KDUZ Radio “Farm Forum”

Dave Ladd, President of RDL & Associates, recently participated in KDUZ Radio’s “Farm Forum hosted by Lester Schuft.  Topics include buffer strips/water quality, land values, international trade, biotechnology and much more.

He was joined by Mark Dorenkamp (Brownfield Ag News),  Kent Thiesse (MinnStar Bank) and Dave Nicolai (University of Minnesota Extension).

Commentary: Deja vu all over again. Crop insurance garners White House attention

It has become an article of faith amongst policy wonks that an administration’s budget proposal is considered “dead on arrival” before it hits the Halls of Congress.  Every year the White House delivers a proposed budget to Capitol Hill and, every year, there is a hue and cry from affected stakeholders.  The release of the Trump Administration’s fiscal year (FY) 2018 budget is no exception.

While it is true that an administration’s budget is the first step in an intricate dance with 535 members of Congress, it does provide insight as to the priorities of the Executive Branch.

The budget recently released by the White House would cut the federal crop insurance program by $28.5 billion—or roughly 36 percent—by capping the premium subsidy and eliminating the harvest price option.

As producers continue to face low commodity prices and weather-related challenges, risk management tools such as crop insurance continue to be a critical component of their marketing plan. Crop insurance protects a producer’s yield and price, as well as providing collateral and a repayment source for operating loans, term loans for machinery, livestock, facilities and real estate loans.

The enhanced coverage provided by higher levels of revenue policy coverage means significantly greater protection for the producer’s revenue stream, as producers have shifted to protecting income rather than yield.

A review of recent history related to the crop insurance program are illustrative.  During deliberations related to the 2008 Farm Bill included reductions to the crop insurance program of approximately $6 billion over a 10-year period.

The 2011 Standard Reinsurance Agreement (SRA) that went into effect July 1, 2010 included an additional $6 billion in estimated funding reductions the crop insurance program over 10 years.

Another part of the equation is the delivery mechanism for crop insurance – crop insurance companies.  The two primary revenue sources for a crop insurance company are Administrative and Operating (A&O) reimbursement and underwriting of gains and/or losses.

During consideration of the 2014 Farm Bill, amendments in the U.S. House related to crop insurance would have reduced the cap of government funding for crop insurance companies from $1.3 billion to $900 million per year and another that would reduce the guaranteed rate of return for crop insurers from 14 percent to 12 percent.

A wide range of strong risk-management tools for producers, including a viable crop insurance program, is more important than at any time in recent memory.  As such, proposed reductions in the crop insurance program would adversely impact producers and hinder their ability to manage risk.

The proposed reductions hold the potential to reduce the number of companies offering risk-management tools such as crop insurance.  Without a viable program, it is likely that lending standards would need to be much more stringent in order to maintain sound credit quality.

It is unclear as to what the aggregate national impact of reductions to producer premium subsidies and A & O reimbursements would be on producers and those entities that currently serve the crop insurance marketplace.  It is likely, however, that lower producer premium subsidies would stifle producer utilization of crop insurance as a risk-management tool.  Likewise, lower reimbursement rates would most likely be passed along to producers in the form of higher premiums or diminished service.

It is important to remember that most producers cannot afford not to have some type of protection.  Therefore, their profit margins would be further reduced if premiums are raised.  In addition, many young and beginning producers (who traditionally have less collateral and equity) would face additional challenges in obtaining financing.

Crop insurance is not immune to the vagaries of the budget process and the issues deserve renewed scrutiny.  Over the course of the past few years the program has emerged as a continuing policy issue for policy and philosophical reasons.  In the end, Congress passes the budget and agriculture has generally been successful in making the case for crop insurance and mitigating proposed reductions.  Each battle, however, expends political capital and emboldens critics – including members of Congress.

Dave Ladd, President of RDL & Associates, is a frequent guest commentator regarding the public policy and the political environment.  He assists clients in achieving their legislative and policy objectives via government relations, strategic communications, and message development.

Trump to target agriculture spending in FY18 budget (via Agri-Pulse Communications)

President Trump releases his full fiscal 2018 budget this week and it’s expected to propose big cuts in crop insurance, conservation assistance and a number of agricultural and rural development programs.

The budget, which expands on the “skinny” budget plan issued in March, will be released on Tuesday. Agriculture Secretary Sonny Perdue will be in the hot seat the very next day when he faces the House Agriculture Appropriations Subcommittee, which writes the annual spending bill for USDA, the Food and Drug Administration and Commodity Futures Trading Commission.

Multiple sources told Agri-Pulse last week that the budget will propose cuts in crop insurance. And the National Sustainable Agriculture Coalition said the budget also would whack rural development programs, including Value-Added Grants, rural housing assistance, and cut $100 million from the National Institute for Food and Agriculture, which funds university research projects.

“The one bright spot in the President’s budget proposal is that it is just that – a proposal,” said Greg Fogel, NSAC’s policy director.

Many, if not most of the cuts, especially to farm bill programs, have little chance of passing Congress, especially with the House and Senate Agriculture committees wanting to maintain funding levels as they prepare to write the next bill. Lawmakers were already downplaying the importance of the proposals even before they were released.

“When the administration sends over their budget they’re looking for programs to cut to try to get their numbers to all add up. We’re not looking to take exactly what they recommend and running with it,” the chairman of the House Agriculture Appropriations Subcommittee, Robert Aderholt, R-Ala., told Agri-Pulse.

Congress has typically trimmed from select farm bill programs – the Environmental Quality Incentives Program being a typical target – to shore up other priorities, but Aderholt said he didn’t expect lawmakers to go beyond that this year.

House Agriculture Chairman Mike Conaway, R-Texas, pledged to continue defending crop insurance and other farm programs. He said it’s no time to cut agriculture spending, given the downturn in the farm economy. “The president wanted a robust farm bill and we intend to get that done. Obviously, resources will be the next big issue to come to grips with,” he said.

The FDA’s new commissioner, Scott Gottlieb, will appear before Aderholt’s subcommittee on Thursday.

The March budget proposal dealt only with “discretionary” spending programs, those whose spending levels are determined by annual appropriations bill. The expanded version will include programs in which the spending levels are mandated by the farm bill and other laws.

Also this week, the House will take up legislation aimed at easing permit requirements for pesticide usage. The Reducing Regulatory Burdens Act would reverse a 2009 appellate court ruling in a case involving the National Cotton Council that forced the Environmental Protection Agency to require pesticide applicators to get permits to spray in or near “navigable waters” as defined in the Clean Water Act.

“My district is home to many hard-working farmers, so I know this issue quite well,” House Majority Leader Kevin McCarthy, who represents a portion of California’s Central Valley, said on the House floor Friday. “This bill will reduce red tape that makes it more costly for farmers to protect their crops and our nation’s food supply.”

Similar efforts to reverse the 2009 court decision have died in the Senate.

Health care reform is likely to join Trump’s budget in dominating the attention of Congress this week as lawmakers prepare to leave for their week-long Memorial Day recess.

On Wednesday, the Congressional Budget Office releases its analysis of the House-passed health care reform bill. GOP leaders have yet to actually forward the legislation to the Senate for consideration while they waited for the CBO report, which will include estimates of how many people would lose insurance coverage under the measure.

EPA Launches “Water of the U.S.” Webpage (via Brownfield AgNews)

The EPA has launched a web page to keep stakeholders up to date on potential changes to the Waters of the U.S. rule.  The EPA says the web page will keep the public informed about EPA’s review of the definition of WOTUS.  President Trump’s February executive order directs the EPA to review the rule and to publish revisions, including changes to what’s considered “navigable water” under the rule.

Redefining “Waters of the U.S.” (via MorningAgClips)

U.S. Environmental Protection Agency and the U.S. Army sent a letter to governors today soliciting input from states on a new definition of protected waters that is in-line with a Supreme Court Justice Antonin Scalia’s opinion in the 2006 Rapanos v. United States case. Scalia’s definition explains that federal oversight should extend to “relatively permanent” waters and wetlands with a “continuous surface connection” to large rivers and streams.

“EPA is restoring states’ important role in the regulation of water,” said EPA Administrator Scott Pruitt. “Like President Trump, I believe that we need to work with our state governments to understand what they think is the best way to protect their waters, and what actions they are already taking to do so. We want to return to a regulatory partnership, rather than regulate by executive fiat.”

“The Army, together with the Corps of Engineers, is committed to working closely with and supporting the EPA on these rulemakings.  As we go through the rulemaking process, we will continue to make the implementation of the Clean Water Act Section 404 regulatory program as transparent as possible for the regulated public, ” said Douglas Lamont, senior official performing the duties of the Assistant Secretary of the Army for Civil Works.

The Clean Water Act asserts federal control over “traditionally navigable waters” without providing clarity or details about the law’s scope. President Donald Trump signed an executive order on February 28, 2017 to direct federal agencies to roll back and replace the Obama Administration’s Clean Water Rule – also known as the “Waters of the U.S.” or WOTUS – to ensure that the nation’s navigable waters are kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of Congress and the States under the Constitution.

To meet the objectives of the executive order, federal agencies are following a two-step process that will provide as much certainty as possible, as quickly as possible, to the regulated community and the public during the development of the replacement rule.

The first step is to revise the Code of Federal Regulations to re-codify the definition of “Waters of the United States” which currently governs administration of the Clean Water Act, in light of a decision by the U.S. Court of Appeals for the Sixth Circuit staying a definition of “Waters of the United States” promulgated by the agencies in 2015. This action will simply make the text of the Code of Federal Regulations reflect the definition currently in effect under the Sixth Circuit stay. This action, when final, will not change current practice with respect to the how the definition applies, which is consistent with Supreme Court decisions, agency guidance documents, and longstanding practice.

The second step will be a public notice-and-comment rulemaking involving a substantive reevaluation and revision of the definition of “Waters of the U.S.” in accordance with the executive order. The letter sent to governors today is seeking input on the second step of the process.

– See more at: https://www.morningagclips.com/redefining-waters-of-the-u-s/?utm_content=articles&utm_campaign=NLCampaign&utm_source=Newsletter&utm_term=newsletteredition&utm_medium=email#sthash.kDgLWLuI.dpuf

Meet Secretary Perdue’s new inner circle at USDA (via Agri-Pulse Communications)

Agriculture Secretary Sonny Perdue hit the ground running in his first two weeks on the job, meeting with President Trump in the White House, traveling to Kansas, Iowa and Arkansas and working on his subcabinet nominees. A number of top-tier names have been sent to the White House, waiting for the president’s approval. In the meantime, Perdue has a small but mighty team of advisors already on the job. Here’s a look at some of the folks you are likely to meet in Perdue’s inner circle and their roles at USDA:

Heidi Green, Chief of Staff

Green is a longtime ally of the former Georgia governor, working with the new Secretary as far back as his gubernatorial transition team in 2002. She shares his “sunny” disposition and “can do” attitude, but – because of her longstanding working relationship – she is also the one most often tapped to deliver any negative news.

The California native first worked on Capitol Hill for Rep. Bill Thomas, R-Calif. Later, she established her Georgia credentials by working for Republican Sen. Paul Coverdell from the Peach State. Since her early days of working with Perdue, she’s served as an advisor on economic development, transportation, and other issues before ultimately rising to the rank of commissioner of the Georgia Department of Economic Development. In a 2007 release, Perdue called Green “an integral member of our team” and cited her “wide range of experience in negotiating difficult policy issues.”

Green was also a founding member of Perdue Partners LLC, the grain trading company founded by Perdue, his cousin David, now a U.S. senator, and Trey Childress, another former Perdue gubernatorial administration official. During Perdue’s time as Georgia governor, Green served as an administration representative with the Southern Governors’ Association, Republican Governors Association, and National Governors Association.

Chris Young, Deputy Chief of Staff

ChrisYoung A native of Fitzgerald, Georgia, Young graduated from the Georgia Institute of Technology, earning a B.S. degree in history and a law degree from the University of Georgia before being tapped by Gov. Perdue as Chief of Protocol and Director of International Affairs in 2005. In that role, he helped grow Georgia’s international footprint, organizing visits for dignitaries and planning gubernatorial and senior official missions to almost 20 foreign countries.

“I tell people that protocol is the science of creating the right conditions for business and diplomacy to succeed,” Young said in a video interview with GlobalAtlanta.com in 2009. Just one year earlier, Young was named to a two-year term as president of the Protocol and Diplomacy International-Protocol Officers Association – the association’s youngest president and current governance chair.

After Perdue completed his term as governor in 2011, Young moved on to serve as executive director of the Protocol School of Washington and as executive director and associate fellow with the United Nations Institute for Training and Research in Atlanta. Now he’s back on the Perdue team.

Brian Klippenstein, Senior Advisor

KlippensteinThe Missouri native is familiar to many in agriculture circles, thanks to his work in the industry and time on Capitol Hill. Most recently, Klip – as his friends call him – served as the executive director of Protect the Harvest, the Lucas Oil-backed initiative “created to preserve the freedoms of American consumers, farmers, ranchers, outdoor enthusiasts, and animal owners.” He’s a high energy guy, whom one long-time friend described as “the Energizer Bunny, working at a pace, both mentally and physically, that wears out his co-workers and colleagues.  It won’t surprise anybody that watches him that he runs marathons.” The George Washington University graduate is known as an experienced straight-shooter, with a wealth of agricultural knowledge.

He also understands Missouri and farm politics like none other, after years of honing his political skills on the staffs of Missouri Republicans Rep. Tom Coleman and Sens. Kit Bond and Roy Blunt. Klippenstein was among the small transition team first at USDA and was initially planning on that experience being the length of his tenure. Now, he’s full-time with USDA, but plans to work out of agency offices near his home in the Kansas City area whenever possible.

Sam Clovis, Senior Advisor

Clovis was a fixture in the ag policy corner of the Trump campaign, serving as a national chief policy advisor who engaged in several different capacities. His responsibilities may not be exactly well-defined at USDA, but sources say his influence can be felt across many different areas of the department, and he remains very well-connected to the White House – an important asset for the agency.

ClovisThe Kansas native served as a surrogate for the president on ag issues and led the transition team at USDA. The former Morningside College economics professor was active in the Iowa conservative scene, even hosting a talk radio show on local radio. Friends describe Clovis as a great spokesperson who’s knowledgeable on a wide variety of issues including agriculture, defense, and foreign policy.

In 2014, he made a run for the U.S. Senate seat in Iowa eventually won by Joni Ernst. Clovis was the Iowa director for Rick Perry’s 2016 presidential bid before leaving that post in August 2015 to join the Trump team. Clovis is a graduate of the Air Force Academy, where he served as a fighter pilot in the 70th Fighter Squadron for 25 years, ultimately rising to the rank of Colonel. Clovis holds an M.B.A. from Golden Gate University and a Ph.D. in public administration from the University of Alabama.

Kristi Boswell, Senior Advisor

K BoswellA former American Farm Bureau director of congressional relations, Boswell was an early hire to Perdue’s team, where she’ll work on farm labor issues for USDA. That was a key assignment for her former employer, and an AFBF coworker told Agri-Pulse that, while they were sad to see her go, “what better place for her to be?”

Boswell grew up on a farm in southeastern Nebraska where her family raised corn and soybeans. She holds a bachelor’s degree from the University of Nebraska-Lincoln and is a graduate of the University of Nebraska’s College of Law.

Before joining USDA and working for five years at AFBF, Boswell practiced corporate defense litigation and worked as a political aide for a Nebraska state senator. One of her first jobs was serving as the Ag Youth Coordinator for the Nebraska Department of Agriculture.

Rebeckah Adcock, Senior Advisor

Adcock An environmental scientist and licensed attorney, Adcock attended the University of Tennessee, Knoxville as an undergraduate and later obtained her J.D. from the University of Kentucky College of Law. Shortly after graduation, she joined the Kentucky Farm Bureau as its director of natural resources. That work led to a job with the American Farm Bureau in Washington in 2002, where she handled environmental and regulatory issues for the nation’s largest farm group.

In 2008, she was selected as counsel to the Senate Committee on Environment and Public Works and two years later, joined CropLife America as senior director of government relations. She has previously served on EPA’s Pesticide Program Dialogue Committee and has chaired the Pesticide Policy Coalition.

Adcock is no stranger to the Trump agenda. She was active during the presidential campaign, serving on the Trump Agricultural Advisory Team and, in at least one debate that was organized by CropLife, served as a spokesperson for the campaign

Senate Committee on the Environment Hearing – WOTUS

The United States Senate Committee on Environment and Public Works, chaired by Senator John Barrasso (R – WY), recently held a full committee hearing entitled, “A Review of the Technical, Scientific, and Legal Basis of the WOTUS Rule.”

Witness testimony can be accessed below:

Lawmakers seek to repackage energy bill in infrastructure legislation (via Agri-Pulse Communications)

Congress came close but didn’t pass a comprehensive energy bill last year. Now a bipartisan push is underway to repackage many of that failed bill’s pieces as part of the infrastructure legislation the Trump administration hopes to sign into law this year.

Because Senate Republicans hold only 52 seats and 60 votes are required under current Senate rules to pass most legislation, Republicans will need some Democrats’ votes. One House committee staff member tells Agri-Pulse that Senate rules are “always going to be an obstacle for us.” But to deal with this constraint, she says Republicans are working hard to draft legislation that has significant bipartisan support in the House and “hopefully will attract similar bipartisan support in the Senate.”

Examples of GOP efforts to win Democrats’ votes include two bills the House Natural Resources Committee and the House Agriculture Committee are working on now: the Electricity Reliability and Forest Protection Act, H.R. 1873, and the Bureau of Land Management Foundation Act, H.R. 1668.

The House passed prior versions of the two bipartisan bills last year. The Reliability bill would streamline procedures for removing trees and other hazards threatening electricity transmission lines, to avoid power failures and forest fires. The BLM bill would create a nonprofit foundation to accept private donations to fund BLM operations to include “reclamation of abandoned mine lands, orphaned oil and gas well sites, or public lands impacted by development connected to mineral exploration and development activities.”

The Senate is moving in the same bipartisan direction. On April 6, Senate Environment and Public Works Committee (EPW) Chair John Barrasso, R-Wyo., explained that his committee has “begun important bipartisan work on energy development” to increase the benefits from America’s “abundance of natural resources, particularly for energy production.”

Calling energy the “master resource,” Barrasso said, “Working with a large, bipartisan group of senators, we introduced, and the committee passed, the Nuclear Energy Innovation and Modernization Act,” (S. 512). EPW voted 18-3 for the bill designed to accelerate development and licensing of advanced nuclear reactors, and improve uranium regulation and accountability.

In a joint statement supporting the nuclear energy bill co-sponsored by seven Democrats along with seven Republicans, Barrasso and EPW’s top Democrat, Tom Carper of Delaware, highlighted different aspects of the bill. Barrasso said the bill “will create jobs, lower energy costs, and allow America to remain a leader in nuclear development.” Carper said the legislation “shows how we can work together, across the aisle, to address issues that are important for our country.” After echoing Barrasso in saying passing the bill will create jobs, Carper stressed another reason for his co-sponsoring the bill: “When done responsibly, nuclear power can help combat the negative impacts of climate change on our environment and public health.”

Carper’s climate-change remarks contrast with Barrasso’s recent demand that the U.S. “pull out of the Paris climate agreement entirely” and scrap President Obama’s Clean Power Plan and other federal regulations to limit carbon emissions. Crediting private industry rather than government regulations for current emissions reductions, Barrasso argues that “We can reduce our emissions without the Paris accords.” Yet both senators are committed to passing bipartisan energy legislation such as the nuclear energy bill. Their aim is to lock in bipartisan support by including enough fossil-fuel provisions to please Republicans while winning over some Democrats by providing at least tacit recognition of the need to reduce CO2 emissions.

Despite his repeated objections to federal limits on carbon emissions, Barrasso insists on the need for “making sure that we have clean air, clean water, and a clean environment.” Acknowledging Democrats’ concerns, he says that “we want to protect our environment, while allowing our economy to grow.” While the coal-state senator mentioned solar but not wind in speaking to the Environmental Council of States earlier this month, Barrasso said “We need to use an all-of-the-above approach with American-made energy. Here in America, we have coal, oil, natural gas, hydropower, solar, and nuclear, and we need to use them all.”

Encouraged by sending the nuclear energy bill to the full Senate with a significant 18-3 committee vote, Barrasso clearly hopes to win Democrats’ support for further action. He pointed out that “In personal meetings, members of our committee, both Democrat and Republican, have expressed that infrastructure is a top priority.”

Reflecting the GOP view that this year’s best vehicle for energy legislation that removes “burdensome” federal regulations will be a comprehensive infrastructure bill, Barrasso said “The Republican majority in Congress and the Trump administration are working together to roll back the regulatory rampage that Washington has imposed on the country.” He adds that “An important part of our infrastructure plan is streamlining the permitting process to allow states, localities, and private interests to build infrastructure in a safer, more efficient way.”

As part of the GOP’s regulatory roll-back efforts, President Trump’s March 28 Energy Executive Order required all federal agencies to “immediately review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources . . . with particular attention to oil, natural gas, coal, and nuclear energy resources.”

The order defines “burden” as imposing any federal barriers or delays that create “significant costs on the siting, permitting, production, utilization, transmission, or delivery of energy resources.”

That was the cue for Congress to act because “suspending, revising, or rescinding” many of the provisions targeted by Trump will either require changes or be strengthened by legislation. In welcoming Trump’s executive order, House Natural Resources Committee Chair Rob Bishop, R-Utah, promised legislation. “This order begins the reversal of a number of harmful and ideologically-driven policies,” he said. “We will work with the President to add statutory permanence to prevent future administrations from resurrecting this harmful regulatory agenda.”

Undermining such GOP hopes for bipartisan legislation, Sen. Maria Cantwell of Washington, the top Energy Committee Democrat, was among the first to speak out against Trump’s energy order. Her response was that Trump’s order overturning the Obama administration’s Clean Power Plan along with other energy and climate initiatives “marks an irresponsible retreat from making polluters pay, promoting energy efficiency, growing our clean energy economy, addressing the threat of climate change, and ensuring taxpayers get a fair return for the minerals they own.”

Cantwell concluded by charging that “The Trump administration is sabotaging the United States’ chances of becoming the world’s clean energy superpower in order to line the pockets of polluters.” She pledged to “oppose this wrong-headed order with every tool at my disposal.”

But Republicans in Congress remain hopeful that their efforts at bipartisanship will succeed because they only need to peel off eight Senate Democrats to pass legislation, “not win a popularity contest.”


The great dairy trade war that will test President Trump (via the Washington Post)

Seven generations of Gartmans have birthed calves in this barn, a white-roofed, red-sided structure within a short walk of the land the first Gartmans are buried on.

But the bull that Luke Gartman, 36, pulled into the world on a recent Tuesday morning was a special one. This calf — steaming and soggy and apparently unbreathing, before Luke began to poke his face with straw – could be one of the very last calves born on the Gartmans’ farm.

The family has two weeks to find a new dairy processing company to buy their milk and sell it into the market. The contract with their existing buyer was just canceled, the latest casualty of an increasingly acrimonious trade war with Canada over the price of ultrafiltered milk, an ingredient in cheese.

“We could be in a situation where we have to sell the cows,” said Gartman’s brother Matt. “If we’re to that point of May 1 and have no solutions — well, we would no longer be a dairy farm.”

The dispute — which has played out in surprisingly barbed remarks across the normally friendly northern border — illustrates the enormous complexity of fulfilling President Trump’s promise to renegotiate the North American Free Trade Agreement, the free trade pact with Canada and Mexico.

While NAFTA is often portrayed as a single trade agreement, it has specific provisions affecting thousands of products in hundreds of industries. The trade pact contains terms governing dozens of different dairy products alone.

Reworking many of these, experts say, will involve not just complex technical discussions but a fight between powerful political interests on both sides of the border. And in almost every case, on the line will be the livelihoods of the people who grow or make the products, each with a compelling case for why their side should prevail.

This particular dispute has already affected 75 family farms, caused more than $150 million in losses, and prompted a bipartisan alliance of lawmakers to demand that Trump deliver on his tough talk about protecting U.S. industries from unfair trade practices.

“This could certainly become an issue in any attempt to renegotiate NAFTA,” said Luis Ribera, an agricultural economist at Texas A&M who studies North American trade. “Once you open NAFTA, everything is theoretically on the table for debate.”

‘Farmers are using alternative facts’

The dairy industry, like much of agriculture, has never been predictable. But until receiving the cancellation letter earlier this month from their processor, Grassland Dairy Products, the Gartmans at least knew where their milk would end up.

Every morning at 5, Luke, Matt and their father, Mark, begin herding the family’s 120 Holsteins from the 13,000-square-foot barn where they sleep. They guide the cows to pumps in the 12-stall milking parlor, where they produce 3,800 pounds of milk in each of the herd’s two daily milkings. The milk is siphoned via stainless-steel pipes to a Civil War-era cold room, where it awaits pickup by an insulated tanker truck.

From there, the milk travels 194 miles west to Greenwood, Wis., where Grassland processes it into butter, cream, dry milk powder and a high-protein milk concentrate called ultrafiltered milk. The bulk of ultrafiltered milk is shipped to Canada and used as a protein added to cheese.

At least that’s how it was until April of last year. That’s when dairy farmers in Ontario, Canada’s most populous province, took steps that undermined their U.S. competitors.

Trade agreements between the United States and Canada govern what kinds of tariffs the countries can impose on each other’s goods. While NAFTA eliminated many tariffs between the countries, some large tariffs on dairy remained.

But ultrafiltered milk hit the market after NAFTA’s 1994 enactment. As a result, it could enter Canada without facing big tariffs.

Ontario farmers, frustrated with the arrangement, last April dramatically cut the prices on Canadian ultrafiltered milk. Other provinces plan to follow suit, posing a dire threat to U.S. farms.

Companies such as Grassland and New York’s Cayuga Milk Ingredients have already reported losses of $150 million since the price drop began.

American agricultural interests have decried Canada’s actions as deeply unfair.

“Our federal and state governments cannot abide by Canada’s disregard for its trade commitment to the United States,” Tom Vilsack, president of the U.S. Dairy Export Council and former secretary of agriculture under President Barack Obama, said in a statement. Canada, he continued, has “pursue[d] policies that are choking off sales of American-made milk to the detriment of U.S. dairy farmers.”

The Canadian dairy industry disputes these allegations, arguing that U.S. milk producers have built far too much capacity in recent years and face such an oversupply of milk that they have to cut back.

“To use a phrase that has recently come out of the U.S., Wisconsin farmers are using alternative facts,” said Isabelle Bouchard, the director of communications and government relations at the industry group Dairy Farmers of Canada. “The Wisconsin people are trying to find an enemy — when in reality the problem they have is that they’re overproducing.”

With dairy farmers scrambling to find new markets for their milk, a bipartisan alliance of policymakers, including New York Gov. Andrew Cuomo (D) and Wisconsin Gov. Scott Walker (R), have called on the Canadian government to intervene in its dairy industry.

Sens. Tammy Baldwin and Ron Johnson of Wisconsin — a liberal Democrat and a tea-party Republican, respectively — joined a statement by House Speaker Paul D. Ryan (R-Wis.) this month that alleged that the new pricing policies “appear to violate Canada’s existing trade obligations to the United States.”

Industry groups, meanwhile, have called on the Trump administration to intervene directly. On Thursday, several powerful dairy trade associations sent a joint letter to Trump, asking that he push Canadian Prime Minister Justin Trudeau on the issue and direct U.S. agencies to “impress upon Canada in a concrete way the importance of dependable U.S. trade.” The letter called on Trump to escalate the issue to the World Trade Organization if Canada doesn’t respond positively.

The industry is also concerned the dispute could spill into other products. The Ontario price drop applied not only to ultrafiltered milk but also to skim milk powder, which could eventually result in Canadians selling more of the ingredient on global markets. That could depress prices for American farmers, and ultimately hurt them even more than the lost trade in ultrafiltered milk.

The White House has not yet taken action and did not immediately respond to a request for comment, though the dairy industry is confident it will act. Trump will be in Kenosha, Wis., on Tuesday, visiting a manufacturing plant.

The U.S. Trade Representative’s 2017 report on barriers to U.S. trade, which articulates the country’s trade enforcement priorities, discussed the dairy concerns. Emily Davis, a spokeswoman for the office, said that USTR was “aware of the importance of the Canadian market for American dairy farmers” and was “examining” the matter.

“The administration has demonstrated strong interest in trying to resolve this issue,” said Jaime Castaneda, vice president of trade policy at the National Milk Producers Federation. “They are definitely paying a lot of attention.”

The escalating rhetoric has begun to alarm some Canadians.

“A lot of people are very nervous in Canada because of Mr. Trump’s statements about trade,” said Sylvain Charlebois, a professor of food policy at Dalhousie University in Nova Scotia. “You could easily see the U.S. refusing to buy Canadian beef, for instance, unless Canada opened its dairy markets.”

‘Nowhere to go with this milk’

Without renewed access to the Canadian market, U.S. dairy farmers find themselves in a deeply precarious situation. They are scrambling to find new processors to buy their milk, but finding few takers because of the overall glut.

“Everybody knows there’s nowhere to go with this milk. Absolutely nowhere,” said Stacy Limberg, who heads the Sheboygan County Dairy Promotion Board, gesturing around her own barn. “I can’t even begin to fathom what we would do in that situation.”

Ten miles east on County Road V, the Gartmans have begun to fathom it. They remain “hopefully optimistic” that they will find a new processor by the May 1 deadline, and have recently heard from a local hauler who believes he might have a connection for them.

Should that fall through, however, the brothers are discussing the possibility of moving their herd, short term, to a relative’s farm. And if they still can’t find a processor at that point, they’ll begin to truck their cows to auction.

That is a prospect that Gartman said he refuses to think about, yet. He knows each of his 120 cows on sight, by name: There’s Yodel, Dinah, Egypt, Cosmic, Jolly — generations of cows milked in this room his mom hand-stenciled with a cow motif in the ’80s.

On a recent Monday night, his 8-year-old niece Audrey herded cows around the parlor, unfazed by the fact that most were twice her height. Gartman’s own children were off the farm at a 4-H meeting for the night.

“This was supposed to be their farm next,” he said. “What will be left for them?”

Then he headed to the back barn to haul manure. That, at least, remains a constant.

Commentary: Canada’s dairy actions hurting rural U.S. (International Dairy Foods Association)

 U.S. dairy organizations today urged the Trump Administration to fight back against protectionist Canadian trade policies that are slamming the door to American dairy exports in violation of existing trade commitments between the two nations.

The National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC) and the International Dairy Foods Association (IDFA) called on the federal government, and on governors in northern states, to take immediate action in response to Canada’sviolation of its trade commitments to the United States.

Because of the new “Class 7” pricing policy, which is expressly designed to disadvantage U.S. exports to Canada and globally, multiple dairy companies in Wisconsin and New York have been forced to inform many of their supplying farmers that the Canadian market for their exports has dried up. For some farmers, this means that the company processing their milk and shipping it to Canada can no longer accept it starting in May. This is a direct consequence of Canada’s National Ingredients Strategy and new Class 7 milk pricing program.

Canada’s protectionist dairy policies are having precisely the effect Canada intended: cutting off U.S. dairy exports of ultra-filtered milk to Canada despite long-standing contracts with American companies,” said Jim Mulhern, president and CEO of NMPF. “American companies have invested in new equipment and asked dairy farmers to supply the milk to meet demand in the Canadian dairy market. This export access has suddenly disappeared, not because the market is gone, but because the Canadian government has reneged on its commitments.”

“Our federal and state governments cannot abide by Canada’s disregard for its trade commitment to the United States and its intentional decision to pursue policies that are choking off sales of American-made milk to the detriment of U.S. dairy farmers,” saidTom Vilsack, president and CEO of USDEC. “It is deeply concerning that Canada has chosen to continue down a ‘beggar thy neighbor’ path of addressing its internal issues by forcing the U.S. dairy industry to bear the harmful consequences.”

Vilsack noted that while farm families in the Northeast and Midwest are suffering the immediate consequences of the loss of Canadian markets, “thousands more will suffer if Canada persists in using its programs to distort the global milk powder markets so critical to tens of thousands of American dairy farmers.”

“The U.S. dairy industry is united on this issue because these restrictive policies effectively bar a significant U.S. export to Canada, with total losses estimated to hit $150 million worth of ultra-filtered milk exports from Wisconsin and New York. As we feared, these policies are now prohibiting our nation’s dairy processors from accessing the Canadian market,” said Michael Dykes, D.V.M., president and CEO of IDFA. “IDFA is speaking out against Canada’s protectionist policies on Capitol Hill, and asking the Trump Administration and state governors and legislators to insist that Canada honor its trade commitments and allow more market access for U.S. dairy products.”

Despite efforts by the U.S. government and dairy organizations to shed more light on the Canadian program, Canada is refusing to share sufficient details. For instance, limited information has been posted online by certain provinces, and some of that information has subsequently been removed from provincial milk authorities’ websites in what appears to be aimed at obfuscating how the program operates. Despite this lack of transparency, U.S. companies and their supplying farmers are already feeling its real-world consequences.

The United States is Canada’s largest export market, accounting for approximately three-fourths of Canada’s total exports. The organizations urged both federal and state governments to move swiftly to demonstrate to Canada that trade is a door that must swing two ways to have a functional relationship.

The National Milk Producers Federation (NMPF), based in Arlington, Va., develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF’s cooperatives produce the majority of the U.S, milk supply, making NMPF the voice of dairy producers on Capitol Hill and with government agencies. For more on NMPF’s activities, visit www.nmpf.org.

The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the global trade interests of U.S. dairy producers, proprietary processors and cooperatives, ingredient suppliers and export traders. Its mission is to enhance U.S. global competitiveness and assist the U.S. industry to increase its global dairy ingredient sales and exports of U.S. dairy products. USDEC accomplishes this through programs in market development that build global demand for U.S. dairy products, resolve market access barriers and advance industry trade policy goals. USDEC is supported by staff across the United States and overseas in Mexico,South America, Asia, Middle East and Europe.

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 nearly 525 companies within a $125-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 nearly 200 dairy processing members operate more than 600 manufacturing facilities 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.

—International Dairy Foods Association (via PRNewswire)