Washington Insider -- Tuesday

Milk, Market and the Culture Wars

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

USDA Notes Lots of Interest to Host ERS and NIFA

Some 136 expressions of interest to host USDA's Economic Research Service (ERS) and National Institute of Food and Agriculture (NIFA), were received by the department by an October 15 submission deadline.

USDA has proposed relocating ERS and NIFA outside of the Washington, DC region where they currently reside. Among the reasons cited were bringing the agencies closer to stakeholders, cost and quality of living considerations, and making it easier to attract new talent.

Interest about hosting the agencies "has been overwhelming as localities, universities, private entities, and elected officials realize the potential for their communities in become the new home for these two agencies," USDA Secretary Sonny Perdue said.

"It is an old saying that not all wisdom resides in Washington, DC, but it is gratifying to see so many folks step forward wanting to prove that to be the case," Perdue remarked, adding, "We look forward to working with Ernst & Young in examining all of the proposals and selecting the new locations.”

Expressions of interest came from locations spanning 35 states: Alabama, Arkansas, Arizona, California, Colorado, Delaware, Florida, Georgia, Iowa, Illinois, Indiana, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, North Carolina, North Dakota, Nebraska, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, West Virginia and Wyoming.

Kudlow: Beijing's Doing 'Nothing'

In a Financial Times interview, Larry Kudlow, the director of Trump's National Economic Council, accused Beijing of doing “nothing to defuse trade tensions” ahead of the G20 meeting next month in Argentina.

Reports surfaced last week that Chinese leader Xi Jinping and Trump agreed to meet November 29 ahead of the G20 confab in Buenos Aires. But Kudlow underscored the stalemate and US frustration with Xi's refusal to bow to Trump's demands.

"We gave them a detailed list of asks, regarding technology for example, [which] basically hasn't changed for five or six months. The problem with the story is that they don't respond. Nothing. Nada," Kudlow told the FT.

Washington Insider: Milk, Markets and the Culture Wars

Amid the pre-election fights, the urban press has become sort of enamored by milk—seriously. For example, the New York Times says that milk has “gone viral,” and “joined the ranks of Pepe the Frog and the ‘okay’ emoji as symbols of 21st century, post-Obama white supremacy.

The reason, the Times says, is that milk drinking sometimes is used to “reinforce notions of white superiority and idealized visions of masculinity.” It notes a long association between dairy milk and white supremacy and cites legal scholar Andrea Freeman’s work tracing the link back a century. Official U.S. government documents from the 1920s suggest a link between “white people, milk-drinking and a superior intellect,” NYT says.

Sociologist Melanie DuPuis describes how milk was central to the construction of the modern Western nation state. Early 20th century milk advertisements perpetuated this trope, often juxtaposing images of healthy-looking, light-skinned people with sickly-looking, darker-skinned ones. “By declaring milk perfect,” says DuPuis, “white northern Europeans announced their own perfection.”

The cultural issue arose at a time when consumption of plant-based beverages has risen rapidly, up 9 percent to $1.6 billion in the 12 months through June—as sales of cow’s milk fell 6 percent. Milk drinking has been declining in recent years, from the 1970s when a typical American drank about 30 gallons a year; to the current level of about 18 gallons, USDA says, a severe worry for the dairy industry.

Milk producers want the Food and Drug Administration to “enforce its rules around labeling things honestly.” They argue that the word “milk” for plant-based products confuses consumers because it implies that the white liquid they are considering has a nutritional value similar to cow’s milk. As a result, commissioner of the Food and Drug Administration, Dr. Scott Gottlieb, caused a stir by telling a Washington audience that an almond “doesn’t lactate.”

With the dairy industry and the plant-based foods group at such odds, Dr. Gottlieb’s comment about almonds and lactating was the strongest indication yet that his agency would begin more fiercely enforcing rules for milk labels.

Amid these concern, Quaker Oats is expanding its marketing of an oat-based milk, the Times says. It will use the distribution muscle of its parent company, PepsiCo, in hopes of claiming a bigger piece of a fast-growing sector and expand PepsiCo’s portfolio beyond sugary sodas and salty snacks to healthier options.

The company’s main competitor in the category is Oatly, a 25-year-old company based in Sweden. Oatly entered the US market about two years ago by persuading small coffee chains like Intelligentsia and some stand-alone shops to use its milk alternative. The product quickly developed a cult-like following among the coffee elite because of its consistency — thicker than other plant-based options.

After spreading from a small number of coffee shops in New York to more than 2,000 nationwide in a little over a year, Oatly began to sell its milk at Wegman’s, Whole Foods, ShopRite and other grocery stores this year.

The brisk growth of this product is bad news for the dairy industry, which has experienced a decades-long decline in consumption. And as more plant-based beverages come to market, grocers have increased the fees they charge dairy milk brands to maintain their spots in the refrigerated aisles, another hit to dairy profits, the Times says.

As a result, some milk producers have responded by jumping onto the plant-based bandwagon. Dean Foods, a leading supplier of dairy milk, is a majority investor in Good Karma Foods, which makes flax milk. And after Elmhurst Dairy, the last remaining milk company in New York City, stopped producing milk in 2016, it turned to making Elmhurst Milked, a line of drinks made from hazelnuts, almonds and oats.

Quaker hopes to distinguish its offering by promoting what it says are its health benefits, primarily that it contains beta-glucan, a soluble fiber from oat bran, that might reduce the risk of heart disease. Robbert Rietbroek, Quaker Foods North America’s general manager, claims they are “good for your heart. They reduce cholesterol. They’re good for your gut, and they give you long-lasting energy.”

Health professionals are more reserved about such claims.

“How much do you have to drink to get the recommended daily amount of soluble fiber?” asked Marion Nestle, a well-known retired professor who specialized in nutrition, food studies and public health at New York University. The answer: four eight-ounce glasses. “Or you could just eat a bowl of oatmeal,” Ms. Nestle said, laughing.

“For the population of people who are buying these products, the health benefits from this incremental change are going to be small,” she added. “These people are already eating healthily.”

Well, that’s a lot of battles for a product that once was an unquestioned, national dietary mainstay. Still, the dairy industry has a strong nationwide presence with well demonstrated links to state and federal governments, so we will likely see this fight intensify. It is a fight producers should watch closely as it proceeds, Washington Insider believes.

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