationsReport

We would see continued and better trading of dairy products with our biggest partners, and it would allow us to compete on more level ground, as well. We highly encourage you to support passage here in the U.S., and let your congressional representatives know where you stand.

One final topic of national concern is the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration’s proposed changes to the hours of service rules. They are proposing a major shakeup to the regulations on truck drivers, and officials are seeking input.

Our association is in support of the proposed changes.

The rules on Hours of Service are the standards by which both short- and long-haul drivers measure their drive time and rest time. This proposed rule seeks to enhance safety by giving America’s commercial drivers more flexibility while maintaining the safety limits on driving time.

The rules on the books right now limit long-haul truckers to 11 hours of driving time within a 14-hour on duty window, and then drivers must take 10 consecutive hours off duty before the on-duty clock resets. There’s also a mandate that a driver can’t drive more than eight hours straight without taking a break. Members we have heard from believe the rules are too rigid and costly because drivers aren’t allowed to pull over and rest during major traffic jams.

FMCSA’s proposed rule on Hours of Service offers five key revisions to the existing HOS rules: • Increasing safety and flexibility for the 30 minute break rule by tying the break requirement to eight hours of driving time without an interruption for at least 30 minutes and allowing the break to be satisfied by a driver using on duty, not driving status, rather than off duty.

• Modifying the sleeper-berth exception to allow drivers to split their required 10 hours off duty into two periods: one period of at least seven consecutive hours in the sleeper berth and the other period of not less than two consecutive hours, either off duty or in the sleeper berth. Neither period would count against the driver’s 14-hour driving window.

• Allowing one off duty break of at least 30 minutes but not more than three hours that would pause a truck driver’s 14-hour driving window, provided the driver takes 10 consecutive hours off duty at the end of the work shift.

• Modifying the adverse driving conditions exception by extending by two hours the maximum window during which driving is permitted.

• Changing to a short-haul exception available to certain commercial drivers by lengthening the driver’s maximum on duty period from 12 to 14 hours and extending the distance limit within which the driver may operate from 100 air miles to 150 air miles.

The newly announced proposed rulemaking also includes expanding the short haul air-mile radius from 100 to 150 air miles, extending the short haul duty period from 12 to 14 hours.

We encourage our members to get involved. Let your voice be heard in your state capital! You can easily view our “2019 Bill Introductions Report” and the soon-tobe released 2020 version at our association’s website in the “Members Only” Legislative Update section.

As a member, you will need a username and password to view this report. If you haven’t obtained your username yet, it is easy and will give you access to many other useful pieces of information. Visit our website at www.nedairyfoods.org to see all the information your membership provides. You can also request a copy of our lobbying activities and bill report by contacting our office at 315-452-MILK (6455).

Thank you for your attention to the important legislation that we, as your association, are monitoring with your best interests in mind. While what’s happening in one state may not be in play in your state, that doesn’t mean it might not one day be the case. It’s important to see what’s on the horizon. As always, thank you for your support, and please don’t hesitate to contact me with your opinions and concerns.

Bruce Krupke is the executive vice president of Northeast Dairy Foods Association, Inc.

NED Magazine | Fourth Quarter 2019 • 13

Benefits of Association Membership EXECUTIVE DIRECTOR AND INDUSTRY CONSULTANT SUPPORT

NDFA

Legislative Representation Through Executive Lobbying and Networking Safety and Environmental Information Economic Analysis and Forecasting Continuing Education and Certification Opportunities Industry Spokesperson Emergency Preparedness

PROFESSIONAL COST-SAVING PROGRAMS Dedicated Industry-Specialized Insurance Programs Employee Benefits, Including 401(k) Retirement Program Energy Supply and Consulting Services

NETWORKING AND MEETING EVENTS Annual Northeast Dairy Convention Contact Booth at the Annual Convention Annual Dairy Industry Clambake Hospitality and Sponsorship Opportunities Industry Plant Tours Annual Charity Golf Outing Fundraiser

COMMUNICATIONS AND PUBLIC RELATIONS Quarterly copy of Northeast Dairy Magazine Direct Customer Advertising Opportunities Industry Scholarship Program Membership Directory with Key Contacts in the Dairy Industry Digital Buyers Guide (launching in 2019)

ADVOCACY An association represents your interests before your government leaders, industry and business community. If your business/industry faces major threats or needs support, our association is right there on the front line fighting for you.

14 • Northeast Dairy Foods Association, Inc.

NETWORKING Association events, meetings and member directories make networking a reality for you and your peers. This is the one advantage many view as the most important reason to join!

NDSA

Maximize

Performance.

Minimize

Maintenance.

Study Ranks Milk More Hydrating Than Water A study out of St. Andrew’s University in Scotland suggests that milk is a better beverage choice than water when the body needs hydration. According to the abstract of “A Randomized Trial to Assess the Potential of Different Beverages to Affect Hydration Status: Development of a Beverage Hydration Index,” by Ronald J. Maughan and Phillip Watson, 13 commonly consumed drinks were investigated for the purpose of establishing a beverage hydration index on subjects that were neither dehydrated or overhydrated.

Seventy-two healthy and physically active males between the ages of 18 and 35 participated in the study and were given various beverages that included bottled water, diet soda, orange juice, sports drinks, oral rehydration solutions, beer, coffee, tea (both hot and iced), whole milk and skim milk. The study tracked the urine output after consumption of each beverage in order to create a ranking. Researchers ranked the beverages tested from most to least in terms of hydration benefits over a four hour period and found that skim milk ranked No. 1 and whole milk No. 3. Bottled water ranked No. 9.

According to the St. Andrew’s study, beverages with some sugar, fat or protein kept the test subjects more well hydrated for a longer period of time than bottled water, which quickly hydrates the body but does not have as long lasting of an impact.

The study concluded that the following beverages in order had the most hydration benefits: 1. Skim milk 2. Oral rehydration solutions 3. Whole milk 4. Orange juice 5. Cola 6. Diet cola 7. Cold tea

8. Hot tea 9. Sports drinks 10. Bottled water 11. Sparkling water 12. Beer 13. Coffee

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855-357-4110 www.acesanitary.com NED Magazine | Fourth Quarter 2019 • 15

DAIRY MARKET DEVELOPMENTS TO SHAPE 2020 OUTLOOK It Appears the U.S. Is in a Good Position Heading Into New Year

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BY GARY LATTA

fter several recent years of low farm milk prices, things have turned around dramatically in 2019. A contraction of the world’s dairy herd has reduced global supply, while domestic sales in the U.S. have been brisk due to a strong economy. While ongoing tariffs with China continue to reduce U.S. shipments, exports to other countries have been relatively positive. These, and other issues, have propelled Federal Order Class III prices from $13.96 in January to $18.31 in September. We will take a closer look at these dairy market developments and how they continue to shape 2019 and 2020.

16 • Northeast Dairy Foods Association, Inc.

After getting off to a slow start in January, cheese barrels and blocks began to move upward. Weekly movements displayed gyrations, but the long, steady climb upward was evident with block cheese hitting a high of $2.35 for a short period before moving back down. At the time of this writing, both barrel and block cheese were trading just over $2 a pound at the Chicago Mercantile Exchange. CME cheese prices have not been this high since late 2014 (the all-time record high for dairy producer pricing). Some dairy observers believe cheese prices will climb higher as we approach the holiday season. Recent U.S. Department of Agriculture reports reveal that

Economic Outlook

cheese sales per capita have tripled since the early ‘70s to nearly 37 pounds per capita.

Unlike cheese, U.S. butter prices have been high but flat. Hovering around $2.30 to $2.40 per pound since the beginning of 2019, butter has just recently showed some weakness, dropping to nearly $2.10 a pound. Domestic butter demand remains healthy, however, and is at the highest level of consumption per capita since the late ‘60s, according to USDA. Nonfat dry milk prices have been mostly steady for much of the year, between 95 cents and $1.05 a pound, but have shown recent strength, rising to $1.17 a pound in mid-October. Dry whey prices have suffered the most of the dairy commodities, dropping from around 50 cents late last year to 30 cents in mid-October 2019. China was a major buyer of U.S. whey-derived products before the current trade war and prior to its severe outbreak of swine fever that has decimated its hog population. Whey is a major ingredient in piglet feed. Recent developments indicate that Chinese purchases of U.S. whey may resume soon, as trade talks show hints of optimism. The U.S. has also offered agricultural and technical assistance to the Chinese to help eradicate its swine flu dilemma. If that happens, U.S. whey prices could rebound significantly late this year and into 2020.

NEW TRADE DEAL WITH JAPAN, CHINA TO EASE TARIFFS In mid-October, the Trump administration announced a new trade deal with Japan and another deal with China that eases tariff restrictions. Both deals are in the early phase of negotiations, so we don’t have a lot of detail yet, but dairy is included in each. The announcements have been met with cautious optimism, at least for the time being, by most in the industry. Leaders from all three countries have agreed in principle to new deals,

but that needs need to be ironed out and put into writing.

Along with the U.S.-Mexico-Canada Agreement that is still waiting for congressional approval, the Japan-China addition has been billed as the “trade trifecta.”

Japanese Prime Minister Shinzo Abe and U.S. President Donald J. Trump agreed on the first phase of a new deal in late September. According to the Trump administration, Japan will reopen its market to $7 billion worth of U.S. agricultural products. Japan is the fifth largest foreign market for U.S. dairy products with around $270 million purchased in 2018. However, some industry experts and trade groups have pointed out that this new deal only puts U.S. agriculture back on par with New Zealand, Australian and Canadian competitors and may not be as lucrative as the old Trans-Pacific Partnership that Trump pulled out of shortly after taking office. U.S. butter and dry milk products may have been better off with TPP. U.S. cheese, the biggest volume dairy export to Japan, appears to be better off under this new deal than with TPP. Cheese, along with U.S. whey products, will have a gradual elimination over time of imposed Japanese tariffs that presently run between 30% and 40%. Japan is near the top of all cheese importing nations and purchased just over 73 million pounds from the U.S. last year. Others, like the EU, Australia, New Zealand and Canada, also export dairy products to Japan, so the U.S. has quite a few competitors for that market. Japan is an excellent export opportunity for U.S. dairy products, however, because its industry is not growing as fast as its domestic demand.

Within a few weeks of the new deal with Japan, the Trump administration trade team tentatively struck a new deal with China that relaxes tensions and tariffs between the two countries. On October 11, China agreed to purchase $40 to $50 billion of agricultural products from the U.S. In return, the Trump administration agreed not to hike (continued on next page) NED Magazine | Fourth Quarter 2019 • 17

Economic Outlook

tariffs on an additional $250 billion of Chinese products.

The most agricultural products China ever bought from the U.S. was $24 billion in 2017 before the trade war broke out. Of course, the details and timeline of the new agreement still need to be worked out on paper, so many observers are cheering with cautious optimism because anything can happen. The Chinese agricultural market is enormous, importing around $130 billion per year from various countries around the world. In this proposed deal, the U.S. stands to get back most, if not more, than its share.

China is struggling to feed its population, which has developed an increasing demand for quality food, including dairy products. In recent years, China has been battling an outbreak of swine fever that has decimated its pork industry. Pork was a major part of the expanding Chinese diet. Whey products are a significant portion of swine feed rations and was the main reason China imported great amounts of whey permeate for piglets. Since the swine fever outbreak, China’s demand for whey products has fallen significantly. This swine outbreak, along with trade war tariffs, are key reasons U.S. whey prices have plummeted.

U.S. Dairy Export Council’s Tom Vilsack and others recently visited China to promote high quality U.S. whey, as well as assistance in rebuilding the country’s swine herd.

USMCA COULD ADD MORE THAN $68 BILLION TO U.S. ECONOMY The United States-Mexico-Canada Agreement is the third part of the trade trifecta. USMCA, which would replace NAFTA, has been patiently waiting for congressional approval in the House of Representatives. Nearly every economic and agricultural organization has urged approval. The U.S. Trade Commission has reported that the USMCA will add over $68 billion to the U.S. economy and create up to 180,000 new jobs. Mexico and Canada are anxiously waiting for the U.S. to approve the agreement before the new deal can proceed, yet the legislation remains stalled by Democratic leadership in the House. Canada and Mexico are huge agricultural trading partners and represent around 40% of all U.S. dairy product exports.

One other international dairy issue worth noting is a recent ruling by the World Trade Organization in favor of the U.S. and against the European Union in a dispute over Airbus. It seems the EU subsidized the sale of airplanes in a manner that violated international trade rules, so now the U.S. can retaliate by issuing a 25% tariff on EU imports.

The selected EU imports are to include butter, cheese and yogurts as of mid-October 2019. Approximately 20% of EU 18 • Northeast Dairy Foods Association, Inc.

Economic Outlook

dairy exports to the U.S., particularly Italian style cheeses, will be subjected to 25% tariffs. U.S. Italian cheese manufacturers and dairy groups have been irritated, as the EU prevented them from marketing U.S. Parmesan cheese in Europe under this common name. In the past, EU cheese manufacturers tried to use the concept of “geographic indication” to limit U.S. competition there.

2019 DAIRY MARGIN COVERAGE PROGRAM PROVED SUCCESSFUL It appears the new Dairy Margin Coverage program implemented in 2019 has been a success and improvement over the old Margin Protection Program that it replaced. More than 22,000 dairy farmers enrolled in the new program that has paid out just over $300 million in 2019. Recently, higher milk prices paid to dairy farmers in combination with lower feed costs have moved the DMC margin above the $9.50 maximum margin coverage level, resulting in no payouts under the program’s formula. It is expected that higher milk prices will keep the DMC margin over $9.50 for the rest of 2019. The program will be continued in 2020, and signups have already started. The deadline for 2020 signup is December 23, 2019.

USDA’s “Milk Production” report for September 2019 showed that production was up 1.6% from September 2018 in the top 24 states.

Production per cow was up 33 pounds to a 24-state average of 1,913 pounds.

The number of milk cows in the top 24 dropped to 8.80 million head —

11,000 less than September 2018 but an increase of 7,000 head from August 2019. Among the major Northeast states, New York milk production was up 1.7% on both more cows and an increase in milk per cow. Vermont was up 0.5% on fewer cows but an increase in output per cow.

Pennsylvania continued its decline with a drop of 3.8% in milk production in September and closer to 6% for the year so far. Pennsylvania showed growth in output per cow, but a large drop again in cow numbers. Neighboring Ohio was up 1.2% in milk production for September due (continued on next page)

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t Agri-Mark, we are continually investing in the Northeast Dairy industry because this is our home. We have finished the $21 million investment in a new dryer at our butter/powder/condensing plant in West Springfield, Mass., shown above, for the 950 dairy farm families that own the co-operative. This project boosts the plant’s capacity by roughly 33% and will allow us to better serve our customers. Please contact us at 978-552-5500 for more information on how we can serve you!

NED Magazine | Fourth Quarter 2019 • 19

Economic Outlook

to good increases in output per cow. California was on par with the national average milk production for September, up 1.6%, but Wisconsin was up only 0.6%.

FORECASTS SHOW MILK PRICES MOVING HIGHER Milk prices for the remainder of 2019 will likely be moving higher than seen in several years. The USDA’s most recent forecasts show Class III prices rising to near $18 per hundredweight in the fourth quarter of this year.

Some experts in academia feel the USDA’s estimates are overly conservative and are forecasting a possible $19 Class III price in the fourth quarter of 2019. Both the USDA and academia are predicting 2020 farm milk prices to be even higher than 2019.

In its monthly estimates, the USDA once again increased total U.S. milk production figures primarily due to gains in output per cow. Of all the figures the USDA estimates, milk production per cow seems ever increasing. Contracting global 20 • Northeast Dairy Foods Association, Inc.

milk output has elevated both international and domestic prices. U.S. export volume is down, but value is up due to higher product prices. Dairy stocks appear to be adequate and domestic demand is good due to a strong economy.

For the last quarter of 2019, the USDA raised its estimate of both cow numbers and output per cow, resulting in total milk production of 218.2 billion pounds. This compares to 217.6 billion pounds in 2018. While total milk production is still increasing, it is doing so at a decelerated rate. The USDA’s 2020 forecast for milk production is 221.6 billion pounds, an increase of about 1.6%.

For the remainder of 2019, the USDA left import forecasts unchanged due to strong demand for foreign butter type products and the expected push to import select Italian cheese and other products before the new tariffs kick in.

The USDA slightly lowered export forecasts because of expected lower shipments of cheese and nonfat dry/skim milk powders to Mexico.

Economic Outlook Fourth quarter 2019 USDA observations recognized lowered to $2.20, and the USDA expects 2019 butter prices continued strong domestic use in the U.S. adding momento carry over on into 2020. tum to some dairy product prices and Class price estimates.

For 2020, the higher cheese price forecast increases the Cheddar cheese has been raised another 4 cents to $1.875 Class III estimate by 15 cents to $17.20 per hundredweight. per pound. Butter and dry whey were lowered in the fourth The 2020 Class IV price was reduced slightly to $16.10 per quarter by 3 cents and 5 cents, respectively. The USDA hundredweight. The lower butter price estimate more than raised the estimate of nonfat dry milk prices by 2 cents offsets the expected higher nonfat dry milk price. The 2020 due to improved domestic and international demand. As annual all-milk was left unchanged at $18.85 per hundreda result of these new product price estimates, the USDA weight. Some dairy experts in academia and other circles raised its Class III price for the fourth quarter by 35 cents. believe the USDA’s estimates are too conservative and that The higher cheese price estimate more than offsets the lower market prices will go higher. There is a lot going on in the whey estimate. The USDA raised its 2019 final quarter Class world of politics and global trade right now, and it appears IV estimate by 5 cents to $16.10, as the increase in nonfat the U.S. is in a good position heading into year 2020. dry milk outweighs the decrease in butter. The all-milk Gary Latta is a dairy product specialist price for the fourth quarter of 2019 was raised 20 cents to consultant for the Northeast Dairy $19.60. The entire year, 2019 all-milk price was increased Foods Association, Inc. He has more 5 cents to $18.40. In comparison, the annual all-milk price than 30 years of experience in in 2018 was $16.26. providing economic analysis, statistics For 2020, the USDA modified its estimates based on what and information to the dairy is happening now and extrapolating ahead. Herd size was processing industry. unchanged, but output per cow was increased. Therefore, the 2020 total milk production estimate was increased 0.4 billion pounds from last month up to 221.6 billion pounds.

Based on the new U.S. import tariffs on EU products, the import estimate was lowered. The USDA expects improved global demand to stimulate U.S. exports of nonfat dry milk and skim milk powder FINANCING THE in 2020. U.S. nonfat dry milk and skim milk powders are expected to be price competitive in the global marketplace in 2020, as well.

The current momentum of cheese prices is expected to carry over into 2020. Cheese import estimates have been lowered, and the cheese price estimate was increased to $1.79 per pound. The dry whey estimate was unchanged at .375 cents. However, whey VERTICALLY INTEGRATED AG BUSINESSES could go much higher if China increases PROCESSING AND MARKETING EQUIPMENT • VALUE-ADDED AG BUSINESSES purchases to feed its recovering swine DAIRY SERVICE AND INPUT BUSINESSES • PARTNER WITH OTHER CAPITAL PROVIDERS population. If so, this would move Class III prices higher. Demand for U.S. milk powders is expected to strengthen in 2020. Therefore, the nonfat dry milk 800-562-2235 | FARMCREDITEAST.COM estimate has been raised to $1.040 per pound. The butter price forecast was

DAIRY

INDUSTRY

NED Magazine | Fourth Quarter 2019 • 21

POLICY, PLANNING AND BEST PRACTICES

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POLICY, PLANNING AND BEST PRACTICES

NDFA DEFENDS FLAVORED MILK, OPPOSES PROPOSED NYC BAN

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BY CAROLINE K. REFF

ho doesn’t want a glass of chocolate milk? Apparently, some representatives of the New York City public schools. Recently, Richard Carranza, New York City Schools Chancellor of the New York City Department of Education, proposed a ban on flavored milk in schools, citing that low-fat or fatfree white milk has less sodium, calories and carbohydrates compared to equivalent servings of chocolate milk.

The idea behind the proposed ban is to promote healthier eating habits for the more than one million students who attend New York City public schools. Representatives of the school system argue that children already consume too much sugar, and eliminating flavored milk could help students develop more nutritionally sound habits.

New York City is not the first to propose such a change.

Los Angeles, for example, banned flavored milk in 2011 (although it was reinstated in 2017 after research showed that students were rejecting milk overall). Washington, D.C., schools banned chocolate milk in 2010, and San Francisco eliminated it in 2016.

The issue has caused controversy in New York City.

Some parents don’t agree with the ban, stating that the actual problem is the lack of nutrition in what they claim are “pre-packaged school lunches filled with preservatives.”

Many believe that if the ban is implemented, their children won’t drink any milk at all. Farmers throughout New York state also oppose the ban, emphasizing the nutritional value of all varieties of milk when compared to soda, which has much higher percentages of sugar, or water, which contains no nutritional value. They also emphasize how the ban on flavored milk would influence demand, which, in turn, would negatively impact the bottom line for millions of New York farmers who are already struggling. A group of farmers, along with some of their legislators, recently sent a letter of opposition to New York City Mayor Bill de Blasio.

In September, Bruce W. Krupke, executive vice president of the Northeast Dairy Foods Association, Inc., sent his own letter to Carranza, as well as de Blasio and Gabriel Schnake Mahl, senior executive director of public affairs, NYCDOE, on behalf of the organization’s processors, manufacturers and distributors, to outline the association’s opposition

and further inform the officials of the potentially negative impact of the ban on New York state’s children, economy and association members.

“My general observation has been one of nutritional concern for all the kids by all stakeholders,” wrote Krupke.

“It cannot be overstated that, should flavored milk be eliminated, it will affect consumption and ultimately the nutrition received by each student from their meals.”

“I could provide you with all the other reasons why elimination of flavored milk would be bad for our dairy economy, farms, processors and distributors,” he continued.

“No industry likes to have a potential sales decrease. Loss of milk sales and consumption in school transgresses into adulthood and then passes that on to future generations.”

Krupke has experience with this topic. Earlier in his career, he worked with the Office of School Food and Nutrition Services and helped create and promote a breakfast program for New York City school children. He has also assisted with and has seen many policy changes with New York City school food systems pertaining to the inclusion of milk and dairy products.

In his letter, Krupke referenced “English Disease” put out by the U.S. National Library of Medicine National Institute of Health as a reference to the nutritional ramifications caused by lack of milk in the 20th century. “There was a time when children were Vitamin D and A deficient in our country,” he noted. “Rickets, blindness and poor bone development were some of the common ailments associated with children. …The advent of increased milk consumption and quality, the addition of Vitamins A and D and the introduction of the school lunch program helped to eliminate most of these common nutrition problems. …

We don’t want to see a return to nutrition afflictions of a century ago in our younger populations.”

Krupke concluded his letter by saying, “The bottom line is, deciding to eliminate flavored milk in your school cafeterias must be determined by the nutritional well-being of children. Low-fat flavored milk provides the same nine essential nutrients as white milk. Studies show that children who drink flavored milk drink more milk overall and meet more of their nutritional needs. It would not be advantageous (continued on next page) NED Magazine | Fourth Quarter 2019 • 23

POLICY, PLANNING AND BEST PRACTICES to reduce the good nutrition that flavored milk delivers when consumed in exchange for fewer calories associated with the small amount of extra sugar in milk. Children will be disadvantaged should they not receive the nutrition to grow and maintain good health found in the milk. …We ask that you do not eliminate flavored milk in the New York City school system.”

Krupke’s letter did receive a quick response from Chris Tricarico, senior executive director, New York City Department of Education, stating that the department’s priority “is the health and well-being of our students.” Tricarico also acknowledged that The National School Lunch and Breakfast Programs require that schools offer a variety of milk options with every reimbursable meal served. “At this time, we continue to serve chocolate milk in our schools, and we have not changed any purchase orders or contracts in regard to chocolate milk,” he wrote.

Despite this response, however, the ban is still under consideration, according to Krupke.

“As an association, we intend to keep a sharp eye on the situation in New York City and continue to communicate with decision makers the importance of keeping flavored milk in schools,” said Krupke. “This is not just a New York City issue. If this ban is allowed, it could have repercussions in school systems throughout the Northeast and the rest of the country.”

CHOCOLATE MILK DOES PROVIDE ESSENTIAL NUTRITION

According to the American Dairy Association, adding chocolate to milk doesn’t take away the nine ingredients essential to good nutrition for children. Milk — white or flavored — is the No. 1 source of three of the four nutrients — calcium, Vitamin D and potassium — identified in the 2015 Dietary Guidelines for Americans that are vital to growth and development. Flavored milk contributes only 4% added sugar in the overall diets of children age 2 to 18, according to a National Health and Nutrition Examination Survey.

HERE ARE FIVE REASONS WHY FLAVORED MILK MATTERS: 1. Kids love how it tastes (and, consequently, may be more likely to choose milk as their beverage option).

2. Flavored milk contains the same nine essential nutrients as white milk: • Calcium • Niacin • Pantothenic acid

• Phosphorus • Protein • Riboflavin

• Vitamin A • Vitamin B12 • Vitamin D

3. It helps children achieve the recommended three cups of milk and dairy products recommended by the Dietary Guidelines for Americans.

4. Children who drink chocolate milk consume more of the nutrients of concern compared to non-flavored milk drinkers, and flavored milk consumption is not associated with increased BMI.

5. Chocolate milk is the most popular milk choice in schools, and kids drink less milk (and thus fewer nutrients) if it’s taken away.

24 • Northeast Dairy Foods Association, Inc.

(Source: AmericanDairy.com)

POLICY, PLANNING AND BEST PRACTICES

FDA Extends Nutrition Facts Label Changes Until July 2020

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he Food and Drug Administration announced in late October that it would grant the request of the International Dairy Foods Association to give the food industry an additional six months in order to complete nutrition facts label changes. With this change, IDFA members and the whole food industry now have until July 1, 2020, to comply. Before the announcement, a Jan. 1, 2020, deadline loomed, leaving many with often millions of dollars of obsolete packing inventory that would be unusable.

The IDFA said in a press release, “The FDA’s announcement granting six months of enforcement discretion to the food industry for the new Nutrition Facts Label following the Jan. 1, 2020, compliance date demonstrates that when we join together as a dairy industry and unify our voices with other advocates in the food space, good things can happen.”

The FDA has added a new, helpful Question and Answer document to its website to assist during this transition.

It can be found at https://www.fda.gov.

In addition, the IDFA has undertaken a comprehensive update to its three labeling manuals: the “Milk, Yogurt & Cultured Products Labeling Manual;” the “Ice Cream & Frozen Desserts Labeling Manual;” and the

“Cheese Labeling Manual,” which include specific examples and references to help understand details of each of

the new regulations that impact dairy product labeling. Visit idfa.org for more information.

(Source: FDA) NED Magazine | Fourth Quarter 2019 • 25

POLICY, PLANNING AND BEST PRACTICES

DAIRY INDUSTRY NEEDS A WIDER VIEW TO FIND REAL SOLUTIONS (Andrew M. Novakovic, Ph.D., E.V. Baker professor of agricultural economics at the Charles H. Dyson School of Applied Economics and Management at Cornell University, was a featured presenter at the 2019 Northeast Dairy Convention in September. The following is an excerpt from his presentation, “What’s Ahead for Dairy Policy in the 2020s.”)

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here are many pressing economic issues facing the dairy industry today and well into the future.

Andrew Novakovic, Ph.D., has built his career examining just such issues, and he shared an interesting approach that encouraged dairy producers and manufacturers to take a wider view and think through their ideas before putting all their weight behind them. Without this, he fears that the industry might not solve anything at all.

26 • Northeast Dairy Foods Association, Inc.

“Some of the things we’re facing today are actually a new twist on the issues that we’ve been talking about for the past 40 years,” said Novakovic. “I hope people in the industry are making decisions based on facts, long-term goals and possible consequences. I believe in being in favor of what makes sense. Industry members should also make sure the plans they are endorsing don’t have unintended consequences.

We often jump into things before we really look at what we are trying to accomplish or what it is that really needs fixing.”

POLICY, PLANNING AND BEST PRACTICES

Novakovic explained how the magnitude of an economic event can drive attention, but we still need a realistic look at how expensive preventing future events is, how widespread and how many people may be impacted.

“Those in power often make decisions based on their own constituents, something they care about specifically, or whether the nature of the event is something that they are especially interested in,” he explained. “The cost to fix a problem always weighs against a solution. This could be a cost to taxpayers or a less direct cost — to economic growth, jobs, personal freedom, etc.”

Novakovic asked dairy producers and manufacturers to really think about how badly they want to solve a particular problem in the industry? “The bigger something gets, the more likely there is the possibility of legislation, but that is often offset by cost or other negatives that we haven’t really thought through,” Novakovic said. As an example, he referenced the highly debated idea of Medicare for All, which he said has some sound principles but also astronomical costs that make it all but impossible to realistically implement.

Novakovic emphasized that, in the end, dramatic changes to programs generally require large economic events where solutions or future avoidance coincides with a public agenda for which the cost of the solution is less onerous than the cost of repeated events. “Various combinations of factors will influence the strength of a policy,” he explained. “For example, we may do things to fix small problems that aren’t that big of a public priority if the cost of the fix is low enough.”

HOW MUCH WILL WE TOLERATE? The presentation addressed just how much those in the industry will tolerate in terms of someone else dictating what to do. “There are many degrees of control in markets and

government, and the thing we need to look at is behavior versus results,” he said. “To the extent that we have a choice, the fundamental questions are: How much are you willing to tolerate when someone else is telling you what to do versus your ability to figure it out on your own and maybe not be quite as successful? How much freedom are you willing to give up in order to achieve the desired results?”

Novakovic again referenced the example of healthcare.

“That’s a more powerful trade-off than just what’s affected medicine,” he said. “There are a lot of moving parts in how much I am willing to accept or tolerate from a system that works supposedly for my benefit, yet there’s something about the way that it’s done that I might find objectionable. These are the kind of conversations that we need to at least be aware of, and it’s very obvious that people have different attitudes.”

PAY ME NOW OR PAY ME LATER Novakovic emphasized that it does not usually take a government mandate to get those in the dairy industry to do something they want to do anyway. We might well agree to certain goals related to how workers are treated, technologies we permit to improve efficiency, reduce waste or deal with climate change, but we don’t easily agree on how to achieve these goals. Moreover, agreement is harder if we find that people won’t solve these problems on their own.

“We all know we want to do these things, but nobody wants to be the first to do it,” he said. “It’s what behavioral scientists refer to as ‘hyperbolic discounting.’ Should I pay for something now, or should I send that bill to my great grandchildren? Should I sacrifice short term economic gain for long term costs that come in the form of climate change, pollution, a social problem and more? It’s undeniable that we avoid certain things now, and that there’s a real possibility (continued on next page) NED Magazine | Fourth Quarter 2019 • 27

POLICY, PLANNING AND BEST PRACTICES

that the problem will become worse later, but what is the trade-off for waiting and hoping that some bright person comes up with a cheap, magic solution in the future versus taking on some of that pain now?”

There is plenty of behavioral research to confirm that decision makers are all guilty of this hyperbolic discounting and are perhaps attaching too much value to current concerns and not enough to the future, according to Novakovic. “That’s called ‘kicking the can down the road phenomenon,’ and it’s something we really need to think about,” he said.

has been a difficult one for those in the dairy industry who understand and support fairness for their employees but work in an industry that often doesn’t align correctly with some of the legislation that is in place.”

Justice for workers will only continue to grow in importance, according to Novakovic, who called it “part of the Millennial social contract.” He mentioned New York state’s recent passage of legislation regarding the just treatment of workers. “This is a noble cause that a lot of us in agriculture, including the dairy industry, understand is not like working in a factory.

There’s no such thing as NOT EVERYTHING IS A a 40-hour work week in 21ST CENTURY IDEA agriculture. Is that an exNovakovic believes cuse or is that a real thing? some issues feel more imFarms don’t take weekends portant now than they have off, and cows need to be at other times in history, milked 24/7 — that’s just even though these issues the way it goes,” he said. have existed for a long time.

“Working through all of that He noted worker justice as and articulating that idea is an example of something going to be a real challenge. that is not a 21st century The fact is, New York state idea, even though there just made its agriculture inare a lot of headlines surdustry less competitive than rounding it in today’s news.

48 other states (California According to Novakovic, is the other exception). Do — ANDREW M. NOVAKOVIC, PH.D. this was a concern at the you care about that? What time of President Franklin can we do about it?”

D. Roosevelt’s New Deal, Novakovic believes when the economy grew more complicated in the post-Civil much of this is pushed by private initiatives not government, War period, and even as far back as Medieval times when and often it is the customer — or the consumer, retailer, proguilds were developed along with a system of masters, cessor or farmer — that is pushing back — not the federal journeymen and apprentices. government. He contends that there are places where “we “We’ve always thought about treating people right,” he are going to have to tell our story and gain understanding of said. “Today, however, it’s a hot button issue for sure, and it our predicament” to make meaningful changes.

We’ve always thought about treating people right.

Today, however, it’s a hot button issue for sure, and it has been a difficult one for those in the dairy industry who understand and support fairness for their employees but work in an industry that often doesn’t align correctly with some of the legislation that is in place.

28 • Northeast Dairy Foods Association, Inc.

POLICY, PLANNING AND BEST PRACTICES

TRADE POLICIES DON’T SOLVE EVERY PROBLEM Trade policies are another hot topic, Novakovic explained, particularly those around the United States-Mexico-Canada Agreement. He told the story of a producer quoted in the media who said that the single most important thing we can do is conclude the NAFTA revision, also known as USMCA. “Every analyst sees this the same way: positive and small,” he said. “It will probably have some benefits to companies operating in places like New York and Wisconsin but have an imperceptible effect on the price of milk in the U.S. Does this mean we shouldn’t do it? No. There’s more going on in that agreement than just the dairy issue with Canada.

Stabilizing trade with Mexico, for example — that would be a pretty good deal. But to say that this is the single most important thing that we could do is not likely to be true.

Unfortunately, politics gets involved. Instead of ‘This is a good idea,’ it becomes, ‘I’ll be damned if I’m going to vote for a Republican idea.’ I’m disappointed that that is the nature of the conversation.”

CONSUMERS ARE THE REAL DEAL With all of the issues swirling around the dairy industry, Novakovic believes that what consumers want may be the biggest one. “This might be the most important thing on my list,” he said. “If you don’t have customers, then what do you need suppliers for?” He noted that part of the dairy industry is being beat up by consumer desires, noting fluid milk as an obvious example, while also acknowledging that cheese, which has been a “dynamo for the dairy industry for 50 years” has even been facing push back, too. “You’re seeing plant-based alternatives to cheese, yogurt, ice cream

and more,” he explained. “Consumer preferences have to do with some ideas that are real and some that are just not as real as consumers imagine.”

Novakovic referenced YouTube influencers with modest — if any — scientific credentials telling people what makes for healthy eating. Yet, people believe them. While, on the other hand, there’s someone out of Cornell University telling you things based on real science, and for some reason, this information is not a “slam dunk proposition.” He contends that consumers tend to believe the YouTube influencer because he or she looks like them, seems to share the same values and talks in a way that is easily understood with a message that says, “Don’t drink milk. It will kill you!”

“Let’s face it, scientific facts are complicated and some people simply can’t process that,” Novakovic explained.

“Ironically, the dairy industry has a long history of relying on science to move itself forward. It’s relied on the professor with the white lab coat to set people straight on how nutritious dairy is, but that’s just not working anymore. Our challenge is to figure out how to talk to people with messages that resonate with them when the guy in the white lab coat no longer does.”

Other issues Novakovic touched upon ranged from open trade, animal welfare, U.S. immigration policies and much more, acknowledging that the industry has a responsibility to respond and stand up for issues that make an impact. Still, he stressed that taking a wider look at some issues, not just the immediate benefit or personal gain, is essential to making tangible things happen without unintended consequences.

“The world is a complex place,” he said. “If you aim for one target, you’ll miss 14 other ones — but aim for something.”

NED Magazine | Fourth Quarter 2019 • 29

POLICY, PLANNING AND BEST PRACTICES

Make Time for Family Mealtime — and Include Dairy on Your Plate

Y

ou want the best for your family but ensuring your child’s success seems a monumental task when everyone has a busy schedule. In fact, we are busier than ever before with work, school, evening activities and life in general taking our time. However, studies show that with good time management, there is a simple solution to helping your child by making time for family meals. Family meals provide a dedicated time to bond over a healthy meal. Mealtime can be in a restaurant, a car or wherever is convenient, not only the dining room table.

As long as you’re together enjoying a meal, your child will eat better and thrive.

One important element of family meals is encouraging good eating habits, and what better way than to include dairy products in your meals? Family meals promote eating habits that help your child’s growth, so focus on what is on your plate. To encourage nutritious eating, prepare examples of healthy meals for your

family using the USDA MyPlate (choosemyplate.gov) as a guide. Dairy provides three nutrients that many meals otherwise lack— calcium, potassium and Vitamin D— so provide your family with a variety of these choices at every meal.

Here are some way to make family mealtime a healthy time: • Plan out your meals. Prepare a weekly menu so you can enjoy more time with the family and less time evaluating your possible ingredients.

• Let everyone help. When families prepare meals together, kids demonstrate more confidence in choosing healthy foods.

• Pair your meals with a glass of milk. Milk provides key nutrients, like high-quality protein and calcium, to everyone in your family.

• Dedicate a day of the week to eating together. Begin with one meal a week that takes precedence over other plans.

• Remember family meals don’t have to be at dinner. Gather for breakfast, lunch, dessert or even a snack.

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POLICY, PLANNING AND BEST PRACTICES

CHANGES IN U.S. FOOD RETAILING Dairy Must Stay Current, so It Doesn’t Get Left Behind (The following is an excerpt from a presentation by Kristen Park, extension associate at the Dyson School of Applied Economics and Management at Cornell University, given at the 2019 Northeast Dairy Convention held in September.)

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airy is, and always has been, a staple in American households. In fact, dairy accounts for almost 11% of in-store sales, according to Progressive Grocer. However, according to market research group IRI, trends in dairy retail sales have shown a slow growth since 2014 of only 2.5%, which

is clearly a concern for the industry.

Dairy is at an impasse, and what got us here won’t guarantee we’ll still be here tomorrow.

SHOPPERS SEEK VALUE OUTSIDE THE GROCERY STORE According to the U.S. Census, 55% of U.S. households are now considered low-income, which is a remarkable shift

in the last decade. (Note: According to the U.S. Department of Education, the average family of four is considered low-income if its income is at or below $38,625.) Because of this, people simply aren’t buying things that aren’t necessities. This is not only true of low-income consumers though. Those in the middle class are also making (continued on next page) NED Magazine | Fourth Quarter 2019 • 31

POLICY, PLANNING AND BEST PRACTICES

more conscious economic choices.

The idea seems to be, “If you don’t need to spend money on something, then why do it?”

As an offshoot of this, consumers are looking for the best price, so they aren’t just going to the traditional brick and mortar grocery store for their food.

They know that there are often better bargains to be had at dollar stores or drug stores. Thirty years ago, so called “dollar stores” were thought of as places

to purchase trinkets or birthday party favors for a buck. Today, that perception has changed.

Take Dollar General, for example.

It currently has 14,383 stores and built 975 new stores in 2019 alone. (By comparison, Walmart has 15,000 stores worldwide, but Dollar General has that many in the U.S. alone!) And, 75% of the U.S. population lives within a five minute drive of a Dollar General, which means that convenience and

less expensive options are right around almost every corner. Dollar General offers many of the same items available at the grocery store for less and recently has been looking at offering more perishable items in some of its stores. In fact, one-third of Dollar General locations are expected to have “fresh” items by the end of this year, and right now the company is targeting dairy, meat and frozen items. This is a huge opportunity for the dairy industry,

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32 • Northeast Dairy Foods Association, Inc.

POLICY, PLANNING AND BEST PRACTICES as bargain savvy consumers are on the hunt not for price and quality.

While Dollar General seems to be making its move, ALDI is the retail competitor everyone in the industry is watching. Originally started in the Midwest in low income neighborhoods, ALDI didn’t originally accept credit cards and had a very generic, warehouse feel. But, this family-run operation has kicked up its marketing and advertising and has made a concerted effort to improve the quality of its fresh products.

No longer considered second-rate by many consumers, ALDI has become Walmart’s biggest competitor and the lowest price food retailer in almost every marketplace.

PRIVATE LABELS RULE THE SHELVES Recently, we’ve seen only a .4% increase in food sales at retail with an expected total of only 1% this year and another 1% in 2020, according to the U.S. Bureau of Labor Statistics. For retailers, this is not good news, as this leaves no opportunities to increase their prices. Why is this happening? One of the reasons is that private label and store brands are bringing prices down by giving shoppers options, as well as creating bargaining opportunities when retailers go back to national brands in search of a better price. Consumers no longer shy away from so-called “generic” items, as they have discovered that many offer equal quality at a lower price. Competition is so fierce that retailers double down on their own brands and private labels because they can better position their margins off of these products and also use private labels to position against more wellknown national brands that sit right next to them on the shelves.

Some retailers, like Kroger, have as many as three tiers of private label

products: budget, which is the least expensive and attracts shoppers choosing primarily by price; standard, which is a bit more upscale; and then premium, which brings some added value like being organic or fair trade certified, for example. This is happening at almost every major retailer across the country. Retail giant Albertson’s, for example, launched 1,800 new private label items in 2018, totaling 11,000 on its shelves today.

CONVENIENCE & E-COMMERCE GO HAND-IN-HAND Let’s face it: today’ s consumers are all about convenience, and technology has only increased the demand and expectation. People want their shopping experience to be fast and easy, often at the click of a button. About 3% of e-Commerce is currently grocery store sales, and Nielsen estimates that by 2025, that number will surge to 25%.

Clearly, e-Commerce is not going away, but it does pose an added layer of challenge for the dairy industry, primarily because dairy products are perishable.

Amazon is, of course, a leader in this space and led the e-Commerce shake up with the purchase of Whole Foods two years ago. Today, it is trying a number of options to make grocery shopping practically effortless. Some of the ideas the company is already testing include Amazon Prime Air, which offers delivery by drone of packages up to 5 pounds within a 30 minute zone, and palm scanning, where each person’s unique palm print is linked to his or her credit card, so a consumer can shop and pay on the go.

For those not quite ready for that level of technology, there are other options. Almost every major retailer now offers self-check out, as well as online shopping with options for pick

up or home delivery typically within the hour. Apps like Instacart even allow consumers to communicate with their “shopper” in real-time, and artificial intelligence helps consumers create lists, generate coupons or automatically purchase items they buy on a regular basis.

The ultimate experience may be Alibaba Hema, which offers full O2O (online-to-offline) integration that brings the typical online customer to a physical retail location that offers a combination of a supermarket, restaurant, distribution center and an online store, along with a full range of digital experiences. Whether or not this model becomes viable remains to be seen.

All of these conveniences may eventually result in smaller retail store formats in the future. If fewer customers are physically coming to the store, then space can be condensed. This has its advantages, as a lower cost per square foot may decrease costs and allow more retailers to move into new markets, including urban areas that often lack affordable grocery store options. Consumers don’t seem to mind the concept of smaller stores. In fact, many don’t want to shop in huge retail environments that take time and effort to navigate.

CONSUMERS AREN’T ALL THE SAME Another key to succeeding in this changing retail environment is the realization that there is no “one customer.” Millennials and Gen Zers are very different consumers, and it is critical to appreciate their eating patterns and ways of looking at the world.

Convenience, sustainability, locally sourced and fair trade are just some of the terms that pertains to the priorities of these two demographics. In contrast, (continued on next page) NED Magazine | Fourth Quarter 2019 • 33

POLICY, PLANNING AND BEST PRACTICES older consumers have a large share of today’s purchasing power, and that is only going to increase by 2020 when there will be 45 million people age 65 or older in the U.S. They have different needs and wants when it comes to retail food shopping compared to their younger counterparts, but with money to spend, they definitely must not be ignored. With smaller households, they might not need a full gallon of milk each week, but they still want to buy it in a smaller size, or they may shy away from too much technology in favor of more traditional shopping methods.

In addition, increased consumer diversity will continue to create huge opportunities, as ethnic flavors and products become more familiar and

available to the average consumer.

Increased urbanization will be a factor, too, as larger numbers of shoppers move toward urban centers where they often live in smaller spaces and rely on mass transit or walking to get to where they need to go.

Bottom line: the dairy industry would do well to cater to various demographics with options that encourage everyone to purchase from the dairy case, whether it be online, in the store or both.

SO HOW DOES DAIRY STAY IN THE GAME? All of these trends and changes can be seen as problems for the dairy industry, but it is far better to see them

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as opportunities. Yes, older shoppers or those who rely on public transportation may not be willing to haul a gallon jug of milk home from the grocery store, but that opens up great potential in new packaging and sizing options.

E-Commerce certainly presents an added layer of challenge to the dairy industry, as dairy products are perishable. However, with some ingenuity, there is an opportunity to work with producers, manufacturers and retailers on ways to make items in the traditional dairy case also succeed in the online marketplace. Ten to 20 years from now, we might not recognize the retail food shopping experience, but consumers will still want milk, cheese, butter and other dairy products on their tables.

POLICY, PLANNING AND BEST PRACTICES

MAKING THE SHIFT Finding and Keeping the Next Generation of Employees (Editor’s note: Susan McLennan was a featured speaker at the 2019 Northeast Dairy Convention. She is a management consultant who helps brands make the necessary shifts in order to attract the next generation of workers and customers).

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o you feel like you’re banging your head against the wall to find and keep the employees that you need? Are you concerned that the young people you hire just don’t seem to have the same work ethic as you do? It’s a common concern for those Baby Boomers (born between 1946 and 1964) and members of Generation X (born between 1965 and 1980), as they work to keep their businesses moving forward, but, like it or not, Millennials and Gen Zers are about to dominate the labor pool, and, it may take a shift in thinking to attract and retain the best of them.

First, let’s start with defining the demographics. According to the Pew Research Center, Millennials were born between 1981 and 1996, and Generation Z includes anyone born from 1997 on. According to the U.S. Bureau of Labor Statistics, Millennials are already the largest segment in the workplace, and any day now, they will make up 50 percent of the U.S. workforce. By 2030, 75% of U.S. workers will be Millennials.

While many of you are probably acquainted with Millennials, it’s time to get to know Generation Z. Although (continued on next page) NED Magazine | Fourth Quarter 2019 • 35

POLICY, PLANNING AND BEST PRACTICES

they are just starting to enter the work force, there are 60 million of them in the U.S. — outnumbering Millennials — and soon they will come knocking on your door.

It’s important to remember that these young people are not your “Mini-Me’s.” That’s an important distinction that company owners, management and HR personnel need to recognize if they intend to both hire and retain qualified employees. Younger workers think differently, work differently and have different expectations from what many of us have come to expect from the Baby Boomer and Gen Xers.

Is this a bad thing? Not at all, but it is going to take a shift in thinking if you want quality workers who are willing to stay with your company.

MILLENNIALS HAVE PLENTY TO OFFER Millennials are everywhere in the workplace right now with most of them between age 25 and 40. They tend to get a bad rap for being lazy or entitled, and, yes, some of their work habits and expectations certainly seem unconventional. However, complaining that “That’s not how we do that here,” or “They should just be grateful to have a job,” has gone the way of the dinosaurs. We need to shift our thinking because Millennials have plenty to offer.

From their perspective, Millennials fear the inability to move up in their careers as quickly as they’d like. Certainly, some are too impatient to pay their dues and assume the answer is to find another job. But, their fear is real, in part, because Baby Boomers just aren’t retiring at the rate at which they used to. Ironically, one of the reasons for this is that many Baby Boomers are still financially responsible for their Millennial children. It’s a catch 22 really. And, it’s a stark reality for Millennials who are expected to be the first generation that will not do as well financially as their parents.

There’s no disputing, however, that Millennials have a different take on employment. For one, they are very concerned with workplace culture. They want to go to work each day at a place they like and with people they enjoy. In many cases, the suit and tie and the corner office have been replaced by jeans and sneakers in a flexible workspace filled 36 • Northeast Dairy Foods Association, Inc.

with gourmet coffee makers and ergonomically designed desks. Certainly, not every company can offer these amenities to its employees, but a vegan option in the company cafeteria certainly can’t hurt.

The often-heard stereotype that Millennials refuse to work as hard as their predecessor may be more likely related to their prioritization of a work-life balance. They value their job, but they value their personal time, too, and they understand that both matter. In the end, many Millennials will choose a company for its workplace culture and potential for growth, not just for a paycheck. That’s a tricky one for a dairy farm that can’t simply shut down at 5 p.m. or an ice cream manufacturer that requires employees to work in sub-zero temperatures. Employers whose working conditions may not be for the faint of heart need to brainstorm for other ways to keep younger workers motivated.

There is a big upside to Millennials, however, and it’s one that employers need to foster and embrace. First, they’re entrepreneurial, and they like to work collaboratively on a team, so they can share and work off one another’s ideas.

Even though they are young, they still want — and in many cases expect — a seat at the table. They have ideas, and they want to be heard. This might be an especially difficult shift for current leadership, but it’s an important one. Why? For one thing, Millennials understand and love technology (and let’s face it, how many of us 50 and 60-somethings really consider themselves IT experts?). While they aren’t “digital natives,” they live their days transfixed to an ever-changing deluge of technology that can really benefit your business.

It’s not all Instagram and Snapchat; it artificial intelligence, robotics and engineering — and that can make your operation run more smoothly, safely and sustainably.

Speaking of sustainability, Millennials genuinely care, and they want to use their talents to make the world a better place. They are concerned with climate change, and many experience “climate grief” over what they see happening to our planet. If you see this as a hassle, you definitely need a shift in thinking because Millennials and Gen Zers are not going to let the needs of the planet or issues related to

POLICY, PLANNING AND BEST PRACTICES

social injustices be ignored. So rather than shake your fists at them, listen to them. They just might have some valuable ideas you might decide are worth considering.

IT’S TIME TO EMBRACE GENERATION Z Gen Zers are coming up fast, and, interestingly, they can’t be lumped in with the Millennials. Yes, there are similarities, but there are some distinct differences, too, and shifting your thinking once again can help you recruit and retain what is potentially some of the best talent out there.

First, it’s important to see their side of the story. Those that make up Generation Z tend to be very dependent on their parents financially, and it seems that isn’t going to change any time soon. Many are swimming in college debt (or are about to be) and no longer see a stigma in living in mom and dad’s basement in order to save money. In 1980, for example, 50% of 20 year olds were financially independent from their parents. Today, however, 70% are dependent on their parents to stay afloat. They no longer automatically believe that the standard wisdom of go to school, get a job, buy a house, etc., is attainable for them. Interestingly, this, along with the debt they see Millennials carrying into adulthood, has caused them to be more frugal.

Members of Generation Z are true digital natives. They never knew a world without technology. It is completely normal and unintimidating to them. They embrace every bit of it and can’t wait for the next app or iPhone. They also have a hard time surviving without it. In fact, one study showed that if Gen Zers had to choose between a working bathroom or access to Wi-Fi, they would choose the Wi-Fi every time! And while many of us get a good chuckle when a 20-year-old has no idea what a rotary phone or a manual typewriter does, we must remember that their knowledge of technology can be a huge boon to our businesses. Like it or not, technology is moving and changing faster than most of us can keep up (but we have no choice). These Gen Zers just might be the key to some great innovative ideas that will not only move a business forward but allow for solutions that appeal to employees, customers and consumers.

Generation Z is also the most diverse we’ve ever had.

They embrace diversity of every kind — race, gender, religion, disability, age, socioeconomic levels and more. This generation also expects equal pay for equal work, regardless of whether or not an employee is male or female, and they are willing to bring legal action in order to get it. They aren’t afraid to speak their minds to the powers-that-be and consider themselves “social justice warriors” in that they will go to great lengths to protest, speak out or stand up for what they see as injustice. At a time when diversity and inclusion, as well as pay equity, are such hot button topics, companies would be wise to tap into Gen Zers’ ideas as a form of checks and balances when it comes to diversity and inclusion in the workplace.

Surprisingly, Gen Zers prefer to work alone. They are more independent than Millennials, which makes them less likely to want to collaborate in a group of team setting.

They prefer face-to-face interaction (versus Millennials who operate primarily by text, email or Skype), and they tend to be very entrepreneurial, possibly thinking that they are going to have to make their own mark in the world, rather than expect a company to do that for them.

The best news, however, is that Gen Zers seem more willing than Millennials to put down roots with a company.

However, they still expect the opportunity to move within a company and want the chance to see other places and try other things — a real opportunity for organizations with locations around the globe or requiring travel of their employees. If these opportunities present themselves to Gen Zers, they are more likely to stick around. That can be a real opportunity for a company willing to shift its thinking towards how Gen Zers’ expectations can match up nicely with a company’s needs, as well.

THE GREATER GOOD, NOT THE BOTTOM LINE Finally, while Millennials and Gen Zers have differences, they also have something in common that probably requires a big shift in thinking for most companies. Unlike the Baby (continued on next page) NED Magazine | Fourth Quarter 2019 • 37

POLICY, PLANNING AND BEST PRACTICES Boomers, these two groups of up-and-coming employees and future leaders aren’t just looking for a paycheck and good benefits. What they do want is a job that has purpose.

Seventy-five percent of Millennials say they consider a company’s work environment and stand on social issues when pursing a job and will investigate these aspects of a company before applying. Two-thirds of this potential work force say they won’t even consider a job at a company if it lacks purpose.

Purpose? What do they mean by that? The younger generations want to see that in their hands — and the hands of their colleagues — the company they work for can make the world more fair. They want to see that a company is working towards something to help the greater good, not just the bottom line.

This is actually not a new concept, and here’s a great example that illustrates just what that purpose means. On a visit to NASA, President John F. Kennedy shook the hand

of a janitor and asked him what he did there. The man did not say that he swept the floors or took out the trash. Instead, he replied, “I’m helping to put a man on the moon.” That janitor understood that without his input — large or small — others at NASA couldn’t do their jobs. He understood that everyone’s job contributed to the greater good: putting a man on the moon. That’s the kind of purpose Millennials and Generation Z are looking for today. And finding that purpose is one of the many things that can help retain them.

So the next time a Millennials or Gen Zer walks through the door looking for a job (Who are we kidding? They’re going to apply online.), don’t write them off. Yes, their methods and expectations are different. Their ways of thinking can be disruptive and even annoying, but, in the end, if you’re willing to shift towards a better understanding of what matters to them, you may just attract and retain some outstanding employees who will rise to the top and help your company do the same.

Pass the Cheese Please — But Choose Wisely

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heese consumption is booming across the U.S., and there seems to be no sign of slowing down. According to a 2018 report from the U.S. Department of Agriculture, cheese is consumed in the U.S. at 37.23 pounds per capita.

While some consumers worry about the negative effects of cheese as a high-fat food that can impact heart health, several studies from 2018, including “Dairy Fats and Cardiovascular Disease: Do We Really Need to Be Concerned?” by Ronan Lordan, Alexandros Tsoupras, Bhaskar Mitra and Ioannis Zabetakis at the University of Limerick (Ireland), and “Dairy Products, Dairy Fatty Acids and the Prevention of Cardiometabolic Disease: A Review of Recent Evidence”

by E Yu and FB Hu at Harvard’s T.H. Chan School of Public Health, suggest that milk products, including cheese, “may have a positive or neutral effect” on cardiovascular health or a “null or weak inverse association between consumption of dairy products and risk of cardiovascular disease.” Other research touts cheese as beneficial for its protein, calcium, zinc and Vitamins A and B12.

These studies suggest that consumers looking for the most healthy cheeses should select fresh cheese like ricotta, feta, goat cheese, mozzarella or cottage cheese. Cottage cheese, for example, has seen a resurgence in popularity due to its 38 • Northeast Dairy Foods Association, Inc.

high protein and low calories, along with more creative and convenient options that include flavorful ingredients and convenient, on-the-go packaging (although nutritionists suggest reading the labels to make sure tasty additives don’t add too many calories and sugar).

Don’t despair if your tastes run toward harder cheeses like cheddar, Parmesan or Swiss, as these too are good sources of vitamins and calcium with only a moderate amount of fat. Many of these hard cheeses are more easily tolerated by those who are lactose intolerant. They tend to be slightly lower in fat, although often they do contain a higher amount of sodium.

Softer cheese like brie and Camembert are often considered less healthy than other cheese choices, as they do contain more saturated fat. And, because they are often creamy and spreadable, people tend to consume more. In this case, portion control is probably the key. Finally, processed cheese products, e.g., spray “cheese,” should be avoided.

In summary, dietitians recommend that cheese consumption as part of a balanced diet is probably the way to go.

Depending on your cheese choice, this will enable you to enjoy your favorite and consume some protein and calcium without going overboard on fat or sodium. Bottom line: pass the cheese, please — but in moderation.

DFA ADVANCING TECHNOLOGIES ON FARMS, INNOVATIVE PRODUCTS FOR THE DAIRY CASE Seeking Startup Applicants for 2020 DFA Accelerator Program

D

airy Farmers of America, a national cooperative owned by family farmers across the U.S., is recruiting startups for its 2020 Accelerator Program, which helps mentor and grow companies in the areas of ag technology and dairy food products.

For the 2020 program, DFA is seeking early stage food product companies that are dairy-focused or dairy-based. On the ag tech front, DFA is looking for companies with ag tech applications related to any portion of the dairy value chain, including, but not limited to, product testing, data management, herd health and management, supply chain optimization, sustainability and traceability.

“For the food vertical, we’re looking to find companies that are doing new and interesting things with dairy as the main component,” said Doug Dresslaer, director of innovation at DFA. “With ag tech, our goal is to identify companies with applications or technologies that can help us improve processes or reduce margins to ultimately enhance productivity on our members’ farms.”

Ag tech categories of particular interest to DFA include dairy ERP systems, drone technologies, robotics and automation technologies for the farm, sensor technologies in agronomy, digester efficiency and new technology in animal health around mastitis. The DFA Accelerator is a 90-day immersive program, with a combination of on-site meetings and virtual programs to provide training, growth opportunities and mentorship.

Most startup participants typically spend about four weeks in Kansas City, Kansas, where DFA is headquartered.

Throughout the program, startups have numerous opportunities to meet with a variety of DFA executives and other relevant investors and industry leaders, as well as receive guidance and advice on business development, product development, marketing, etc.

Dresslaer added, “Ultimately, we’re looking for companies where we see long-term potential, as the end goal is to hopefully help and partner with them in some way.”

Additional details and applications are available at DFA Accelerator (www.dfa.brightidea.com). The 2020 DFA Accelerator Program will begin on March 30, 2020.

Do you sell products or services to companies that process, manufacture and distribute dairy products?

Let us help you make a splash.

Boost your bottom line and brand awareness within the industry. Contact us today to learn about the opportunities.

Hannah Gray, Relationship Manager hannahg@nedairymedia.com 315-445-2347 Ext. 115 NED Magazine | Fourth Quarter 2019 • 39

Convention Highlights The 2019 Annual

NORTHEAST DAIRY CONVENTION

Held at the Otesaga Resort in historic Cooperstown, New York

40 • Northeast Dairy Foods Association, Inc.

Convention Highlights

NED Magazine | Fourth Quarter 2019 • 41

Convention Highlights Watching the association teams work and lead and execute the meetings/week is greatly appreciated.

Thank you for who you are and what you do.

We will be there again! Dairy food members were very friendly.

It was a great event — nice venue, great golf course, good networking opportunities and good food.

2019 Convention in Cooperstown “Hit It Out of the Ballpark” Hundreds of dairy executives, managers, industry vendors, supplier representatives, friends and colleagues from across the Northeast gathered in Cooperstown, New York, in September for the 32nd Annual Northeast Dairy Convention, sponsored by the Northeast Dairy Foods Association, Inc., and the Northeast Dairy Suppliers Association, Inc., in conjunction with the Pennsylvania Association of Milk Dealers. The event was an opportunity for attendees to network and gather the latest updates and information on the industry from a variety of speakers with expertise in the field.

It was not all business, however, as the group participated in a tour of the National Baseball Hall of Fame, the Fenimore Art Museum and a golf tournament. One of the highlights of the event was an appearance by former Yankee and Hall of Famer Richard “Goose” Gossage. More than 35 suppliers and vendors participated by showcasing their products and services.

“The convention was a huge success for our members — our attendance increased by 15% this year — and the speaker sessions were fantastic, as was the chance to meet National Baseball Hall of Famer Goose Gossage,” said Bruce W. Krupke, executive

First class.

“Keep up the great work!”

42 • Northeast Dairy Foods Association, Inc.

vice president, NDFA. “Each year, we try to provide members with opportunities to network, as this is the number one reason people tell us they attend. It seems that we hit it out of the ballpark this year!”

Photos of the event can be found on the previous two pages. For even more photos, visit our website at https:// nedairyfoods.org/events/.

Mark your calendars now for next year’s convention: Wednesday, Aug. 12-Friday, Aug. 14, 2020, at the Mount Airy Casino Hotel in Mount Pocono, Pennsylvania. Bring your family to this outstanding location!

Great networking event!

“The convention is a great place to learn more on important issues and make good connections.”

Convention Highlights

SONBYRNE SALES HONORED WITH FIRST NDFA CUSTOMER OF THE YEAR AWARD

O

ne of the highlights of the 2019 Northeast Dairy Convention was the announcement of the NDFA’s first-ever Customer of the Year Award. This year, the award was presented to Sonbyrne Sales, Inc. The award was designed to recognize the loyalty, leadership and supportive role customers play in the important and evolving customer partnership within the ever-changing, exciting and complex dairy processing, manufacturing and distribution industry doing business throughout the Northeast.

“Sonbyrne Sales is a true reflection of what the dairy industry is all about,” said Bruce W. Krupke, executive vice president of the NDFA. “The company not only manufactures and distributes high quality, delicious products but also cares for its employees, the dairy industry as a whole and

the promotion of dairy products. Sonbyrne is an outstanding member of the community and our industry. We are proud to honor the company with our first-ever Customer of the Year Award.”

Members of the association nominated food retailers and food service customers that demonstrate a vision for operational excellence as it pertains to the dairy food and beverage industry. The selection committee considered innovation, product introduction, promoting dairy products and the industry through marketing and advertising, involvement with the dairy industry, community relations, management planning and oversight, exceptional leadership, commitment to improving accountability and success of their operation and relationships with vendors and service product suppliers. (continued on next page) NED Magazine | Fourth Quarter 2019 • 43

Convention Highlights A family owned separate convenience store entity associated with Byrne Dairy Inc., Sonbyrne Sales has been in business since 1956, when it opened its first location in Central Square, New York. Today, it operates approximately 60 locations throughout Central New York and employs more than 800 people. Dairy products, such as milk, butter, cheese and ice cream have always been the primary focus of the business.

Sonbyrne Sales has made a concerted effort to promote the dairy industry with a large offering of locally made Byrne Dairy products. According to the company, it differentiates itself from the competition and the traditional convenience store by offering six doors of fluid milk and six doors of ice cream products, and it sells upwards of 10 times the amount of dairy — particularly fluid milk, ice cream and yogurt — than its competitors. The stores also offer ice cream dipping stands in over 40 locations.

Involved in the community, Sonbyrne Sales frequently makes donations of ice cream and milk for events and spon-

sors local youth sports teams. The company also sponsors Syracuse news station WSYR Channel 9’s “Athlete of the Week,” where one student-athlete from a local high school is highlighted for athletic accomplishments and presented with a trophy — and a fresh Byrne Dairy chocolate milk — during the local newscast. The company is also environmentally minded and aims to enhance the communities in which its stores are located.

“Our customers are our lifeblood, and we aim to treat them like family,” said Mark Byrne, CEO of Sonbyrne Sales, Inc. “We offer the same quality dairy products that they have come to love over the years, particularly the Byrne Dairy chocolate milk and ice cream Cookiewich! We are truly honored to be the recipient of the Customer of the Year Award, and it is a remarkable tribute to all that Sonbyrne was founded on — from the farms where we get our milk to all of our hard working employees, our dedicated suppliers, and, most importantly, our customers.”

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Call (855)785-3625 or visit AminoMax.com NED Magazine | Fourth Quarter 2019 • 45

Tools of the Trade

MILK SHRINKAGE COST MORE IN 2019

BY RON MONG, CPA

A

ll fluid milk processors have shrinkage — the unexplained loss of product between farm pickup and product sales. Rising milk costs in 2019 are making the cost of shrinkage higher in 2019 than in 2018. Even if you are reducing the pounds of skim and butterfat shrinkage, or at the same loss as last year, the dollar cost is probably higher at your plant in 2019 compared to the last year.

HOW SHRINKAGE IS PRICED IN FEDERAL ORDERS Processors must pay their dairy suppliers — cooperative or independent — for all milk pounds received. At month’s end, the dairy’s accountants accumulate the pounds of milk utilization. Utilization is the pounds sold as Class I, plus the pounds used in batches to make Class II, III and IV products, as well as the pounds in ending inventory. The milk pounds received are usually greater than the pounds utilized. The difference between milk received and milk utilized is the plant’s milk shrinkage. The shrinkage is allocated in the market adminis46 • Northeast Dairy Foods Association, Inc.

trator’s monthly settlement statement between skim shrinkage and butterfat shrinkage.

In the Federal Order regulatory system, every dairy product processed and sold is assigned to a price Class. For example, fluid milk is priced as Class I. Milk used in ice cream mix is priced as Class II. What Class price does the Federal Order Market administrator assign to milk shrinkage?

In Federal Orders, the first 2% of milk received from farms is priced at the lowest Class price that month. If a plant receives 8 million pounds of milk from producers, then 160,000 pounds (2% of 8 million) is priced at the lowest Class price.

If this plant had more than 160,000 pounds of shrinkage, the excess pounds are priced at the highest-Class price at that plant. For a fluid milk plant, the highest Class price is almost always Class I. The table (Figure 1) on the next page shows the lowest price Class for each month in 2018 and 2019, as well as which Class was the lowest. Note: the last three months of 2019 are forecasted prices.

Tools of the Trade

January February March April May June July August September October November December

2018 Lowest Amount Price per Cwt. at Class 3.5% Bfat Class IV $ 13.13 Class IV $ 12.87 Class IV $ 13.04 Class IV $ 13.48 Class IV $ 14.57 Class IV $ 14.91 Class III $ 14.10 Class IV $ 14.63 Class IV $ 14.81 Class IV $ 15.01 Class III $ 14.44 Class III $ 13.78

Average

$

14.06

2019 Lowest Amount Increase Price per Cwt. at (Decrease) Percent Class 3.5% Bfat Class III $ 13.96 $ 0.83 6.3% Class III $ 13.89 $ 1.02 7.9% Class III $ 15.04 $ 2.00 15.3% Class IV $ 15.72 $ 2.24 16.6% Class IV $ 16.29 $ 1.72 11.8% Class III $ 16.27 $ 1.36 9.1% Class IV $ 16.90 $ 2.80 19.9% Class IV $ 16.74 $ 2.11 14.4% $ 1.54 10.4% Class IV $ 16.35 Class IV $ 16.39 * $ 1.38 9.2% Class IV $ 16.31 * $ 1.87 13.0% Class IV $ 16.28 * $ 2.50 18.1% $

15.85

$

1.78

12.7%

* Forecast

The average of the lowest Class price for 2019 is $15.85/ Cwt., which is $1.78/Cwt. or 12.7% higher than the 2018 average of $14.06. This means that the price shrinkage value has increased almost 13% from last year.

SHRINKAGE COST CASE STUDY Let’s look at shrinkage costs at a typical plant. This plant purchases and processes 10 million pounds of raw milk each month. The incoming milk tests 3.8% butterfat. The skim shrinkage is 1.4%, and the butterfat shrinkage is 1.8%. How much more will the milk shrinkage cost in 2019 compared to 2018?

The answer? This plant would have a monthly shrinkage of 134,680 skim pounds and 6,840 butterfat pounds.

For our case study plant, the cost of shrinkage increased $22,733 or 10.4%. This cost increase happened even though the amount of shrinkage pounds was the same every month.

In our hypothetical plant, the shrinkage cost per fluid gallon sold increased by .002 cents per gallon, from .022 cents in the first nine months of 2018 to .024 cents in 2019.

This cost increase could decrease gross margins. In a low margin sector like fluid milk, tenths of a cent cost increases make a difference. (continued on next page) NED Magazine | Fourth Quarter 2019 • 47

Tools of the Trade WHAT CAN BE DONE? Reducing milk shrinkage requires a team effort from all areas — lab, accounting, processing, packaging, refrigerated warehouse and January distribution. Without collaboration February among these departments, shrinkage March reduction efforts will be ineffective.

April In our recent shrinkage reduction May projects, we have observed several June recurring causes for excess shrinkJuly age. Here’s a partial list of some August common shrinkage causes we have September helped uncover: • Overfilling of packages • Improper cutoff between batches • Inaccurate reporting of milk and cream used in Class II batches • Errors in spreadsheets used in production accounting • Unreported losses in the refrigerated warehouse • New products or new customers • Employee theft and pilferage • Butterfat testing errors caused by improper sampling • Weights and butterfat tests on tanker-load shipments of bulk milk and bulk cream.

BEST PRACTICES In our shrinkage consulting work, we have found that the best practice for reducing shrinkage is to track it daily. The spreadsheet above accounts for raw milk receipts to packaged products and batches, from packaged products and batches to load outs, and from load outs to sales. This daily analysis will indicate which area of the operation has the most significant losses.

Each operation has a different department that causes the most shrinkage. It could be receiving, processing and packaging, the refrigerated warehouse or during delivery.

The academic name for a daily milk reconciliation is “mass balance.” The daily milk reconciliation has been proven to be an effective tool because it focuses management efforts on the area with the most problems.

Many plants only think about shrinkage once a month, on the day the Federal Order monthly report is due.

When the report shows a high shrinkage amount, the employees spend several frantic hours trying to “find the shrink.” Eventually, the report is submitted with a large amount of shrinkage. The next morning, the 48 • Northeast Dairy Foods Association, Inc.

2018 Shrinkage Costs $ 23,122 $ 22,559 $ 22,946 $ 23,722 $ 25,462 $ 26,028 $ 24,623 $ 25,507 $ 25,644 $ 219,613

2019 Shrinkage Total $ 24,373 $ 24,339 $ 25,967 $ 26,906 $ 27,759 $ 27,904 $ 28,836 $ 28,561 $ 27,701 $ 242,346

Increase (Decrease) Percent $ 1,251 5.4% $ 1,780 7.9% $ 3,021 13.2% $ 3,184 13.4% $ 2,297 9.0% $ 1,876 7.2% $ 4,213 17.1% $ 3,054 12.0% $ 2,057 8.0% $ 22,733 10.4%

shrinkage problem is forgotten until next month rolls around, and the process repeats. A daily shrinkage reconciliation can help the plant avoid the anguish from only calculating shrinkage on the day the Federal Order report is filed.

Another best practice is to establish a shrinkage reduction committee. This group meets at least weekly to focus on specific shrinkage problems and solutions.

The shrinkage team would include the processing manager, packaging supervisor, refrigerated warehouse leader, lab director and plant accountant. The successes should be published and celebrated.

SUMMARY Because of rising milk costs, plants are experiencing higher shrinkage costs in 2019 than in 2018.

This can be true even if plants are maintaining or reducing the level of shrinkage pounds. This can cause decreased gross margins. A daily milk reconciliation and a shrinkage reduction team are two best practices in plants that want to reduce shrinkage costs. At the higher milk costs in 2019, all shrinkage reduction efforts will have a bigger payoff — the milk lost has a higher value than it did last year.

Ron Mong, CPA, is senior manager of the Herbein + Company, Inc., a certified public accounting firm in Reading, Pennsylvania, and a member of the NDSA.

Tools of the Trade

ARE YOU READY FOR A RECALL? Having a Plan, Asking the Right Questions Can Ease the Pain

C

ompanies from every industry experience recalls from time-to-time. It’s a headache, and it can be costly and cast a negative light on a company and its brands. In some cases, though, a recall is a necessary action for the protection of consumers and/or the long-term reputation of a company. So, if the worst does happen, the pain of a recall can often be mitigated — and sometimes even avoided — if there’s a solid plan in place.

The dairy industry is not immune to recalls. In 2017, an ice cream manufacturer recalled nine of its flavors due to possible pathogenic E. coli contamination. That same year, another company recalled its half & half after traces of

alkaline phosphates were found in samples during routine testing. And earlier this year, a dairy manufacturer recalled certain batches of milk after the product tested positive for an undeclared tree nut allergen.

Not every product crisis warrants a full blown recall, according to Omar A. Oyarzabal, Ph.D., associate professor of food safety at the University of Vermont Extension. Oyarzabal recently presented a webinar, “Are You Ready for a Recall?”, which discussed various preparation strategies and a list of federal agencies that can serve as a valuable resource when and if a company is alerted to the possibility of a recall (see sidebar on page 52). (continued on next page) NED Magazine | Fourth Quarter 2019 • 49

Tools of the Trade

According to Oyarzabal, there are different levels of possible action according to the Food and Drug Administration: • A true recall is defined as removal of a marketed product that is considered by the FDA to be a violation of the law, e.g., when a product has caused an outbreak of illness or imminent danger to a consumer. In this case, the FDA would seize the product and possibly initiate legal action.

• Most of the time, a recall does not reach this level.

Instead, a company may undergo a market withdrawal, which consists of removal or correction of a distributed product that would not be subject to legal action and/or the involvement of the FDA, e.g., normal stock rotation practices.

True recalls are not as common as one might think, according to Oyarzabal, but they do happen — most often due to adulteration (e.g., one ingredient is substituted for another or when a product may have a health hazard); or misbranding (e.g., a product contains a possible allergen but is not labeled as such). Still, it is always best to be prepared before you are faced with any level of recall.

“Recalls are very active situations,” said Oyarzabal, “but having a road map in place can help you move through a moment of crisis.”

There are many variables when facing the possibility of a recall, but the bottom line is this: Do you have first-hand information or do you need to find out more before making a decision? When a company finds itself in this position, the following should be considered: • Where is the information coming from?

• Did it originate from within your own company through lab results or record verifications?

• Did a supplier inform you that it was facing a recall that in some way could become connected to your product?

• Did a customer or consumer trigger a recall investigation?

• Or, did the information originate from local, state or federal agencies that may have found something in an inspection or through a safety reporting portal?

50 • Northeast Dairy Foods Association, Inc.

IF A RECALL BECOMES NECESSARY If a recall is necessary, there are specific areas to address, according to Oyarzabal.

• Depth of Recall: The extent of the recall varies with a company’s level of distribution. This differs, as some companies sell wholesale, retail, direct to the consumer and also online. Some products may even have been donated. Many companies do all of these, so the need for a recall is going to depend on the extent of distribution and the type of hazard involved. It is important to quickly find out where the products in question are, but keep in mind that this can become complex.

• Effectiveness of Checks: The FDA also offers a document called “Methods for Conducting Recall Effectiveness Checks,” which explains how the recalling firm can perform effectiveness checks, while at the same time the FDA can assist. This is where a company’s traceability system plays an important role, with information like lot numbers, codes, product records and more.

• What Happens to the Affected Product? There are many variables once a product has been confirmed to have a problem, according to Oyarzabal, which is why it is essential to look at product segregation and place in the market. Will you perform tests, and, if so, do you have qualified laboratories set up to assist you? If you decide to destroy the product, do you have good communication and records to ensure that products are not accidentally returned to the marketplace?

COMMUNICATION IS KEY Like in any other type of crisis, communicating from the beginning and throughout a recall is extremely important. The initial press release and the information shared with regulatory agencies and customers must be carefully crafted. The engagement through social media can be a double-edged sword; it can ease or exacerbate the pain of the moment. Poor communication in social media accounts gets amplified extremely rapidly, and it can be out of con-

Tools of the Trade

trol quickly. Companies should realize that providing brief, concrete, targeted information to the best of their knowledge is more important than engaging with social media channels to attempt damage control.

Effective communication with regulatory agencies and customers is critical from the very beginning. If customers suspect that you have not been upfront in the early stages of the recall, you may face difficult circumstances with them later on. Keep in mind that you will need help from your customers and regulatory agencies to go through the recall process. Companies need to be prepared to have the resources for quick, effective communication. In some cases, it is advisable for the affected company to retain a public relations firm specializing in crisis management for effective communication among all parties.

IS IT OVER? Thankfully, at some point, the affected products will be identified, and the company can start to determine the termination of the product recall. Is that days, weeks or months? For example, an instance of a potential packaging issue may be able to be resolved quickly, while a recall related to a health outbreak may take much longer to resolve.

Oyarzabal gave an example of salmonella found in a cake mix, where seven people were reportedly sickened.

According to a map from the Centers for Disease Control and Prevention, the reported salmonella cases began in June 2018, but it wasn’t until November 2018 that the company initiated the recall. This particular recall is still, in fact, ongoing, even though no more cases of salmonella were reported. Why? Because of the potential that there is still some of the affected product out there sitting in a consumer’s kitchen cupboard.

“Some recalls can take a long time,” said Oyarzabal.

“So be prepared for something that can take quite a bit of effort.”

Even when a recall has come to an end, there is still work to do. Using all of the information collected, it is important to determine which corrective actions are

needed. This is often based on another series of questions.

• How effective was the implementation of the recall?

• Is there a need to re-analyze your food safety plan following the recall?

• Is any retraining of employees needed in regard to your existing safety plan?

• Do you need to consider other additional or updated practices or actions to prevent a similar event in the future?

• Is all the proper documentation in place?

Regardless of how well a recall was handled, or even if one was determined not to be necessary at all, Oyarzabal suggests holding a mock recall that goes beyond a traceability exercise. He admits that he’s seen “a noticeable lack of interest in holding a mock recall that goes further than quickly identifying where the product is in market in the last couple years by most food facilities,” but he encourages companies to make the effort anyway. Most only do traceability exercises, and end it at that. However, a mock recall, involves not only a traceability system but also all of the other actions needed to withdraw a product from commerce. Using a specific scenario during a mock recall is particularly effective, according to Oyarzabal, as it can help you create some records to work on improvements that might be identified, letting you know if you are achieving the goals you have set up and guiding you through changes or updates if needed. A mock recall can also point out any missing steps — from key contact information, a recall strategy, product segregation and disposition, termination — and can guide you on corrective actions to improve your recall plan.

“Keep it simple and use the most appropriate tools for your facility,” advised Oyarzabal. “Run mock recalls, and make sure this includes finished products, ingredients, materials, packaging and more. Make changes as you improve, and try to keep your recall plan updated. Keep all resources and documentation in case of a recall. Lastly, be ready for the worst case scenario — even though, in most cases, the situation will likely not be that serious.” (continued on next page) NED Magazine | Fourth Quarter 2019 • 51

Tools of the Trade BE PREPARED FOR A RECALL If the possibility of a recall comes to light, be prepared to ask the right questions.

• Does your situation really require a recall? Where did the information about the problem with your product originate from and is this a credible source?

• Who can help you make the decision of whether or not a recall is appropriate?

Do you have an up-to-date list of local, state and federal agencies that can answer your questions and help best assess your particular situation?

• If you decide a recall is not necessary, do you have adequate justification for your decision?

• Do you have access to other companies or colleagues within your industry who may have been through similar situations and can offer advice?

• If it becomes necessary, do you have access to good legal advice?

RESOURCES • The FDA, which handles the majority of recalls in the dairy industry, offers regional contact information through the Office of Regulatory Affairs. Members of the Northeast Dairy Foods Association should contact the office for the Northeast region. Go to www.fda.gov.

• There is also a safety reporting portal through the FDA that allows anyone — from the industry to the public — to submit reports related to the safety of various foods and beverages.

Often, this is how the FDA is often alerted to potential safety problems. This can be accesses at https://www.safetyreporting.hhs.gov .

• The USDA FSIS (Food Safety and Inspection Services) has regional contact information for its office of field operations district offices, which can be found at https://www.fsis.usda.gov.

• For a current list of food recalls coming from major agencies, go to www.recalls.gov .

• Food Recall Webinars by The University of Vermont Extension: 1) Food Recall: A Review and Resources for the Northeast. Available at http://go.uvm.edu/recall01; 2) Are You Ready for A Recall? Available at http://go.uvm.edu/ recall02.

PA Research Agency Recommends Adding Fee to Plant-Based “Milk”

T

he Legislative Budget and Finance Committee, a Pennsylvania research agency that makes policy recommendations to lawmakers, recently suggested that the state consider adding a fee to plant-based milk alternatives.

The legislation that prompted the study was sponsored in 2018 by Pennsylvania State Sen. Judith L. Schwank, who is the top Democrat on the Agriculture and Rural Affairs Committee.

There has been a great deal of controversy throughout the industry nationwide about the labeling of plant-based 52 • Northeast Dairy Foods Association, Inc.

beverages as “milk,” which many in dairy consider to be highly inaccurate. Dairy leaders nationwide have been putting pressure on the U.S Food and Drug Administration to clearly define milk as something that comes only from a mammal.

However, the FDA has yet set that standard.

Pennsylvania is unique in that it has a Milk Marketing Law that has a broader definition of milk based on products.

One of those products is called a “milk drink,” and it has been suggested that the Milk Marketing Board in Pennsylvania create a special class of milk in order to assess a fee on plant “milks.”

OSHA UPDATES OSHA Local and National Emphasis Programs with Applicability to the Dairy Industry

BY JASON WOODRUFF, CIH CSP

T

he federal Occupational Safety and Health Administration develops regional and national emphasis programs to direct resources (inspectors) towards specific tasks, industries or particular hazards that OSHA has determined as elevated sources of risk. Two of the emphasis programs that have requirements specific to the dairy industry are the National Emphasis Program for Combustible Dust, and, specific to Region 2 of OSHA (New York, New Jersey, Puerto Rico and Virgin Islands), the Dairy Farm Operations Inspection Program.

COMBUSTIBLE DUSTS CPL (03-00-008) – Combustible Dust National Emphasis Program (updated in 2015) contains requirements for inspections of facilities that may contain combustible dusts.

Combustible dusts that are found in the dairy industry may include (but not be limited to): flour, sugar, dry ingredients/ blending, dry/powdered milk, lactose, plastic from regrinding plastic containers and plastic scraps during blow molding, and other biosolids.

If your operation contains potentially combustible dusts, you should understand the five components of the combustible dust pentagon.

1. Fuel Source: Sugar, dry ingredients, etc.

2. Ignition: Non-Class II Division 1/2 rated electrical equipment, hot work, etc.

3. Confinement: Enclosures which may be ventilation systems, hoppers or blenders.

4. Aerosolization of the Fuel: Dispersion of the dust into a combustible concentration.

5. Oxygen: Exposure to air or other sources of oxygen.

If your operation has a location where the five components of the combustible dust pentagon exist, you have a risk for a combustible dust explosion or deflagration. In order to prevent these deflagrations and fires, your facility should have areas for storage and handling of these materials which are setup to prevent these fires.

Storage and processing areas where combustible dusts exist should have NEC Class II Division 1/2 rated electrical systems. These systems are sealed to prevent sparks and sources of ignition from exiting the system. In addition, fire detection and fire suppression systems may be warranted in these storage areas. Outside of storage areas, signage should be present indicating the combustible dust risk and prevention of bringing in any electronic devices or other sources of ignition.

Baghouse and filtration systems used for local air exhaust ventilation should be equipped with Class II Division 1/2 rated electrical systems, appropriate blowout panels directing energy away from personnel and personnel areas, and fire detection or suppression systems.

Inside of processing areas and outside of storage areas, (continued on next page) NED Magazine | Fourth Quarter 2019 • 53

OSHAUpdates

OSHA looks for accumulations of combustible dusts. These accumulations may be as small as 1/16th inches deep and still elicit a citation from OSHA. Accumulations of dust should be avoided in these areas as much as possible. Cleaning all horizontal surfaces is crucially important to prevention of fires. Ceiling joists, rafters, piping, conduit and electrical bridges all may be locations where combustible dusts may accumulate.

Someone within any organization who handles or processes combustible dusts should review NFPA 654. Compliance with NFPA 654, “Standard for the Prevention of Fires and Dust Explosions from the Manufacturing, Processing, and Handling of Combustible Particulate Solids,” will assist in prevention of a catastrophic deflagration emergency and prevent citations associated with working with combustible dusts. This document is referenced by OSHA as

Read the previous issues of Northeast Dairy Magazine online.

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Visit issuu.com/nedmagazine 54 • Northeast Dairy Foods Association, Inc.

Recognized and Generally Acceptable Good Engineering Practice. Deviations from compliance with this guidance document may be sources of citation for OSHA under the General Duty Clause.

DAIRY FARMING OPERATIONS Directive (2019-03) Local Emphasis Program – Dairy farm operations contains requirements for inspections of dairy farm operations within Region 2. Prior to establishment of this emphasis program, OSHA primarily only responded to fatalities and significant injuries on dairy farming operations.

Since establishment of this directive, OSHA has added these facilities to additional inspection rotations.

Inspections will be tailored to identify hazards associated with: • Machine guarding • Permit required confined space entry • Anhydrous ammonia handling • Electrical system hazards • Farming specific hazards – tractor usage, powered takeoffs, manure handling.

Your dairy farming partners should be well-versed in their health and safety programs and actively managing safety hazards at their facilities. Just like in general industry, farming operations with greater than 10 employees have specific OSHA regulations associated with their conduct.

They are found at 29 CFR 1928.

OSHA has assigned additional resources and compliance officers to inspect facilities with these hazardous materials (combustible dusts) and operations (agriculture). Employers should expect compliance officers to inspect their facilities specifically for these hazards and a management system to reduce hazards in the workplace. A proactive management strategy to manage these risks will reduce the likelihood of a catastrophic injury or incident as well as reduce the risk of OSHA fines and citations.

Jason Woodruff, CIH CSP, is a senior consultant with Partners Environmental Consulting in Syracuse, New York.

He is a consultant to Northeast Dairy Foods Assoc., Inc. members and can be contacted at jwoodruff@partnersenv.com or 315-212-4053.

Evergreen Packaging: Sustainability Is at the Heart of What They Do

BY STEVE GUGLIELMO

E

vergreen Packaging can trace its roots back all the way to 1880 when John Cherry developed a new cream can for the Morton Company. Cherry was the chief butter maker for the Morton Company, and he was concerned about the way that the cream was being delivered to the creamery. He devised a solution that utilized an octagonal wood box with a tin can inside of it and a float that helped prevent the cream from churning as it was being transported on the rough roads to the creamery. That invention was the forefather of the modern cream can that we still use today. That foresight and ingenuity would continue to define Evergreen Packaging from its inception

in 1880 all the way through today, where the company is now the only fully-integrated fiber-based packaging supplier in the world with more than 1,300 machines installed globally and serving customers in more than 50 countries.

In 1880, Cherry left the Morton Company to start the Cherry Corporation.

In 1928, the Cherry Company partnered with a cheese processing company out of Little Falls, New York, called the Burrell Company, to form the Cherry-Burrell Corporation.

In the intervening 90 years, the company expanded from its roots as a cream can manufacturer to beginning to work more closely with the dairy industry.

“When the Cherry Company partnered with the Burrell Corporation,

which was working on the cheese processing side of the business, that really opened up a whole processing aspect to the business,” said Gary Nissen, general manager of Evergreen Packaging.

The company began to manufacture its gable top filling equipment in the late 1960s. That equipment would go on to become the company’s core business. Cherry-Burrell continued until 1991 when its packaging division was purchased by International Paper. The company’s Cedar Rapids, Iowa, headquarters had a contest to name the new company, and so Evergreen Packaging was officially born.

“At that time, International Paper had a business that was producing gable (continued on next page) NED Magazine | Fourth Quarter 2019 • 55

MemberProfile

Gary Nissen, general manager of Evergreen Packaging

top carton blanks,” said Nissen. “It went very well with their business to have a machine that could take their carton blanks and put milk into them.”

In 2007, Evergreen was purchased by the Rank Group. The entire company took on the name of Evergreen Packaging, including its Cedar Rapids location producing gable top packaging equipment, the Memphis, Tennessee, headquarters; paper mills and global converting facilities producing fiber-based products in a sustainable, environmentally conscious way.

56 • Northeast Dairy Foods Association, Inc.

SUSTAINABILITY From its name to its corporate identity, “green” is a core tenet of everything that Evergreen does.

“For us, sustainability is at the heart of what we do,” the company’s website said. “We believe that responsible forestry means integrating sustainable growth and harvesting of trees with protection of wildlife, plants, soils and water.”

How does Evergreen do this? By working closely with American forest owners and supporting them. By par-

ticipating in not one, but three, internationally recognized forestry certification programs. And by minimizing its environmental impact by using renewable energy when making its paper and supporting renewable energy efforts.

The company has branded its gable top cartons as PlantCarton packages.

PlantCarton packaging is made up of more then 70% paper from trees grown in forests where responsible forestry practices are used. Also, PlantCarton packaging is recyclable. The company minimizes its environmental impact by using about 55% renewable energy from biomass in its paper-making process.

“We work only with certified forests that meet very stringent certification standards,” Nissen said. “Evergreen Packaging is committed to supporting a healthy, sustainable wood supply for generations to come.”

“While the boom in consumer demand for sustainability has really peaked in the last three to four years, this is something that has been building for quite some time,” Nissen said. “We’re well-positioned as an alternative to plastic. We are actually part of the Carton Council, where we’re working very hard to promote the recyclability of the gable top carton. We’re very focused, from end-to-end, on the idea of being a sustainable package. It’s not just something we say, it’s definitely our culture and what drives us.”

CULTURE Of course, having a great product is only one half of the equation. Part of Evergreen’s continued success is in its company culture, the pillars of which are unchanged since Cherry opened the doors in 1880.

Nissen, who has worked at Evergreen since 1999, said that a strong culture is one of the primary engines of the company’s continued growth.

MemberProfile

“That has always been something I’ve considered the most important trait of Evergreen Packaging,” he said. “We have a lot of employees who have been here for 25 to 30 years or more. It’s a very family-oriented feel. And that’s something that I think is unusual in this day and age to have a workforce that comes to a place and just stays until they retire.”

As those 30-plus year employees approach retirement age, one of the challenges that Nissen and Evergreen continue to face is how to bridge that culture and philosophy to the next generation of employees.

“It’s a culture where people wake up in the morning and are excited to come to work. We do things outside of work together,” Nissen said. “We’re trying to maintain and grow that culture that has been here since 1880. It’s a big challenge, but it’s a fun challenge. We have a lot of new faces, and we’re all trying to maintain that same culture and same pride we feel in working for Evergreen.”

said. “In order to be able to reach that, it’s obviously not just the actual packaging machine itself, it’s lots of other things.

You need to have good milk supply. You have to manage milk when it comes to your plant, and you have to process it.

However, when you do finally go to package it, you need a machine with ELL features to maintain that product quality.

You have to have clean air around the carton and have to be able to treat the carton on the inside to make sure there is no bacteria once it gets filled.”

Today, the company continues to address sustainability concerns wherever applicable.

“We aspire to make our gable top packaging as sustainable as possible,” said Nissen. “We already have a RenewablePlus product line available that uses sugarcane-based polyethylene, providing a carton with 95 to 99% renewable content depending on the carton size, coating type and use of a closure.”

Being able to rise and meet these challenges are what has allowed Evergreen to thrive. The devotion to continuing to meet these challenges are what will allow the company to continue to grow for the next 140 years.

GOING FORWARD Evergreen Packaging’s vision statement says, “We are the worldwide supplier of choice for sanitary packaging machines and services to the liquid food and beverage industries.” It’s been a mission nearly 140 years in the making.

“I think what has driven our industry over the years is the need for the dairy industry to be able to provide milk products with longer shelf lives and higher sanitary quality,” Nissen said. As those requirements have evolved, so too has Evergreen and its gable top machines.

“Customers might demand that products be able to sit on a shelf for 90 days, and that product has to be just as fresh on day 90 as it was on day one,” Nissen NED Magazine | Fourth Quarter 2019 • 57

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SHELF LIFE IS DEPENDENT ON MANY STEPS What is the shelf life of your product? For dairy producers and manufacturers, this is a critical question with complex variables, but one that is essential to the integrity of a product for its customers or consumers.

According to Richard J. Szyperski, technical product manager, Evergreen Packaging Equipment, shelf life is governed by local and federal regulations, microbiological development and organoleptic factors (such as flavor and odor), as well as rate of enzyme breakdown, vitamin degradation and other chemical reactions.

Particularly critical to the extension of shelf life is the raw product microbiological quality, as studies show that when these counts are high, shelf life is difficult to be consistently controlled.

WHAT IS SHELF LIFE? Shelf life has varying definitions depending on the intended use of the product. For low acid products, like most dairy, shelf life is broken down into two criteria: 1. The time period before the quality of a perishable product could potentially become a public health risk.

2. The time period where the quality of a perishable product is such that it is no longer saleable.

Factors that impact shelf life include: • Raw product quality • Processing time and temperature • Storage and distribution conditions • Packaging environment • Retail distribution storage environment

58 • Northeast Dairy Foods Association, Inc.

The shelf life of any product begins with the quality of the raw ingredients. Studies show that despite other efforts along the supply chain, the raw product’s microbiological quality is critical in extending shelf life. The next step requires a determination of adequate processing time and temperature relationships. Szyperski said that there are mandatory minimums required by regulatory agencies, but it is necessary to deliver more than the minimum standard in order to yield the required shelf life of a finished product.

Even though dairy products are refrigerated, processing systems should be designed to aseptic standards, and equipment design should meet the highest sanitary standards that allow for easy cleaning and sterilization using tradition Clean in Place, something referred to as CIP, or Sterilized in Place, sometimes referred to as SIP, methods.

Once a product has been processed, it moves to storage and distribution. According to Szyperski, plants must maintain high hygienic conditions in their equipment in order to avoid post-process contamination and, in turn, length of shelf life. Practices include making sure surge tanks are designed to Extended Shelf Life standards with controlled sterile air venting, the ability to CIP using traditional methods, such as caustic and acid washes followed by rinsing to ensure no chemicals remain. During this phase of the product process, control should exist around tanks to adequately control and record all functions and ensure the product is not exposed to less than optimal conditions that could impact quality and shelf life, e.g., product temperature.

MemberProfile

PACKAGING PLAYS ITS PART Once the product (e.g., milk, half & half, whipping cream) has been processed, it must be packaged. This is just as important a step as any of the others, as it must be able to preserve the product microbiologically at the level in which it was produced until it reaches the consumer.

Although dairy products are refrigerated, aseptic techniques must be adhered to in the packaging process when it comes to machine design in order to maintain maximum shelf life.

Not every packaging machine is the same, of course, but features that assure proper sanitation in all of the places where contamination can occur are critical. These include hygienic machine design, environmental controls and minimal handling of the blank package by human hands.

Good hygienic machine design utilizes an automatic sanitizing system that periodically sprays sanitizing solutions on product contact surfaces to maintain a good hygienic state of the machine surface. Condensate control that minimizes droplet formation on various surfaces of the machine that must be cooled also is necessary. Minimizing condensation is critical to the success of a long life packaging machine.

CIP procedures and pre-production sanitation must also be practiced by the processor, along with hand cleaning of non-CIP machine surfaces.

Environmental controls are critical, as well.

The use of an ISO 5 High Efficiency Particulate Air filter removes 97 to 99% of particles that are at least 0.3 microns in size. Good CIP procedures and pre-production sanitation must be practiced by the processor, along with hand cleaning of non-CIP surfaces.

HANDS OFF In addition, the packaging itself should be handled as little as possible by human hands,

and carton blanks must be stored in a clean environment to ensure adequate sanitation.

Operators and maintenance personnel must be constantly aware of their effects on machine sanitation. Simple steps like keeping hands sanitized at all times or using sanitized gloves are just some of the common techniques used to maintain a sanitary environment. Any time a machine requires manual adjustment, sanitized steps must be repeated in order to ensure the machine has not been compromised in any way.

And, of course, the carton or container must be sanitized prior to filling. Failure to complete this important step can negate any prior steps, no matter how complete they were. The utilization of aseptic techniques ensure the probability of an organism remaining in the carton prior to filling is greatly reduced. Using 35% hydrogen peroxide or similar sterilants will ensure the package is properly treated prior to filling.

“Remember, a packaging machine only preserves the quality of product it is supplied, said Szyperski. “It does nothing to improve shelf life.”

THE FINAL STEPS Lastly, how a product is maintained during distribution and in its retail environments are probably the most critical for preservation of shelf life, and studies have shown that increases in storage and distribution temperatures can dramatically decrease shelf life of the finished product. While this is often out of the producer’s hands, a clear understanding of the supply chain and a transparent relationship with distributors and retailers can go a long way in making sure the product is safe to consume and adequate shelf life is maintained.

Said Szyperski, “Putting all of these practices together into the design and operation of a plant should, when run properly, give producers the shelf life they require.”

NED Magazine | Fourth Quarter 2019 • 59

MemberProfile

BLACK RIVER VALLEY NATURAL IMPACTS DAIRY COMMUNITY BY BRINGING FARMERS TOGETHER

BY COURTNEY KLESS

O

wning a dairy business isn’t a first career for James and Bethany Munn.

James worked in high-tech manufacturing and his wife, Bethany, was in health care, but they felt like something was missing. They reached out to the economic development agency in Lewis County, New York, and the idea for Black River Valley Natural was born.

“They proposed value-add dairy processing because Lewis County is predominantly dairy,” James said. “I came from a manufacturing background, 60 • Northeast Dairy Foods Association, Inc.

so I thought, ‘Semiconductor manufacturing, dairy manufacturing, OK, maybe we can make this work.’…Our goal was really to have an impact on the local community, and we couldn’t think of a better group of folks to help out than the local farmers. We thought that if we started a creamery here, we could potentially offer these farmers a better price for their milk or at least a better market for their milk.”

From there, James and Bethany worked with the Shipley Center for Innovation at Clarkson University to develop a business plan and later began construction on a creamery in Lyons

Falls, New York. During that time, they traveled to Cornell University a few days a month to co-manufacture their products. Their facility opened in March of 2019.

“We’re located on the site of an old paper mill that’s been shut down for almost 20 years,” James said. “We’re part of the revitalization for this town that used to be a mill town. Once they lost their mill, they really struggled, so we’re hoping to bring back some of that.”

Black River Valley Natural currently produces its own line of small-batch dairy products, including butter, flavored butters (ranging from garlic and herb to

MemberProfile maple brown sugar), creamline milk, flavored creamline milk, and, most recently, cheese. James said that Black River Valley Natural also offers co-manufacturing and refrigerated delivery services to farmers in the area, including a goat dairy that uses the company’s new facility to produce cheese.

“They then have a product that they can sell and keep their farm going,” he said. “We found early on when we started this business that we were driving to a lot of places that other local producers — honey, maple, beef sticks, things like that — were also going to. So, we said, ‘Hey, let’s share trucking, share distribution expenses’ and offered to help out there, too, as another way to help promote the local food movement here in Lewis County.”

Though the creation and distribution of local products is at the core of the company’s identity, Black River Valley Natural also strives to educate consumers. Representatives from the company often attend local events — including fairs, craft shows and farmers markets — with farmers so customers know where their food is coming from and who is producing it.

“We really like being able to say, ‘The milk comes from him, and we make your butter,’” James said. “They can actually meet and shake the hands of the people who make their food for them, and I think that’s a really cool thing. We want to try to continue that and leverage the internet to continue that for the folks we maybe can’t shake hands with, but we want to give them that same level of connection.”

In the next five years and beyond, Black River Valley Natural hopes to continue experimenting with flavors (much like it did with their maple creamline milk), grow its market and promote local products other than dairy.

“I think Bethany puts it very well when she says ‘The rising tide will lift all the boats,’” James said. “What we’re hoping to do is raise that tide and help all of our local producers, our neighbors in the Black River Valley, and show them that cooperation is really key. It’s not competition. We’re not competing with each other. We’re all trying to work together to get these great products that we’re making here in the county out to the rest of New York state and hopefully the rest of the country and maybe even to our friends over the border to the north at some point.”

But for now, Bethany said Black

River Valley Natural has brought excitement and hope to the community.

“I think what the business is enabling people to do is to try to reach for a dream that they’ve had, but they haven’t been able to fulfill,” she said. “Working with the farms that we have been, it’s always been their dream to produce their products, however, they’ve never had a way to actually have that come to fruition in a cost effective way. We’re enabling that. Our model, the reason we changed our entire lives, was to make an impact. It’s not necessarily about the bottom line. It’s how can we impact the most people and grow the community and just lift it up as a whole.”

NED Magazine | Fourth Quarter 2019 • 61

Member News

B

MEMBER & INDUSTRY NEWS

yrne Dairy recently announced that it will sell its fresh milk bottling plant in Syracuse, New York, to Upstate Niagara Cooperative, Inc., which is located in Buffalo, New York. Upstate Niagara will also purchase the direct-to-store delivery operations. The agreement allows Upstate Niagara to package fresh milk under the Byrne Dairy name.

Milk will continue to be supplied to the facility from Byrne farms throughout Central New York. The sale does not include other Byrne Dairy locations in New York or any of the Byrne Dairy & Deli Stores.

Chobani introduced its first Farmer Batch yogurt, Milk & Cookies, made in partnership with American Farmland Trust to help support U.S. dairy farmers. Ten cents from every purchase of this product — up to $10,000 — will provide resources and micro-grants to farmers that will help them improve their business, encourage succession planning, protect their land and generate renewable energy, as well as adopt climate-smart farming practices. protecting farmland, promoting sound farming practices and keeping farmers on the land.”

Employees of Great Lakes Cheese’s Cuba, New York, facility raised over $2,000 as they took part in the Out of the Darkness Walk to support the American Society for Suicide Prevention.

Kyle D. Levengood, CPA, CFE, was promoted to partner at Herbein + Company in October. He is the seventh new partner in the past three years, a trend that bodes well for the firm, according to Managing Partner Michael J. Rowley, CPA/ABV, CVA, CFF. Levengood is responsible for overseeing firm audits by working closely with clients and Herbein clients through every step of the engagement and works primarily with dairy,

62 • Northeast Dairy Foods Association, Inc.

food and beverage, manufacturing and distribution, and employee benefits plan industries.

HP Hood, LLC, announced that its Agawam, Massachusetts, plant was the recipient of the first-ever ENERGY STAR certification presented to a fluid dairy processing plant by the U.S. Environmental Protection Agency. The location received a perfect score for its commitment to sustainability, including reduced water use and energy efficiency. Mike Suever, senior vice president of milk procurement, applauded the location for its commitment to sustainability. Agawam is one of only a few U.S. manufacturing plants in the U.S. to have earned ENERGY STAR certification for best-in-class energy performance.

In September, MILKPEP announced its new CEO, Yin Rani, who brings a great deal of experience in integrated marketing across CPG companies and marketing agencies. Her previous experience includes positions at Campbell’s Soup Company and Universal McCann.

Perry’s Ice Cream is expanding into the North Carolina market. Twenty Perry’s family-sized flavors will be available through grocery retailer Wegman’s, which recently opened a location in Raleigh, North Carolina.

To celebrate National Farm to School Month in October, Stewart’s Shops and the Dairy Council Health Foundation donated a new smoothie blender to Saratoga Spring (N.Y.) High School to help increase student access to locally-produced and nutritious foods. Duke Acres Farm visited the school to hand out samples of pumpkin spice and very berry smoothies made with New York state milk, as part of a statewide Farm-to-School initiative that helps students understand where their food comes from. Representatives from Stewart’s and the American Dairy Association North East Youth Program were also in attendance, along with a

number of school officials. Stewart’s has been providing the high school with milk for the past 20 years.

Upstate Niagara Cooperative, based in Buffalo, New York, received 13 awards at the 53rd World Dairy Expo Dairy Products Contest, which was sponsored by the Wisconsin Dairy Association in October. Twelve of the co-op’s products won in 11 categories. Taking first place in their respective categories were Milk for Life Lactose Free Chocolate Milk, LMPS Culture String Cheese, Upstate Farms Ricottone, Upstate Farms Key Lime Greek Yogurt and Bison French Onion Dip. Yancey’s Fancy recently added another product to its well-known flavorful cheeses: cheese spreads with flavors that include Buffalo wing, horseradish & scallion and hatch chili. The products are made from the company’s natural cheese and are sold in 8 oz. containers or 5 lb. bulk tubs. While the cheese spreads are sold under the Yancey’s Fancy label, some retailers are also repackaging the product. The company tested the product and various flavors at the International Dairy Beli Bakery Association show last summer and the Fancy Food Show.

Several members of the NDFA received awards in the 2019 Dairy Products Competition in celebration of the 43rd annual Dairy Day at the Great New York State Fair. Yancey’s Fancy was named the Grand Champion for its Chastinet cheese, and the state’s top scoring milk belongs to Garelick Farms. McCadam Cheese walked away with five medals, including gold, silver and an award of excellence in the flavored yogurt category. Upstate Niagara Cooperative took the gold in the plain yogurt class, and Byrne Hollow Farm won gold in the flavored yogurt class. Saputo Friendship and Upstate Niagara Cooperative earned the most medals overall with eight each.

Member News

NEW MEMBERS

T

he following new members recently joined Northeast Dairy Foods Association Inc., and the Northeast Dairy Suppliers Association, Inc. For more information about the benefits and services

AMCOR RIGID PACKAGING Terry Madden Business Development Manager Terry.Madden@amcor.com 734-428-4529 10521 S-M 52 Manchester, MI 48158 www.amcor.com

ATLAS MINERALS & CHEMICALS, INC. Stephen Abernathy Vice President Sapbernathy@atlasmin.com 610-682-7171 1227 Valley Rd. Mertztown, PA 139539 www.atlastmin.com

available in both the Northeast Dairy Suppliers Association, Inc., and the Northeast Dairy Foods Association, Inc., contact Alex Walsh, director of membership and communication, at 315-452-MILK (6455) or aw@nedairyfoods.org.

BLACK RIVER VALLEY NATURAL James Munn General Manager 315-741-5872 P.O. Box 407 Lyons Falls, NY 13368 James@blackrivervalleynatural.com www.blackrivervalleynatural.com

HAMMER PACKAGING Kimberly Flynn Marketing Manager kflynn@hammerpackaging.com 585-424-3880 200 Lucius Gordon Dr. West Henrietta, NY 14586 www.hammerpackaging.com

J.B. HUNT TRANSPORT

KELLEY SUPPLY, INC. Melody Swatzina Administrative Assistant 715-223-3614 P.O. Box 100 Abbotsford, WI 54405 info@kelleysupply.com www.kelleysupply.com

PCM USA, INC. Chad Phillips F&I Food Systems Product Manager cphillips@pcm.eu 713-896-4888 11940 Brittmore Park Dr. Houston, TX 77041 www.pcm.eu

Richey Miller General Manager Richey.Miller@jbhunt.com 800-452-4868 615 J.E. Hunt Corporate Dr. Lowell, AR 72745 www.jbhunt.com NED Magazine | Fourth Quarter 2019 • 63

ADVERTISERS INDEX Ace Sanitary.....................................................................................................15 Afgritech..........................................................................................................45 Agri-Mark Cooperative....................................................................................19 Dopkins & Company....................................................................................... 44 Farm Credit East..............................................................................................21 Gelpac..............................................................................................................18 H.S. Crocker.................................................................................................... 64 Herbein & Company..........................................................................................6 Krohne...............................................................................................................4 Marathon Energy............................................................................................ BC Nelson-Jameson............................................................................................. 64 PTI/Waldner North America ����������������������������������������������������������������������������30 Schenck Process............................................................................................. 34 Tremcar USA....................................................................................................45 Tri Tank Corp................................................................................................... 44 WestRock........................................................................................................IFC

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64 • Northeast Dairy Foods Association, Inc.

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