Not milk: The ingredient behind the dairy crisis

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I have no idea what it would feel like to be a dairy farmer. I don't run a business that was started by my father or mother or grandparents, or that I built myself; I don't own and manage land that has been in my family for generations. Come to think of it, I've never really had to make a major business decision, let alone a decision that could determine my family's future and the future of animals I raise and care for.

I can't claim to know what it feels like to be a dairy farmer, but that doesn't make the recent conversations I've had with dairy farmers any easier.

The Associated Press reports:

Hundreds of thousands of America's dairy cows are bring turned into hamburgers because milk prices have dropped so low that farmers can no longer afford to feed the animals.... Dairy farmers say they have little choice but to sell off part of their herds for slaughter because they face a perfect storm of destructive economic forces.

Or, in the words of the Minnesota farmer I talked with on Friday, "This could be it - this could really be it. What are we going to do?"

There's been a fair amount of press coverage of the dairy price crisis that began last fall, from January's widely-circulated New York Times article to the daily headlines in many dairy-producing regions. Milk prices currently cover less than half of farmers' production costs, and there's no end to the drop in sight. In California, debt-ridden dairy farmers are committing suicide; elsewhere, they're pouring milk down the drain, wringing their hands, and hoping for a miracle.

Fluid milk isn't the only product at rock-bottom prices. As Andrew Martin reported in that NYT article, the price of U.S. milk products used by processors to make other dairy foods - things like nonfat dry milk powder, which goes into everything from baby formula to pizza cheese - has also dropped, falling by nearly 65% since mid-2007.

The reason for this drop, we're told by Martin and others, is that the recession has created a surplus of milk and milk products. Cows keep producing, but consumers aren't buying - here or anywhere else in the world.

It's interesting, then, that at the moment demand was supposedly crashing hard - the last quarter of 2008 - U.S. dairy imports rose by more than 15% over the previous three quarters. If no one in the U.S. wanted milk, then why did companies increase their spending by nearly $120 million last fall to bring it in from abroad?

According to one farm group, the answer can be told in the form of a story with four main characters: a sneaky company (or, OK, several), a misguided media, a useless regulatory agency, and an ingredient commonly used to make glue that may be in more dairy products than we know. Intrigued? So was I.

Last week, the National Family Farm Coalition, whose members include small and mid-sized dairy producers from the Midwest, Northeast, and upstate New York, held a press conference on "the real cause of the dairy price crisis." Their thesis: it's not because U.S. farmers are producing too much or because demand is falling precipitously. No, some very different culprits are to blame. I'm going to focus on one, a product called Milk Protein Concentrates, or MPCs.

(A note: I'm leaving out the other factors because they involve the way that milk is priced, which is mind-bendingly technical. If you're into that, I recommend reading the press release and this analysis [pdf] by John Bunting, a NY dairy farmer, editor of The Milkweed, and dairy policy guru.)

Chapter 1: The ingredient

Milk protein concentrates are created when milk is ultra-filtered, a process that drains out the lactose and keeps the milk protein and other large molecules. The protein components are then dried and become a powder. That all sounds relatively benign - until we learn that those "other large molecules" can include bacteria and somatic cells; that virtually all MPCs come from other countries, most of them with very poor food safety records (China, India, Poland, the Ukraine); and that the milk used to make MPCs is usually not cows' milk. More often, it is from water buffalo, yaks, or other animals common to the countries where MPCs are manufactured.

Perhaps because of MPCs' sketchy origins, they have never been approved as a food ingredient by the U.S. Food and Drug Administration. (They are, however, a common ingredient in some brands of glue.) The FDA has a list of additives it allows in processed food - the GRAS list, for Generally Recognized as Safe - and MPCs ain't on it. That means the FDA hasn't carried out safety tests on MPCs, as the law requires for any additive on the GRAS list.

I was therefore surprised to learn that MPCs are widely used in dairy products manufactured and sold in the United States. Kraft Singles have them, as did most other brands of processed cheese slices that I checked in the grocery store last night. Some snack foods, coffee creamers, candies, and nutritional drinks have them. They're not approved by the FDA as a food ingredient, but they're in a whole lot of food.

Chapter 2: The companies

We will put aside for the moment the question of why the FDA is allowing food processors to lace their products with unregulated dried yak's milk from Siberia. Instead, we'll ask why companies are going to such lengths to get their hands on the stuff - and what it means for U.S. dairy farmers.

From what I've heard and read, there is one major reason for the shift from home-grown moo-cow to imported who-knows-what: MPCs are much cheaper. Syndicated columnist Alan Guebert called it in a 2005 column, reprinted here on the website of Family Farm Defenders: "[It's] about money. Money processors hope to make by outsourcing milk and dairy product ingredients, like cheaper MPCs, from New Zealand, India and other dairy exporters. Money processors can save by substituting cheaper, imported MPCs for pricier, unaltered American milk in their bottling and dairy product plants." And substitute they did. Between 2004 and 2008, U.S. imports of MPCs increased by more than 300%. Just in the third quarter of 2008, MPC imports jumped 40% over the previous quarter.

A secondary factor driving the MPC stampede was the low-carb craze. (It's always fun to blame things on Dr. Atkins, isn't it?) Recall that the first step to making MPCs is the ultra-filtration of milk, which separates lactose from the protein, which is then dried. Lactose contributes most of milk's carbohydrates, so MPCs are extremely low in carbs. As dairy processors sought lower-carb ingredients for their Atkins-friendly inventions, they found that MPCs fit the bill - and saved money, too. So in yet another example of the insanity induced by diet marketing, U.S. consumers turned up their noses at natural dairy products in favor of parched, parsed protein from unregulated foreign mammals. You gotta love nutritionism.

Chapter 3: The regulators

Dairy processors are pushing the USDA to change the formal definition of fluid milk, yogurt, and ice cream to allow the addition of MPCs. (Currently, something labeled "milk" must be actual milk from an actual cow, not rehydrated water buffalo protein.) They also petitioned the FDA to allow ultra-filtered milk, the substance that's dried and becomes MPCs, to be used in cheese. They haven't been successful yet thanks to protests from farm and consumer groups - you can read comments to the FDA on the ice cream proposal from Wisconsin-based Family Farm Defenders here - but in the meantime, the companies continue to use the ingredient anyway, and the FDA does nothing. NFFC has petitioned the FDA to start enforcing its own food safety laws regarding MPCs, but the group has not received a response.

The final chapter: The farmers

When companies import MPCs and use them in place of U.S.-produced powdered milk, or when they seek to allow them in dairy products that usually contain U.S.-produced fluid milk, those companies save money. U.S. dairy farmers end up where they are right now - out of business, or getting there.

The influx of low-priced "dairy" ingredients doesn't seem to have made life easier for consumers, either. Although farmers saw their incomes drop by 50% in the past few months according to some reports, the USDA reports that the price of dairy products at the grocery store has fallen only about 7% since last summer's high.

There are some proposals out there for what could be done to help struggling U.S. dairy farmers, but the ones actually under consideration by Congress have nothing to do with cracking down on imported MPCs. Instead, most of them involve the government buying up surplus U.S. milk to prop up market prices for farmers. That's fine as far as it goes, and in the short term, it's important. But if dairy companies continue to import MPCs willy-nilly and use them in place of domestic milk, then we won't have actually fixed the problem. Instead, we will have created a Rube Goldberg solution whereby the U.S. government does just enough to keep some domestic dairy farmers in existence while allowing companies like Kraft to bypass them completely, and do so in technical violation of the law.

A better long-term solution to the MPC problem is FDA enforcement of the law, coupled with legislation like that offered last week by New York State Senator Darrel Aubertine, which would prohibit dairy processors from labeling products that contained MPCs as "dairy products." Says the truth-speaking Senator:

We are a dairy deficit nation, but we’ve seen the price of milk drop to just about $9 per hundred-weight. [Cost of production is twice that.] Our farms are not going to survive if that’s all our farmers are getting for their quality product. We should not be letting foreign imports of milk and milk products hurt our dairy farmers and our consumers, since these imports are not regulated for quality and safety like in the United States. This bill would put New York in a position to make sure consumers are not misled into thinking they are getting real dairy products, when they can’t be sure of the origin or standards of the ingredients.

I'll lift a glass of milk to that.

21 Responsesto “Not milk: The ingredient behind the dairy crisis”

  1. Ed Bruske says:

    Great piece, Elanor. Powdered milk is an insidious threat. It's use should be restricted, not expanded. The process of making powdered milk creates oxidized or damaged cholesterol. Oxidized cholestorol causes atherosclerosis. The movement you are describing is simply increasing the risk of cardio-vascular disease. 

  2. Paula Maack says:

    Thank you so much for this informative post!  I will get involved, and pass it around.

    Cheers,

    ~ Paula

  3. Laura says:

    God this is so infuriating!  I am such a yuppie and buy my milk from the guy at the farmer's market, but it is just a drop in the bucket, clearly.  What a terrible situation, and what awful enablers the regulatory agencies are!

  4. "The recession has created a surplus of milk and milk products. Cows keep producing, but consumers aren’t buying - here or anywhere else in the world."

    This is ironic because very recently (1 year ago?) we were being told that because the Chinese were consuming more milk the milk that the price of milk would sky rocket. At the time, prices were up.

  5. Molly says:

    Interesting. The price of Organic Valley milk has gone up considerably in my area since 2007. Maybe the dairy producers in this country should cut the size of their herds, put the rest out to pasture, and go organic!

  6. farmboy says:

    Elanor,

    Thank you for the exceptionally insightful story and analysis.  It is a compelling snapshot of what happens when food processors and retailers combine to degrade a wholesome, natural product and put a fake food on the shelf: farmers are stripped of their just compensation and consumers get food that makes them sick.  It also illustrates whose side the federal regulatory agencies support.  Regarding solutions, I strongly endorse Laura's direct from the dairy purchase in lieu of Molly's organic suggestion.  Molly's observation that the price of Organic Valley milk "has gone up considerably" provides no assurance that the farmer/coop members see an increased pay price.

  7. Elanor says:

    Thank you!
    Molly, my understanding is that organic milk prices rose in 2007 largely in response to higher organic grain costs - so farmers didn't actually keep the extra money being charged to consumers, but had to shell it out for inputs. Organic farmers are seeing their markets tank now as well (see this article about Maine farmers from the Bangor News last week). It seems more important than ever to support dairy farmers by buying direct, as Laura and farmboy point out - and if local dairy products aren't available, organic is a good option because they won't contain MPCs. (On a side note, the Cornucopia Institute recently updated its organic dairy scorecard to help you find organic brands with the most integrity - available here.)

  8. Joanne says:

    Wonderful article, Elanor, I really enjoyed it  :) Wasn't there a big dairy crisis in the 1980s which resulted in the Real California Cheese Campaign (a way for  dairy farms to make more $ from their milk) and again in the 1990s which  resulted in the Got Milk campaign? I'm seeing that the MPCs are certainly a BIG problem that needs immediate attention, but the crisis of the dairy industry is not new, it just has a new reason to be in crisis.

  9. Elanor says:

    Thanks, Joanne! Yep, you're right that the price crisis is not new. MPCs are just one of several factors influencing things - The NFFC press release and John Bunting's report that I referenced in the post have a lot more information about some of the other factors, which have to do with how dairy is priced (the pricing policy changed in the early 1980s and everything went downhill from there...) and how that pricing is manipulated by large dairy firms.

  10. Jennifer Bailey-Wisconsin says:

    Thank you so very much for listening to the teleconference, I really appreciate it! I am a dairy farmer from Wisconsin and  was on the teleconference that day. I am truly grateful for the wonderful article that you have put together, it sums everything up.
    The dairy farms around our area are having a very hard time. Last week cull cows were selling for $.30/lb. live weight at the equity sale barn. The bull calf markets are gone, people are giving bull calves away. The prices for corn and soybeans have all taken a down turn, and the next thing you know we are going to be heading to the fields. Farmers usually use the previous avenues listed above for cash flow for their farm, but this year there is no flow. Farmers are wondering what to do next.  The system is truly  broken!
    I am a 5th generation dairy farmer. When my father graduated in 1970, 3/4 of his class consisted of farm kids. When I graduated in 1999, I was the only farm kids out of 248 graduates. It is sad to drive down the road and look at all of the empty barns that just sit there.
    I hope that people realize that if the  farmer goes, they will be having to either grow their own or have to purchase imports. I would rather keep the farmer!
    Thank you again for spreading the word.

  11. Concerned Mama says:

    Although this is a good post, it doesn't give any clear direction as to what we, the common folk, can do about it.  If I am to be told there is a serious problem, I like to know how I can play a part in fixing it. And just me, buying from the farm, doesn't seem to be the ultimate solution. I would be very interested in knowing if there are other practical steps we can be taking.  If not, I wonder why we're discussing it, and getting up in arms about something we have no idea how to fix? 

  12. Elanor says:

    CM, I'll be doing a longer post on this over the weekend, but one immediate step that we can take (aside from checking the labels when we buy dairy, buying from farmers we know, writing letters to Kraft and other large dairy companies telling them that we don't want MPCs in our products, and asking other dairy companies for assurances that they don't use MPCs) is to comment on an FDA proposal that would change the definition of yogurt to allow the addition of MPCs. The proposal is in response to a petition by the National Yogurt Association (which includes Dannon, General Mills, and other companies). Comments are due March 31. Background on the petition is availalable from The Milkweed here [pdf] and instructions for submitting comments are in the Federal Register here [pdf] - or wait till the weekend and I'll give instructions on the blog.

  13. Well done, Elanor.   This is not an easy subject to explain when the process of providing milk from a lactating mammal to another party, in theory, should be relatively simple.  It is common knowledge that breast is best for babies....well, that is milk in its purest form. When a cow begins lactating, after birthing its first calf, it should be the same common sense principle of providing the fluid milk to consumers (or making other quality dairy products such as yogurt), not finagling it into MPCs, which you so aptly explained have not been tested, etc.

    NFFC has many MPC dairy farmer experts:  Brenda Cochran, Donna Hall, John Bunting, etc.  who have been fighting this battle for decades if anyone wants to dive all the way into the bulk tank of the issue, so to speak.

  14. Jennifer Bailey-Wisconsin says:

    If the "common folk" wants to do something, they can: go to town hall meetings and ask questions, ask your grocery store what they are going to do, write the companies, and join a group that supports how you feel. Even though you are common folk- Getting involved is the best way to get your message heard!  Join a local group, in your area if possible. Some people in our area have boycotted shopping certain stores, for several reasons.
    Because an NFFC member contacted me, I am now more involved than ever! So I encourage others to check the NFFC website out as well as all of the other organizations that are in the coalition.
    The people that know about MPCs that were listed in the above blog are very resourceful and willing to help any one that wants to listen!

  15. Amanda says:

    I'm a fourth generation dairy farmer in southwest Michigan painfully watching my 70 year old grandparents scrape the bottom of the bank account. They wanted to retire this year;  unfortunatly, they can't afford to do so.  I look around at all that they have built and hope everyday that this isn't the end; I'm thankful for every paycheck and everyday I get to spend with the animals. This month ALONE we will be $50,000 short and we are considered a mid-size dairy (milking 320). I hope people learn how to milk their own cow, grow their own food and can it themselves. The FDA, EPA, DEQ don't have a clue.  When this country looks around and can't find food, animals, or land to produce anything from don't look at the farmer; we work until our hands bleed and we're exhausted. All that is left to do now is sign up for every piddly subsidy that is left, sell animals, equipment, land, and pray that this will pass.  However, I am too pessimistic that that will solve much. I wish the American people understood more of what is going on; they don't have a clue - most think milk comes from the grocery store. God Bless the farmers of America, Amanda

  16. Molly A says:

    Some facts - Organic suppliers are not taking on new farmers...at least not in ny at least not right now. Some companies are now making local mpc....some think that is a good thing since it is a market for milk... This is not a simple situation....

  17. Ali S. says:

    I wonder, at what point does the influx of MPCs constitute commodities dumping?

  18. Great article.

    I can't agree, though, that the government forcing milk prices higher is going to help the situation.  That's what they've been doing for over 70 years... with obvious results.  Milk marketing orders that date back to 1937 (after the "marketing order" provisions of FDR's Agricultural Adjustment Act of 1933 were ruled unconstitutional by the Supreme Court) helped to create this situation.  Here's a great example of what happens to a farmer who tries to escape the government-run milk price-fixing cartel to make his milk cheaper for the public:  http://www.washingtonpost.com/wp-dyn/content/article/2006/12/09/AR2006120900925_3.html

    One has to wonder if farmers like Hettinga were allowed to be more successful whether we'd be important yak protein from China. 

    As for those people wondering what they can do, you could check into buying milk from a local farmer.  We get ours unpasteurized but if that bothers you, just boil it.  realmilk.com

    There are numerous benefits.  1) All your money is going to the farmer, not a middleman.  2) If the cows are mostly grass-fed, the product is of superior quality.  It will contain vitamin K2 which is pretty much nonexistent in grainfed milk and critical for proper cranial development in the child.  It also has a beneficial, anti-cancer fatty acid in it, conjugated linoleic acid.  These are absent from grain-fed cows.  I've never tasted milk so rich and so good as the grass-fed milk we get from a local farmer.  3) Most grass-fed farmers use older Holstein breeds or Jerseys and Guernseys and the milk has a high degree of butterfat.  You can see the butterfat layer change from season to season.  Right now our milk is 20% fat by volume.  It's delicious. I am not sure whether whole milk fat content in the store is measured by weight or by volume but it's only 4%!!!!  You can also make butter from the cream, which is not anemic looking like all the butter in the grocery store.  It will be deep yellow or orange the way butter is supposed to be!!   So the third benefit is that along with getting a superior product you are promoting practices which benefit our environment (cows on pasture reduce soil erosion caused by grain farming) and preserve the genetic diversity of our country's livestock.

    One of the only ways to truly remedy this problem is for consumers to be educated about where their food comes from.  We pay $10/gallon for our milk.  It's expensive but I do believe if people could taste the difference may of them would pay for this superior product.  As long as they are duped into thinking they are buying healthy, nutritious products there won't be any incentive for processing companies to change their practices.

    Second, farmers should be allowed to farm in a way that improves the health of the land and the people.  That doesn't mean production has to be limited or that we go back to milking pails.  However, various government regulations currently in place (milk marketing orders, pasteurization mandates, restrictive labeling laws) squelch any kind of innovation or competition in the milk industry. 

  19. Harry says:

    I am a dairy farmer - and I don't think a cow is capable of producing that 20% butter fat test cited above.  Milk with more fat in it is better tasting.  However, our cows go out on pasture more than 50% of the day and they still have a 4% fat test.  Maybe if you are drinking milk from a buffalo or a polar bear (yes, polar bear) then you can get high fat milk.  At home, we drink raw, whole milk and it is delicious.  Whole milk would be our bulk tank test for fat - so about 4%.  Raw milk means it is not pasteurized, and although I like raw milk I would not sell it to the public for legal concerns, dealing with food borne disease.  If you have noticed in the news over the recent years, vegetables and other greens have been cauing more foodborne illness than anything else.  Pasteurized milk has almost never had any foodborne illnesses.

  20. Foggy Kumar says:

    I am a dairy farmer in California, I grow jaded and bitter over time as a continual victim to the theft of my livelihood by the government enabled monopsony to which I am forced to sell my produce.  It gives me hope to see non-farmers taking interest and educating themselves on this topic.

    As citizens and consumers, everybody needs to contact their congresspeople and urge them to review and revise the legal red tape that entraps the dairy farmer in the current milk processing and distribution system. 

    I buy my veggies direct from the grower in season, why shouldn't my neighbors exercise the same right to purchase their milk?

  21. Laura says:

    There is good news for organic dairy farmers in Maine:

    http://maineorganicmilk.com/maine-organic-milks-news.shtml

    It would be great if this started happening all over the country!   New, low profit companies that exist to return at least 90% of the company profits to the farms, instead of to wealthy company executives.