On the Right Track
Tipton’s keynote address sets the tonefor a packed Forum program.
Dairy processors and
producers need to iron out their differences so they can work together to
take on the world.
That was the gist of the keynote address by Connie
Tipton, president and chief executive officer of the International Dairy
Foods Association (IDFA), on the first full day of the 2005 Dairy Forum,
January 9 to 12 in Orlando, Fla.
Citing examples of a “shrinking dairy
globe,” Tipton urged industry leaders to “act globally —
now — as the only way to get on the right track here at home and in
international markets. I believe the U.S. dairy industry can and must take
control of our future by acting now to make sure future world trade
agreements and domestic policies don’t hamper our ability to compete
and put us on the wrong track.”
Among the coming changes Tipton says bode well for the
industry are increased non-subsidized world trade, continued lower domestic
production costs and increasing demand for dairy products, especially in
developing countries.
As worldwide demand increases, global trade policies
improve and technology makes strides abroad, “how well positioned are
we here at home for the global dairy business?” Tipton asked.
In some ways, very well, she said — in
terms of production, exports and product reputation — but somewhat
lagging in new product development, which Tipton blames partly on domestic
policies.
“I don’t think I’ll shock anyone by
saying U.S. dairy policy right now is on the wrong track. It does not help
us gear up for global growth. In fact, it hampers us,” she said. For
example, standards of identity are inflexible, the Class I definition is
too restrictive, and the federal order pricing system is outdated.
“How can we expect companies to invest in new
milk-drink products like those in other parts of the world,” Tipton
said, “when our system effectively discourages that
investment?”
Runaway raw costs also hamper investment in new
products and proprietary technology, according to industry leaders speaking
as part of an executive panel discussion at one of the Forum sessions.
“The impact is huge on sales. It diverts dollars
used to grow our lines,” said Tim Kahn, chief operating officer of
Dreyer’s Grand Ice Cream. “We’re going to kill demand
generation.”
John Jeter, president and CEO of Hilmar Cheese Co.,
agreed. “We devote a lot of resources to managing margins rather than
innovating,” he said.
But John Kaneb, chairman of HP Hood, said commodities
volatility is a normal part of doing business. “You learn to live
with it,” he said. “If what to do about it invites more
government [intervention], I’d say the cure is worse than the
disease.”
In fact, despite the tumultuous raw costs of the past
year, Hood is spending “tens of millions upgrading technology,”
Kaneb said.
Jeter said that “in general, the dairy industry
is probably behind with innovation. The biggest decision we make is what
product class we’re in, and that stifles innovation. Companies that
devote significant resources to innovations do stand out. We really need to
look at these policies.”
Kahn suggested dropping standards of identity.
“It’s not working anymore,” he said. “We’d be
better off partnering [with producers] to increase the overall usage of
dairy products. … The willingness of the producer to cut some slack
to allow innovation would help everybody.”
A closer processor-producer relationship for the
overall good was the subject of discussion at a session featuring Tipton
and Jerry Kozak, president and CEO of the National Milk Producers
Federation (NMPF).
Tipton and Kozak noted the oft-at-odds groups have
partnered successfully in the past year to increase school milk
opportunities and dairy’s presence in the new federal nutrition
standards.
Other sessions over the three-day conference dealt
with legislative and policy issues, the World Trade Organization Doha
round, food safety, milk-based beverages, crisis management, milk from
cloned cows and progress of the ongoing Healthy Weight with Dairy
promotion.
More news from the 2005 Dairy Forum can be found at
www.idfa.org.
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