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Got MPC?

by Robert Schubert
CropChoice editor

(July 12, 2002 -- CropChoice news) -- Joaquin Contente is a dairy farmer feeling the squeeze from cheap, imported milk protein concentrates.

"This is an issue that has to be addressed in order for U.S producers to survive," says Contente, a second-generation dairy farmer in the San Joaquin Valley and president of the California Farmers Union.

The issues at hand involve the economic well being of family farmers and food safety. On a broader scale, these imports epitomize the inability or unwillingness of government to address what some see as the ongoing global push for monopoly control over much of agriculture.

MPCs, what are they?

To produce milk protein concentrates, better known as MPCs, take skim milk, run it through an "ultrafiltration" process, and you'll end up with a concentration of protein ranging from 40 to 90 percent.

Imports of these milk proteins surged in the second half of the 1990s in large part because U.S. officials who negotiated the General Agreement on Tariffs and Trade (GATT), codifier of the World Trade Organization, understood that industry had been using the substances to make glues and other such products, not food. So, they didn't push for tariffs or other import controls.

Subsequently, milk protein concentrates containing more than 40 percent "milk protein" by weight rose from 31.4 million pounds in 1996 to 116.1 million four years later. New Zealand, Australia and European countries accounted for most of that 270 percent increase, according to a June 2002 study at Pennsylvania State University.1


They're cheap.

Converting all of the imported dairy proteins into their liquid milk source would equal about 5 percent of the 2001 U.S. milk production, says John Bunting, as his Jersey cows graze the thick pastures of his Delhi, New York dairy farm.

"If you were to put that 5 percent into tractor trailers, you'd have a line stretching from Los Angeles International Airport to Eau Claire, Wisconsin," he says. The liquid milk source of the concentrates cost $7 per hundred pounds in 2001, about half the price that U.S. farmers received for blended liquid milk.

He and Contente contend that processors are substituting imported milk protein concentrates for domestic nonfat dry milk to make their cheese, butter, ice cream and other products more cheaply. 2

The Commodity Credit Corporation, part of the U.S. Department of Agriculture, is then obliged to buy all that domestic dry milk under the dairy price support program. Much of the powder then sits in warehouses. The concentrates have increased the cost of the support program by $572 million from 1996 to 2000. 1

But the loss to dairy producers is staggering, Contente says. Taking into account the value of milk used to make products such as cheese and butter and the value of Class I milk (the bottled kind), he figures that the importation of concentrates has cost dairy producers about $5 billion per year.

"All that MPCs are is a back door way of getting inexpensive imported milk proteins into the United States, which displace domestic milk, which then gets purchased by the CCC as part of the dairy price support program," says Steven Krikava, director of governmental affairs for the Land O' Lakes cooperative.

It's not just the corporate giants like Kraft, a subsidiary of Philip Morris, and Leprino Foods that use milk protein concentrates. Even the major dairy cooperatives, including Dairy Farmers of America (in control of nearly 30 percent of domestic milk) and Land O' Lakes are selling out the interests of their own member producers to use the imports, Contente says.

Two years ago, the Land O' Lakes board of directors learned that the cooperative had been using the imported concentrates, says Contente, one of its 6,000 members. Management's rationale: competitiveness. Although administrators said they would "try" to curtail the imports, he speculates that the cooperative is planning to use more MPCs in its cheese production.

No one from Land O' Lakes management would comment on his statements.

"They seem to forget that the purpose of a co-op is to enhance the farm gate price for producers," he says. "It was founded by producers who were being taken advantage of by brokers who bought their butter cheap and then sold it high in New York and other places. Arguably, Land O' Lakes is now operating just like the brokers."

The way New York dairyman John Bunting sees it, these and other cooperatives have grown into corporate clones, always using "competitiveness" and "efficiency" to mask their desire for control.

He wonders whether the government needs to look into the possibility that DFA and Land O' Lakes are violating the Capper Volstead Act. The 1922 law allowed for, even encouraged, the formation of cooperatives as a way of giving farmers equal footing with large corporations during the agricultural depression that followed World War I. Its language stated that such associations must be "operated for the mutual benefit of the members thereof..." 3

"But they’re not being very beneficial to member dairy farmers if they go off and buy MPCs from abroad," Bunting says.

Congress is moving to address the problem, albeit too slowly for some.

In the spring of 2001, U.S. representatives and senators introduced HR 1786 and S. 847, both with very similar language calling for tariffs on imported milk protein concentrates. The bills have the support of the National Milk Producers Federation , which represents DFA, Land O' Lakes and other cooperatives and their members.

But the details and the deals are what matter.

Contente references a June 6 letter from the Federation to Rep. Phil Crane, vice-chairman of the House Ways and Means Committee. The letter concludes: "... we expect that the USA will pay compensation to major MPC and casein exporters in the form of additional access for these products."

The latest proposal has it that a tariff would kick in when imports reach their average over the last three years, plus 10 percent, he says, chuckling.

Using that compensation formula for the years 1998 through 2000, the tariff-free quota would be 102.19 million pounds of MPCs. The actual imports in 2000 were 116.1 million pounds, up from 63.8 million in 1998.

"If you're going to grant all this extra compensation in the form of additonal access for these products, then why write the law? Why waste the ink and paper," Contente wonders.

"A ceiling is better than none at all," says Chris Galen, spokesman for the National Milk Producers Federation. In order for the bills to pass Congress and head off potential challenges brought through the World Trade Organization, "we have to compensate certain foreign exporters of MPCs. We can't just unilaterally impose tariffs without expecting a challenge."

There are other ways of compensating New Zealand, Australia and the other exporters, Contente says. The authors of S. 847 suggested, Contente says, that compensation could take the form of either higher quotas for other commodities, such as kiwi fruit, or cash, or both.

"Three hundred or four hundred million in cash would probably do it, if you consider that the cost of the CCC program, not to mention losses to producers, was $1 billion that we paid out in last two years. And it's all sitting in warehouses," he says.

Food safety

The Food and Drug Administration does prohibit the use of the protein concentrates in "standardized cheese products," but is it enforcing its regulations?

When it comes to Kraft Singles, Bunting wonders. The cheese is a standardized product, yet MPCs are listed among its ingredients.

"FDA is saying it's OK if the butcher's thumb is on the scale," says Bunting, as he references a May letter from John B. Foret, a food safety enforcement official with the FDA, to James Harsdorf, the Wisconsin state secretary of agriculture.

Foret wrote: "The Center for Food Safety and Applied Nutrition (CFSAN) establishes priorities to make the most efficient use of available resources, i.e., the 'CFSAN Program Priorities.' Current priorities focus on bioterrorism, food allergens and food safety. To date the use of MPC ingredients in standardized cheese has not been highlighted for enforcement because it is not considered a food safety priority."

The federal food and drug regulator chooses what violations to go after first based on how much risk of harm they pose, says a source inside the FDA. Details about investigations are not revealed so as to avoid compromising them.

That's not very convincing for Bunting, who asserts that the concentrates pose potential health risks.

"There are no standards of identity and no one knows their exact origin," he says. "Yet these products, coming from around the world, are being used in food production places."

He cites a Food Technology article about possible problems with a globalizing food supply.

"The globalization of America's food supply increased substantially during the 1990s. Correspondingly, so did the risk to American consumers of acquiring a foodborne parasite. In 1990, about 13 species of parasitic animals were of concern to food scientists in the United States (Jackson, 1990). Today, that figure has multiplied by more than a factor of 8."4

"The only reason to use MPCs is to make the product cheaper," Bunting says.

His answer to many of the problems facing agriculture here and around the world is for each nation to realize it has a vested interest in being as self-sufficient as possible in terms of food production and distribution. That would benefit farmers, consumers and the environment.

1. Bailey, Kenneth. "Implications of Dairy Imports: The Case of Milk Protein Concentrates." Staff Paper #353. June 2002. Department of Agricultural Economics and Rural Sociology, College of Agricultural Sciences, Pennsylvania State University. http://dairyoutlook.aers.psu.edu/reports/Pub2002/staffpaper353.pdf

2. http://www.gao.gov/new.items/d01326.pdf

3. http://www.nfo.org/webpages/capperv.htm

4. Orlandi, Palmer A., Chu, Dan-My T., Bier, Jeffrey W., Jackson, George J. "Parasites and the Food Supply." Food Technology. April 2002. Vol. 56, No. 4: 72