DMI CEO cites industry role in facing food, energy, health challenges

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In a rapidly changing business world, U.S. dairy producers have a great opportunity to work through the dairy checkoff to create their own future, according to Tom Gallagher, chief executive officer of Dairy Management Inc., which manages the national dairy checkoff program.

“Dairy producers are creating their future through innovation, leadership and results,” Gallagher said, speaking at the 2008 National Dairy Promotion and Research Board/United Dairy Industry Association/National Milk Producers Federation Joint Annual Meeting in Nashville. “They are seeing a positive return on their checkoff investment. And, they had the foresight to initiate the Innovation Center for U.S. Dairy to address common industry challenges.”

By working together to create its own future, “the dairy industry can help solve some of the nation’s most pressing problems -- producing safe and plentiful food, becoming energy-independent and overcoming obesity,” Gallagher said.

Dairy checkoff results

One measure of how dairy producers are creating their own future relates to positive  results on their checkoff investment, Gallagher cited the annual USDA Report to Congress, which concluded that, from the years 1998 to 2007, the dairy checkoff returned $5 for every dollar dairy producers invested. In addition, the U.S. Dairy Export Council has helped exports grow to nearly 11 percent of total dairy production.

Gallagher also pointed to the dairy checkoff’s success in forming partnerships that result in new products. Examples include:

  • In foodservice, an investment of less than $10 million over the past five years has resulted in increased sales of more than a billion pounds of milk, cheese and yogurt each year. A partnership with Starbucks has resulted in the launch of Vivanno, a smoothie that contains milk and whey protein. The new product will use an estimated 550 million pounds of milk.
  • A partnership with General Mills has resulted in Yoplait frozen yogurt chips that are blended with milk for an instant, delicious and nutritious drink.
  • A school program that reaches more than 25 million children about the lifelong benefits of dairy, and that offers plastic, resealable bottles of milk in nearly 11,000 schools – at a time when rising costs could have forced those schools to scale back.
  • A new five-year partnership with the National Football League® gives dairy unprecedented access to players and teams to help promote milk consumption and physical fitness in more than 40,000 schools across the country.
  • These industry partners have invested hundreds of millions of dollars to help dairy producers grow sales. Foodservice companies have invested more than $100 million a year to feature dairy products in their advertisements.

Other examples include the dairy checkoff’s longer-term programs, such as:

  • The dairy industry’s state-of-the-art issues and crisis management programs
  • Cutting-edge nutrition research that has identified the link between dairy and weight management; further work is establishing how dairy can help combat osteoporosis, Type 2 diabetes and hypertension
  • Dairy product and ingredient research that gives food manufacturers the knowledge they need to use more dairy in their products
  • Dairy promotion’s relationships with the health professional community, helping secure dairy’s role in a healthy diet

Creating the future through leadership

Gallagher also announced the formation of committees of the Innovation Center for U.S. Dairy that will identify further growth opportunities. The Innovation Center was created by dairy producers earlier this year through DMI, with the strong support of NMPF.

The Innovation Center will help the industry move bigger, faster, and smarter in developing products that will turn unmet demand into sales. Its board is comprised of a blue-ribbon group of executives and chairs from 30 dairy companies.

The Health and Wellness committee will unite regulatory, legislative, brands and producer efforts to promote the healthfulness of dairy in the marketplace. It is chaired by Miriam Brown of Anderson-Erickson Dairy, based in Des Moines, Iowa.

The Product Development and Communications Committee will help unite producers,

co-ops, processors, manufacturers and others to speak with One Voice about the role technology plays in improving the industry, and ensuring a safe, reliable supply of dairy products. It is chaired by Brian Haugh of National Dairy Holdings, based in Dallas.

The Sustainability Committee will encourage industry innovations, improve environmental performance and position the industry for future marketplace demands. It is chaired by Mike McCloskey of Continental Milk Producers, Select Milk Producers and Fair Oaks Dairy in Indiana.

“We have a great story to tell,” Gallagher said. “The carbon footprint per gallon of milk has declined by 63 percent in the past 60 years. In 1944, we had 25 million cows that produced

52 billion pounds of milk; in 2007, we had 9 million cows that produced 180 billion pounds of milk. That’s the equivalent of taking 16.4 million cars off the road, or planting 12.3 billion new trees.”

DMI is currently working with a gas and electricity buyer to develop an economic model for methane digesters to help bring new income to dairy farms.

Carbon credit trading could provide yet another source of income – as much as $24 billion for the dairy industry, according to the U.S. Department of Agriculture.

Creating the future through innovation – becoming consumer-driven

To compete in the global marketplace, dairy must innovate, and must evolve from a production-driven industry to one that is more consumer-driven, Gallagher said. 

“The plant level is where the old rules were created, and continue to live,” Gallagher said. “That’s where innovation needs an overhaul, and that’s where we will write the new business rules to be consumer-driven.”

“Some companies are moving forward to produce the products that consumers want – but not enough companies, and not quickly enough,” he said, adding that Ireland, the European Union and New Zealand are far ahead of the United States in providing government incentives to modernize dairy’s infrastructure.

“We need to catch up,” Gallagher said. “And, when we become consumer-driven, dairy will be part of the solution to America becoming energy independent, to feeding the world with a nutritious product, and to overcoming obesity.”

“The light that is our future will be lit by power coming from a cow on your farm,” he said.

Source: DMI news release



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