The U.S. Department of Agriculture announced Tuesday that producers in all 10 federal milk marketing areas passed the department's final decision on a new definition for Class I milk. Under the rule, the term "fluid milk product" will apply to any milk product, fluid or frozen, containing 6.5 percent or more of nonfat milk solids or 2.25 percent or more of true milk protein. The implementation date is January 1, 2011.

The rule also determines how milk and milk-derived ingredients will be priced under all federal milk marketing orders when they are used in products meeting the definition. It exempts drinkable yogurt products containing at least 20 percent yogurt (by weight), kefir, infant formulas, dietary products (meal replacements) and other products that may contain milk-derived ingredients from products meeting the fluid milk product definition.

The decision resolves several proposals intended to change USDA's definition of a fluid milk product in response to new products that have been introduced to the marketplace. IDFA views the rule, which stems from a June 2005 federal order hearing, as another example of why the federal milk pricing system needs to be reformed.

"Several years ago, dairy processors began developing new, innovative dairy products in response to consumer demand. It has taken five years for the system to determine how much the government would require processors to pay for the farm milk used to make them," said Connie Tipton, IDFA president and CEO. "The entire dairy industry will benefit when decisions about product innovation and processing investments are made based on what consumers want when they want it, rather than based on how government regulations decide the costs involved."

The final rule is available here.

Members with questions about implementation may contact Bob Yonkers, IDFA vice president and chief economist, at byonkers@idfa.org or (202) 220-3511.

By Bob Yonkers, Ph.D., IDFA Chief Economist

While overall dairy demand is stronger so far in 2010 than last year, mainly thanks to greater exports, there is at least one dark cloud hovering overhead. According to estimates from the U.S. Department of Agriculture's Agricultural Marketing Service (AMS), total U.S. fluid dairy product sales through June this year are 1.3 percent lower than the same period last year.

However, this decline is mostly driven by a few conventional fluid milk products and a few regions of the country. January-through-June sales of whole white milk are down a whopping 5.9 percent, and sales of flavored whole milk are 5.0 percent lower. Even fat-free milk is selling less, down 3.7 percent in June alone and 1.0 percent lower so far this year. Among milks by fat level, low-fat (1%) milk was the star in the most recent month, up 1.2 percent in June and up 3.4 percent for the year.

Overall, USDA reports conventional fluid milk sales were 3.8 percent lower in June compared to last year, and sales for the year to date are down 1.6%. Meanwhile, organic fluid milk sales have regained the growth trend they lost last year. For June, all organic fluid milk sales increased 9.9 percent, and results for the year to date are 6.5 percent higher.

Regionally, USDA reports data on packaged fluid milk sales by handlers regulated in the 10 Federal Milk Marketing Order areas, as well as for California. Packaged fluid milk sales so far this year are higher in only three of the 11 reported areas: Appalachian up 1.2 percent, Pacific-Northwest up 0.9 percent and Southwest up 0.2 percent. The remaining reported areas have all experienced lower fluid sales this year, with California seeing by far the largest decline at minus 3.7 percent.

Should this trend continue for the rest of 2010, it would be the largest year-to-year decline since AMS began reporting estimated total U.S. fluid milk sales in 2000. The previous largest year-to-year decline occurred in 2004 when average daily fluid sales for the year declined 1.0 percent. In fact, 2009 was the only year since AMS began reporting data that average daily fluid milk sales were higher than they were in 2000. Unless sales turn around the remainder of this year, 2010 sales will fall back below those seen in 2000.

Contact: Jeannette Roeder
(202) 220-3562
jroeder@idfa.org

Dallas Convention Center, September 13-15, 2010

(Washington, D.C.-August 27) Amid recent food product recalls, food safety and traceability continue to be top priorities in the dairy industry. From implementation of appropriate safety protocols to compliance with regulatory requirements to what's on the horizon to provide enhanced traceability, the International Dairy Show will offer a wide range of educational sessions and on-floor presentations focused on food safety. The show will be held September 13-15 at the Dallas Convention Center.

"Access to information, technology and best practices that dairy food companies need to maintain the highest standards of safety is a major benefit to participation in the International Dairy Show," said Clay Detlefsen, IDFA vice president for regulatory affairs. "Constant vigilance and improvement to all safety-related operational issues are imperative to keeping consumers safe and on our side."

The educational sessions on food safety and traceability will include:

Monday, September 13

• "One Size Does Not Fit All: Third-Party Certification"
  The Food and Drug Administration has overseen the largest food recalls in history, driven by food-safety failures in ingredients, which is why dairy customers are requiring third-party certification programs. Attendees will get an overview of the schemes endorsed by the Global Food Safety Initiative to better understand this private food-safety environment and how GFSI can work for them.
• "Federal Food-Defense Tools"
  FDA has developed a number of tools that make food-defense planning easy for small and medium-sized companies. Attendees will learn more about how to take advantage of FDA's industry guidance documents and tools that apply to dairy processing operations: Alert and FIRST. Attendees will also hear more about two of FDA's newest entries in the toolbox: CARVER Software and The Mitigation Tools Database.

Tuesday, September 14

• "Rapid Microbial-Detection Systems"
  Dairy customers and new federal and state regulations affecting the food industry are requiring more microbiological product testing, with product held until the testing results are available. Rapid microbiological testing is advancing rapidly, and all dairy companies should utilize this new technology to address existing customer needs, as well as to position themselves for new customers. Rapid microbiological testing also reduces product hold time at processing plants and can improve process control of dairy products.
• "Vulnerability Assessments: What We All Can Learn From the Ice Cream Experience"
  Vulnerability assessments, the process used to identify, quantify and prioritize the weaknesses in a system, have been used by federal and state governments and the private sector since 2001 with mixed results. Recently the ice cream industry conducted a vulnerability assessment with FDA. Attendees will learn more about the results and lessons learned.
• "Full Dairy Traceability"
  Tracing ingredients is getting easier, but there are still limitations to tracking all process steps that a dairy product takes from farm to 'fridge. Attendees will learn what's available now to provide enhanced dairy traceability and view a live demonstration of traceability software.

Wednesday, September 15

• "21st Century Regulatory Environment"
  Attendees will find out what changes their dairy company will need to make to come into compliance with pending federal food-safety legislation and how the substantial updating of FDA's Good Manufacturing Practices, the 2009 FDA Reportable Food Registry and the FDA food transportation initiative will affect operations. Food safety and defense has the potential to be the most important game changer in the dairy industry. Attendees will learn what they need to be prepared for significant new oversight and scrutiny of dairy plant processing operations.
• "Risk Communication Strategies for Food Defense"
  Risk communication as a mitigation strategy is something for firms to consider before, during and after an intentional food system event. Validated risk communication practices and messaging approaches will be presented.
• "Wave of the Future: Regulatory & Technology Hurdles for Shelf-Stable Dairy Beverages"
  In response to expanding market demand, the dairy industry is using newer aseptic processing and packaging systems with higher production volumes and increased energy efficiency. Attendees will find out that FDA's modernized regulations change aseptic processing and filing requirements and learn what the impact of the National Conference on Interstate Milk Shipments' (NCIMS) updated regulations will be to all aseptically processed and packaged Grade "A" systems.
• "Agent Behavior in Dairy Systems and Criticality Assessments of Dairy at a State Level"
  Understanding how threat agents behave in food systems is critical to assessing the vulnerability of any food system. Attendees will review new results on certain threat agents' behavior in dairy products and learn more about the results of the use of the Food and Agriculture Criticality Assessment Tool on a state-level dairy system.

Additional presentations on food safety and traceability will be available in the iDairyShow on-floor presentation area.

The International Dairy Show will feature the newest innovations in technology, packaging, ingredients and services for the dairy foods industry. Educational sessions will offer solutions that span the entire manufacturing process, and attendees will have the opportunity to visit exhibits displaying everything dairy companies need to run more efficiently, create new products and improve profitability.

For additional information on sessions, speakers and demonstrations, visit www.dairyshow.com, or contact Robin Cornelison, IDFA trade show manager, at rcornelison@idfa.org.

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The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation's dairy manufacturing and marketing industries and their suppliers, with a membership of 550 companies representing a $110-billion a year industry. IDFA is composed of three constituent organizations: the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA). IDFA's 220 dairy processing members run more than 600 plant operations, and range from large multi-national organizations to single-plant companies. Together they represent more than 85 percent of the milk, cultured products, cheese, ice cream and frozen desserts produced and marketed in the United States.

The Milk Processor Education Program invites all interested processors to attend a free luncheon and presentation on Tuesday, September 14, during the International Dairy Show. From noon until 2:00 p.m., you'll learn the details of MilkPEP's 2011 marketing plan and gain new insight into how to use MilkPEP's many resources to build your brand and increase sales.

The luncheon is free, but pre-registration is required. Be sure to visit MilkPEP Booth 1739, the Milk Mustache Mobile Tour Booth 2450 and the four sessions specifically for milk processors. More details are available here.