Monday, November 12, 2018
 A Few Things About MPCs  

By Ben Yale, Attorney, Yale Law Offices

Generally I see disagreements on policy issues based upon different vantage points and positions and it is appropriate to agree to disagree. There are those rare times when such a gentlemanly approach is inappropriate and what is wrong should be called just that. Some of the arguments regarding imposing higher tariff rates or quotas on milk protein concentrates (MPC) create such a moment.

Let me make this point clear up front: I clearly support efforts to bring fairness to the import treatment of milk protein concentrates (MPCs) under the tariff rate quotas of the U.S. For reasons or excuses which gain us nothing, the U.S. Harmonized Tariff Schedule has no special tariff rate quota for MPC as it does for cheeses, non-fat dry milk (NFDM) and other dairy products.

While NFDM is subject to quota tariffs as high as 4 cents a pound plus transportation, imports of MPC40 and above are subject to a minimal duty of only $3.70 per metric ton, or less than a quarter of a cent per pound. Giving foreign producers of this valuable dairy product a virtual free pass to our consumers is wrong.

While I join that fight, I part ways with those who base their challenge to imported MPCs by asserting that all MPCs are foreign in source or claiming that using MPC in products is either illegal or unsafe. We must recognize that MPCs also come from American-produced milk. Once an MPC is in the product, it is not an American MPC or a foreign MPC.

It is not the concentration that gives value to the product but the milk protein itself, and Americans consume billions of pounds of milk proteins every year. Only a small percent of those are produced outside of America. When we say bad things about MPC and products that use them, we are saying bad things about our milk.

The term “milk protein” covers a wide range of dairy products. In the truest sense, one form of milk protein is the fluid milk that comes from the cow. Other forms of milk protein (but not all) include cheeses, dry milk powder, skim milk powder, casein, caseinate, milk protein concentrate, whey protein concentrate, whey protein isolates, ultrafiltered milk (UF), concentrated whey and dry buttermilk.

Milk proteins are generally interchangeable. That means simply that milk protein in one form can substitute for another form of milk protein. For example, NFDM can substitute for raw milk for process cheese, or UF milk replaces whole fluid milk in the vat to make cheddar cheese. In some processes, existing cheese itself is a partial replacer of raw milk for its protein. Some argue that choice of the form of milk protein is based on availability, form, product formula, restrictions and price.

But, ultimately, all of these come down to this driving factor in policy and marketing – price. “Availability” means that one form is cheaper to acquire (say in terms of distance or the demand price at that point) than another.

Example: A cheese plant may purchase more distant UF milk from a distant source because the net cost benefit of UF milk makes it less expensive to bring in than raw milk, which is in short supply. An abundance of nearby fresh milk will win out over bringing in other proteins unless, of course, the price exceeds the price to haul in powder and turn the powder into a usable ingredient.

“Form” is also another way to explain a difference in price. The use of MPC instead of milk has costs associated with its use that is not present with raw milk. On the other hand, MPC use has some handling and storage characteristics that are more favorable than raw milk. The lower-cost protein wins.

Milk protein can be concentrated in several ways. One of those, the most common, is drying. The resulting NFDM is an MPC34, where the 34 represents the percent of protein. Another common form of MPC produced and used in the U.S. is ultrafiltered milk or UF milk, which is sometimes called liquid MPC. Higher concentrations of MPCs, the ones we are concerned about, are produced by filtration and drying. The result is higher concentrations such as MPC80 and MPC90.

The higher concentrations are primarily used in specialty products such as sports and nutritional bars. Some of those MPCs are produced domestically. Between the use of domestically produced MPC80 and MPC90, NFDM and UF, the majority of MPC comes from American sources.

The reason that imports of milk products including MPCs, cheeses, and the like are not flooding our shores with product is due not just to the tariff rate quotas, but natural impediments. There is a location value to protein – the greater the distance, the greater the costs.

When our costs are at or near theirs, the sheer cost of transportation makes our milk proteins a better deal. These natural impediments to importation of MPC are offset when foreign governments intervene and subsidize directly or indirectly in the production of MPC or its exportation.

Also, more commonly, it is U.S. intervention in the market that attracts MPCs. When the dairy product price support keeps domestic powder prices above world markets, the costs of making concentrated milk proteins and transportation are offset by lower world milk prices.

Recent studies have shown that importation of MPCs increases as Commodity Credit Corporation powder purchases increase. American taxpayers are supporting world milk producers under the current program. Passage of bills to correct the MPC tariff rate quota will be very difficult because the quotas for all products, not just dairy, are part of world trade agreements.

The U.S. Congress cannot, unilaterally, impose a new quota without huge trade implications in other sectors. A trade war affecting hundreds of products and national economies could result. Recognizing this, the proposed legislation calls for a quota at current levels of MPC imports and authority to the U.S. Trade Representative to negotiate an offset of protection for other goods.

What other domestic product would be willing to give up trade protection for the benefit of dairy? None. The result is that some quotas for other dairy products would also be lifted to get the other countries to agree. All of this makes the goal difficult.

It does not help to push a rightful, but difficult legislative effort if there are misleading, if not downright incorrect, arguments used to support it. Opponents to our efforts to level the playing field for MPCs will turn the wrong arguments against us on the one argument we care about – fairness. That has not stopped some people from making such arguments.

One argument in support of MPC tariffs is arguing that it is illegal to use MPC in products because of the standards of identity. The FDA has issued standards of identity for some dairy products such as milk itself, creams, different styles of cheeses, concentrated milks and other milk products. The standard for butter is set by statute, a separate issue. Not all foods have standards of identity.

Cheese, by itself, has no standard of identity, though there is one for cheddar, swiss and other styles of cheeses. Processed cheese has no standard of identity. Makers of that product can use whatever source of milk protein they want, and they do. The vast majority of it comes from American dairy farms in one form or another. But processors do import some of their ingredients.

According to the International Trade Commission, over half of the imported MPCs are used in place of domestic powder to make processed cheese when price favors such use. At the same time, it is common today for cheddar cheese to be made with some UF milk, often from raw milk processed at the cheese plant, as well as UF milk processed elsewhere. This is permissible because it comes under the “alternative make” provision of the standard of identity for cheese. The milk proteins have not been altered by drying, and all of the milk components found in cheese remain in the solution.

UF milk comes from American dairy farms. Interfering with a legitimate manufacturing process using American milk will not stop the importation of MPCs. By far the most serious error in argument is the too-often-stated claim that any food that uses MPCs is not a safe product because the FDA has never declared MPC as “generally recognized as safe” or GRAS for short. The FDA does not have to make such a declaration.

In 1958 the Food and Drug Act was amended to restrict the use of chemical food additives (emphasis on chemical) used to change the texture, flavor, color and stability of foods. There is no process where such food components and additives have to be pre-approved like drugs are. There are no comprehensive lists of approved products either. The FDA lists some, but not all, non-food chemicals such as ammonium sulfate or tannic acid as GRAS. Not being on the list does not mean it is not GRAS.

While it is true that MPCs do not appear on the lists, saying so leaves the false impression such absence means something when it really means nothing. Milk proteins have long been recognized as generally safe foods. Use of milk protein concentrates such as found in NFDM preceded the amendments to the FDA. MPCs are not man-made chemicals, but biologically produced proteins in their natural form isolated from other milk components. MPCs are inherently safe.

By asserting that MPCs are not on GRAS, such arguments are stating that the use of milk proteins are unsafe (concentration does not change a thing). It implies that these components in milk are like manmade chemicals such as saccharine.

My question to those is this: What evidence is there that foods using milk proteins (concentrated are not) are unsafe? The second question is this: As a producer of milk proteins who is paid for milk protein, why would you ever want to make such an argument?

The American dairyman is rightfully concerned about the absence of import limits on MPCs through inadequate tariff rate quotas, and we all should continue to fight for their inclusion. In that fight we need to argue that foreign products, often subsidized by the governments where produced, should not have an unfair advantage over our domestically produced products.

In this fight we must remember that the biggest supplier of MPC in America are American dairymen, and we should never, never falsely argue that this wonderful wholesome product we produce, especially its valuable protein component, is unsafe to our consumers. I hope we can agree on all of that. 

Source: Progressive Dairyman


Posted on Wednesday, December 22, 2010 (Archive on Wednesday, December 29, 2010)
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