USDA Announces Plans to Purchase Surplus Cheese, Releases New Report Showing Trans-Pacific Partnership Would Create Growth for Dairy Industry
Following an October 11 roundtable discussion with dairy producers near La Crosse, Wisconsin, Agriculture Secretary Tom Vilsack announced that the U.S. Department of Agriculture (USDA) is offering to purchase $20 million of cheddar cheese to reduce a private cheese surplus that has reached record levels, while assisting food banks and other food assistance recipients.
While USDA projects dairy prices to increase throughout the rest of the year, many factors including low world market prices, increased milk supplies and inventories, and slower demand have contributed to a sluggish marketplace for dairy producers and caused dairy revenues to drop 35 percent over the past two years. Section 32 of the Agriculture Act of 1935 authorizes USDA to purchase surplus food to benefit food banks and families in need through its nutrition assistance programs.
“America’s farming families are being called on to demonstrate their world-famous resourcefulness and resilience in the face of this current market downturn, and USDA is making use of every tool that we have to help them,” said Vilsack. “For dairy farmers, this has included $11.2 million in payments in August through the Dairy Margin Protection Program, in addition to the surplus purchase offers. While our analysis predicts the market will improve for these hardworking men and women, reducing the surplus can give them extra reassurance while also filling demand at food banks and other organizations that help our nation’s families in need. Farmers at other points in the supply chain are also receiving a boost with over $7 billion in Agriculture Risk Coverage and Price Loss Coverage payments for the 2015 crop year, which by design kick in when times are tough. As always, we continue to watch market conditions and will explore opportunities for further assistance in the coming months. For producers challenged by weather, disease and falling revenue, we will continue to ensure the availability of a strong safety net to keep them farming or ranching.”
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A solicitation will be issued shortly, and cheese deliveries to food banks and other food assistance recipients are expected to occur beginning in March 2017.
Also at the roundtable, Vilsack shared details of a new report by the USDA’s Office of the Chief Economist, which shows continued growth of the U.S. dairy sector is largely contingent on trade and that the Trans-Pacific Partnership could create an additional $150 to $300 million in annual U.S. dairy exports. Free trade agreements have contributed to the growth in U.S. dairy exports and helped to address tariff and nontariff barriers that disadvantage U.S. products in overseas markets. U.S. dairy exports to free trade agreement partners grew from $690 million in the year prior to each agreement’s entry into force to $2.8 billion in 2015, driven by lower trade barriers and increased U.S. competitiveness. For more information on TPP, visit www.fas.usda.gov/topics/trans-pacific-partnership-tpp.
Certified Angus Beef Reports Record Sales
For the 10th year in a row, Certified Angus Beef LLC reported record sales of its signature Certified Angus Beef ® brand, marketing 1.015 billion pounds of product in fiscal 2016 (ending September 30). The increase of 13.3 percent represented an additional 119 million pounds of product sold by a network of more than 18,000 licensed partners worldwide.
“Thanks to a dramatic positive shift in the supply of high-quality Angus cattle, our partners were able to deliver more of the highest quality beef to consumers while supporting ranch families and rural communities,” said brand President John Stika. “Our partners’ collective achievement – from the farm to the table – illustrates the relevance of our mission established nearly 40 years ago. By delivering unique experiences and value to consumers, our individual partners succeed as well.”
Monthly sales records and category growth
The Certified Angus Beef brand set sales records in all 12 months of fiscal 2016. Furthermore, eight of the 10 best sales months in the brand’s 38-year history were set in fiscal 2016. Sales of more than 90 million pounds in July, August and September reflected partners’ strong marketing and promotional activity during grilling season.
Growth was balanced across product categories. Backed by traditionally strong demand, particularly for consumers’ celebrations and special occasions, sales of premium steaks (middle meats) grew by 11.4 percent. End meat sales grew by 87 million pounds, and ground beef sales increased by 8.5 million pounds.
Illustrating the appeal of premium beef to the most discerning consumers, sales of the brand’s Prime product extension grew by more than 26 percent.
Divisional success
After six years of deceleration, retail division sales exploded with 18.5 percent growth, or 68 million pounds. Quality-focused retailers have long represented the largest portion of brand sales – 43 percent in fiscal 2016 – but lower beef prices linked to increased supply encouraged more consumers to choose beef for family meals more often. Plus, grocery partners aggressively featured brand items in their circulars, further driving sales.
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The foodservice division, already on a well-established path of growth, enjoyed its seventh consecutive year of record sales: 355 million pounds, a 6.3 percent increase. Three-quarters of the brand’s licensed distributors grew their business by an average 9.3 percent. Sales to licensed restaurants also increased 10 percent, demonstrating the brand’s relevance and value to chefs, restaurateurs and customers.
International sales of the Certified Angus Beef brand reached a new record of 138 million pounds in 49 countries. Sales in Japan, historically important for U.S. beef, more than doubled in fiscal 2016, thanks to the efforts of partners strongly committed to the brand. Sales in Mexico also increased a notable 16 percent.
Processors responded to growing consumer demand for high-quality convenience meals in both retail and foodservice with branded value-added products. Sales were up by 8.9 percent, driven by key items including smoked brisket, marinated fajita meat and fresh corned beef.
Family farmers’ focus on quality leads to increased supply
Family farmers and ranchers have been the foundation of the Certified Angus Beef brand since its start; their efforts to raise quality cattle meeting the brand’s 10 exacting standards enable licensed processors, distributors, restaurateurs and retailers to meet consumers’ growing demand for premium beef.
A few years after a devastating drought across much of the United States, these families finally saw the fruits of their efforts to rebuild herds. Beyond simply adding more cattle, they improved the quality of their herds with a strong focus on Angus genetics and the brand’s quality target in mind. As a result, the rate of cattle eligible to earn the brand name rose to a record 28.9 percent, up from just 14 percent a decade ago. The collective improvement in cattle translated into increased supply for the brand of 440,000 head, or 115 million pounds of branded product.
“This additional supply led to reduced prices for consumers while delivering more of the same superior beef they’ve come to expect from the brand,” said Stika. “This intentional focus on quality by our family farmers and ranchers is at the core of the brand’s relevance, not just to the ranching families themselves, but also to the brand’s partners and consumers. It’s a relationship that has a collective impact much greater than the sum of its many individual parts, all passionately focused on quality and family.”
Velvet Ice Cream Opens Expansion Project
Velvet Ice Cream has just opened the largest expansion capital improvement in the company’s storied 102-year history. Velvet broke ground on a new 23,000-square-foot expansion, with price tag of more than $3 million, last August. The expansion added a new state-of-the-art warehouse freezer distribution facility to Velvet Ice Cream’s central Ohio plant at Ye Olde Mill in Utica, more than doubling the company’s freezing and picking capacity. On the heels of significant expansion into the Kentucky and other markets, demand for Velvet Ice Cream has grown, taking the company from $25 million in revenue in 2009 to more than $30 million in 2014. As a result, last summer, Velvet was nearly at capacity with its former distribution facility.
“Our expansion allows us to improve sustainability, sharpen efficiencies and produce more delicious Velvet Ice Cream in order to meet increased demand,” said Velvet Ice Cream President Luconda Dager. “But it also positions us well for future growth and expansion.”
Dager helped the more than 100 attendees at the expansion ribbon cutting to better understand the project’s size, sharing the following details on the new facility:
- The new freezer distribution addition keeps Velvet Ice Cream at 20 degrees below zero
- It holds 3,200,000 cartons of Velvet Ice Cream
- That would fill 80 tractor trailers with Velvet product
- That’s equal to 1,920 pallets
- The Velvet Freezer team walks a quarter of a mile for every order they pick
- In one year of work, that’s like walking from Utica to Las Vegas and back
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Velvet Ice Cream worked with the Licking County, Ohio firm Robertson Construction as general contractor for the project, which took 14 months to complete. Currently employing a staff of 125, Velvet’s new distribution facility initially will require the addition of eight new employees in its picking and shipping operations. However, the development enables the company further to expand production as new accounts are acquired, which is expected to increase future employment. The project also uses the latest green technology, minimizing the company’s environmental footprint via environmentally friendly design, motion-controlled energy efficient lighting, state-of-the-art insulating panels and high-speed automated doors.
Dager added that thanks to the support of tax abatement from North Fork Local School District and Velvet’s partners at People’s Bank and Freije-RSC Engineered Solutions Company, the expansion makes it possible for the company to not only continue serving existing customers, but also enter new markets and forge new partnerships, like those Velvet already has with major retailers and other food service partners.
This year, Velvet Ice Cream celebrates 102 years of making ice cream in Ohio. Founded in 1914 by Joseph Dager, four generations of Dager family have since run the company. Still family-owned and operated, Velvet produces and distributes more than 5 million gallons of ice cream every year from its headquarters on the grounds of Ye Olde Mill. Ye Olde Mill also houses an ice cream and milling museum, a restaurant, playground, picnic area and catch-and-release fish pond.
Named by Frommer’s as one of America’s 10 Best Ice Cream Factory Tours, Velvet’s Ye Olde Mill welcomes 150,000 visitors each year for tours, tastings and events. The annual Ice Cream Festival, group tour experiences and school learning field trips are among the many draws to Ye Olde Mill, which is open to the public April 20-October 31. Complete information about Velvet Ice Cream and Ye Olde Mill is available www.VelvetIceCream.com on Twitter at @VelvetIceCream or Facebook.com/VelvetIceCream.
