MPC frustration growing among nation’s dairymen

SALEM, Ohio – Not since bST have three little letters so inflamed the dairy industry as MPC.

Milk protein concentrate, or MPC, is what’s left when you remove the fluids from milk through a process called ultra-filtration.

This “dry” concentrate is not produced in the United States, but can be a substitute for nonfat dry milk, a storable form of domestically produced milk protein.

Generally, milk proteins are an ingredient in many dairy products, in nutritional supplements such as Ensure, and are an input in processed foods. “Wet” forms of concentrated milk protein are called “ultra-filtered milk;” dry forms are called milk protein concentrate, or MPCs.

The unspoken reality, however, is that imported MPC is replacing domestic nonfat dry milk powder in U.S. cheesemaking because of its low cost – and that is hurting U.S. milk prices, critics claim.

Obvious displacement. An American Dairy Product Institute report found the use of nonfat dry milk in hard cheesemaking in 1999 was down nearly 23 percent from 1998 figures. Since 1996, the institute found, use of nonfat powder in cheesemaking has declined more than 150 million pounds.

At the same time, in 1999, cheese production rose 500 million pounds.

The displacement is starting to catch the attention of producers, industry representatives and legislators. Ashtabula County commissioners, state Rep. George Distel and U.S. Rep. Steven LaTourette hosted a meeting Oct. 29 in Jefferson to hear producers’ concerns and explore possible solutions. Ohio Farmers Union members and other industry representatives met with U.S. Sen. George Voinovich Nov. 1 in Wooster to discuss MPCs.

Huge impact. With the current depressed market for milk, producers are wondering if MPC is to blame.

Although MPC imports aren’t completely responsible for current low milk prices, industry watchers admit they have displaced the use of a lot of nonfat dry milk powder.

Reduced demand for nonfat dry milk powder adds to the milk surplus and the Commodity Credit Corporation has had to purchase large quantities under the dairy price support program.

In fact, according to Penn State dairy policy specialist Kenneth Bailey, the cost of operating the dairy price support program increased by $572 million from 1996-2000 due to MPC imports.

While the International Dairy Foods Association claims otherwise, Bailey’s research concludes that “imported MPC clearly substitutes for domestically produced nonfat dry milk.”

Imports increasing. There is no limit to the amount of casein and milk protein concentrate that can be imported into the United States, according to the U.S. Dairy Export Council.

From January through June 2002, MPC imports increased 248 percent from 1995 levels, and 10 percent from last year. MPC imports, from January through June 2002, were nearly 19,000 metric tons.

The total number of countries exporting milk protein concentrates to the United States grew from four to 16 between 1990 and 1999.

Product of new technology. MPCs were not a significant product during the Uruguay Round of the world trade talks because MPC is a creation of new technology that wasn’t fully developed at that time. That’s why it’s not subject to the same import licensing rules as other dairy products. That’s also likely why it wasn’t considered as an optional ingredient in standardized cheese products.

Top MPC exporters to the United States are New Zealand, Ireland, Germany, Australia and the Netherlands, although opponents claim MPC is being rerouted through these countries from other locations, including Belarus, in the former Soviet Union.

“Somebody’s getting MPCs from countries where you wouldn’t drink the water,” said outspoken critic John Bunting, a New York dairyman who traveled to the Ashtabula County meeting to speak to producers and public officials.

There are currently no milk protein concentrates produced commercially in the United States, although Select Milk Producers is operating reverse osmosis and ultra-filtration plants at dairy farms in Texas and New Mexico.

Earlier this year, milk marketing cooperative Dairy Farmers of America announced plans to produce MPC at a plant in Portales, N.M., in a partnership with the New Zealand-based Fonterra Cooperative Group.

Health concerns. MPC is not a legal ingredient in standardized cheese products such as pasteurized process cheese food, however the Food and Drug Administration has admitted that it lacks the resources to focus on enforcement of the law.

In a letter written from FDA’s John Forer to Wisconsin’s Secretary of Agriculture James Harsdorf, Forer said, “the use of MPC ingredients in standardized cheese has not been highlighted for enforcement because it is not considered a food safety priority.”

There are no limits on MPC use in “nonstandardized” cheeses like ricotta or pizza cheese.

The FDA has also said that while standardized cheese products such as pasteurized process cheese food may not contain MPC as an ingredient, it has not “objected to fluid ultra-filtered milk under specific circumstances.”

The Food and Drug Administration has also stated that they have no reason to believe the MPC imports are unsafe.

Milk producer John Bunting is on a mission to raise awareness of MPC, which he calls simply a “symptom of an ongoing problem” within the milk marketplace of eroding purchasing power and low milk prices.

“We’re looking at the future,” he said, “and we’re headed toward the cliff.”

He likened cheesemakers and food processors using MPCs to a gang of teenagers: They can’t quit using the cheaper ingredient because if one stops, he’s no longer competitive.

Matter of trust. What Bunting said these processors don’t realize is that they are jeopardizing the trust consumers place in the dairy industry.

“The public trusts that the dairy products they are buying are the same quality they were 10 years ago,” he said, adding that that trust could be shattered.

“It’s not an illegal product, but it’s food use is illegal,” Bunting said. “There is no public benefit from the use of MPCs.”

Bunting’s comments at last week’s meeting in Jefferson raised doubts with Geauga County dairyman Charles Lausin.

“I can’t believe that Kraft or any other major dairy processor would risk their reputation” by putting something on the market that isn’t safe to use,” Lausin said.

Is it fraud? Ashtabula County milk producer Bryan Wolfe, who has single-handedly raised the awareness of MPC among his local, state and federal legislators, called the MPC issue one of “consumer fraud” and is hoping there is legal remedy for a state to prosecute a processor for using an unapproved ingredient.

“We know it’s not anything that’s going to fix milk prices,” added Joe Logan, president of the Ohio Farmers Union, “but we want to assure the safety of food ingredients.”

“Dairymen can’t adulterate milk, and we just want to be sure processors are held to the same standards,” Logan added.

“It not about how much is this costing today, but what is it’s impact tomorrow,” Bunting said.

What’s being done. The MPC battle is being waged on many fronts.

In April, the National Milk Producers Federation filed a formal legal challenge challenging how the U.S. Customs Service classified dairy products such as MPC. This came on the heels of a 2001 federation request for a customs’ investigation into the mislabeling and misclassification of imported MPC.

After an initial decision in late 2001 that found many of the imported dairy proteins were misclassified as MPC, U.S. Customs officials reversed their position and upheld the status quo.

The Farmers Union has written U.S. Secretary Ann Veneman, asking her to work with the Food and Drug Administration to halt MPC use as a food ingredient, and to work with the U.S. Department of Justice to enforce anti-trust laws.

Federal legislation. Legislatively, U.S. Rep. David Obey, D-Wis., introduced H.R. 1786 in May of 2001, which now has 70 co-sponsors, including Ohio’s LaTourette, who signed on in September. The bill would impose tariff-rate quotas on imported MPC and certain caseins.

A companion bill, S. 847, was introduced in the Senate by Sen. Mark Dayton, D-Minn.

It is unlikely, however, that either bill will move this year, as the Congressional lame-duck session after this week’s election will focus only on passing the appropriations bills.

States’ efforts. Most recently, individual states are requesting their attorneys general look into the MPC issue. In Ohio, the Ohio Farmers Union wrote Atty. Gen. Betty Montgomery Oct. 27, 2002, requesting an opinion on “apparent extra-legal uses” of MPCs.

The farm group also asked Montgomery to help them pressure the appropriate federal agencies “to assure the integrity and safety of our food supply.”

More study. Although the General Accounting Office produced a report on MPCs in early 2001, too much is still unknown about the impact of MPCs on domestic production and pricing, said Ohio State ag economist Cameron Thraen. One of the big unknowns is exactly how much is being used by cheesemakers, which are not required to report this information.

“Right now it’s not well enough understood,” Thraen said.

The milk pricing specialist added, however, that current low prices are due more to weak demand than MPC imports. “We’ve run out of steam until we get the economy back on track.”

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Farmers lost $1.1 billion in seven years due to imports

WASHINGTON – According to the Dairy Producers for Fair Trade and the National Milk Producers Federation, the growth of unrestricted milk protein concentrate imports has eroded the market for U.S. milk.

Estimates of how the imports of MPC and casein affect dairymen’s wallets range from a loss of 2 cents per hundredweight in 1995 to a loss of more than 15 cents per hundredweight in 2000.

The group says the loss in income to milk producers was $40 million in 1995, and approximately $300 million in 2000.

From 1994 to 2000, milk prices averaged 8.6 cents per hundredweight less, translating to a total income drain of $1.1 billion due to imports of dairy proteins.

Unless tariff legislation is enacted, the group says, “U.S. dairy farmers can expect to see their milk price depressed by more than 20 cents per hundredweight in 2005 and to lose another $1.1 billion over the next five years.”