Let’s Chat Markets Special Episode with Stephen Cain

On this special Let’s Chat Markets episode, Eric Meyer welcomes Stephen Cain of NMPF, a featured speaker at HighGround Dairy’s second annual Global Dairy Outlook Conference next month in Chicago! The podcast can be found here, or wherever you listen to your podcasts. Subscribe so that you never miss an episode!

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[00:09] Eric: Today is Wednesday, May 31st. We’re on the cusp of rolling the calendar to a new month, and this past Memorial Day weekend marked the official start of summer in the US, or at least in Chicago, where temperatures finally swelled above 80 degrees Fahrenheit. But before we start thinking about summer vacations, we’re just three weeks away from the HighGround Global Dairy Outlook Conference, taking place June 20th through the 22nd, right here in Chicago. Registration is still open so if you have yet to sign up, do so now by going to highgrounddairy.com/conference.

[00:48] Eric Meyer here with you today, and on this special episode of our Let’s Chat Markets podcast, Outlook Conference edition, I’m pleased to be joined by Stephen Cain, Director of Economic Research & Analysis at National Milk Producers Federation. Stephen, welcome and tell me, what’s today’s buzz on the streets of Washington DC, since today you are going to be my resident political pundit, will Congress end up passing this McCarthy/Biden brokered debt ceiling/spending cut bill over the next few days?

[01:17] Stephen: Thanks for having me, Eric, I appreciate it. That’s a loaded question!

Eric: It sure is.

Stephen: I don’t know, we’ll see. There’s a lot of buzz around the debt-ceiling talk that’s holding up some further conversations on the farm bill for sure. That’s definitely the main topic of discussion around here in Washington.

[01:35] Eric: Definitely. Well Stephen, you’ve officially been a “dairy-specific” industry professional approaching three years now with National Milk, but you went to school for Agribusiness so it’s not like you’re a relative newbie to the Ag sector. Tell us more about yourself, where you’re from, and what you studied as an Aggie, pun intended!

[01:52] Stephen: Yeah, sounds great. I went to Texas A&M for undergrad, got a degree there in Agribusiness and loved A&M so much that I stuck around for a master’s degree but had a transition there to Ag Economics. The Agribusiness was great but I kept having questions where I wanted to dig a little bit deeper and Ag Economics allowed me to do that so I stuck around to get a master’s there in Ag Econ.

Eric: And did you grow up in Texas?

Stephen: I did, yes. Outside Fort Worth up in North Texas.

[02:22] Eric: Awesome. So, you stuck with it in-state. And, boy, there’s a lot of good schools and a lot of sports competition there, huh?

Stephen: Absolutely. SEC!

[02:31] Eric: That’s right. Just based on your career timeline post-undergrad, you had to have some interest in legislative policy along with service as you spent some time as a Congressional Intern & Aide, also with USDA and the US Commercial Service over in London. Tell us about those experiences and how that shapes your mindset with your current role at National Milk.

[02:54] Stephen: Yeah, those were really great primers for the role and organization I work at now. I know the congressional side, working in the house and it’s a fast-paced environment, you get a lot of exposure to a lot of different policy and how things really get done here in Washington. Really exciting opportunity there. Then also working for the USDA in the dairy division so I got to see a little bit of behind the scenes on the regulation side and get to see how the agency works to better US agriculture but specifically, the dairy and getting a deeper lens on how the Federal Orders work and how the agency supports the industry. Then, I was in commercial service. That was a great opportunity as well. I was stationed in London at the US Embassy which in it of itself was a great experience. The work itself—working on the US commercial services, the trade promotion arm of the commerce department so a great opportunity there to promote and push US products into the UK. It was a really cool experience to see more of that commercial side of the industry where the folks are trying to get their products into the country and make those connections and make the sales so great opportunity there which—all of those together—is really what i do here today at National Milk as well as USDEC. It was the policy and regulatory side and also trade side as well, working with US dairy exports.

[04:19] Eric: Sure. And prior to joining National Milk in late 2020, you had spent nearly three years working at IHS Markit, a global data information and analytics firm. Tell us about that role.

[04:30] Stephen: Yeah, it was in the Agricultural Consulting Division for IHS and IHS has now become part of S&P Global, an even larger data division. That was great opportunity there. I got to work on a number of different commodities, dairy included. I got to do a couple of projects there for the Dairy Export Council but my focus at that job was on Economic Impact Analysis so I focused in on providing numbers to different initiatives, whether you are putting in a plant somewhere in the Midwest or investing in a farm overseas—what is the economic impact of that for either the bottom line or the industry at large? It was a great opportunity to be exposed to a lot of different areas and that was where I was exposed to the US Dairy Export Council.

[05:18] Eric: Wow, that’s really fascinating and really cool. So, you ended up joining National Milk in October of 2020, which makes you one of the earlier/in-COVID job hires. You didn’t really have to go far because you had already lived in DC, right?

Stephen: Yes, I was already in DC

Eric: But similar to Illinois, I’m assuming, DC was pretty locked down still at that point with limited office movement/no travel and very little, if any, in-person meetings were happening at that point. So I am curious because I just toughed it out at HighGround and I actually was coming into the office as soon as I could get out of the house with three little kids at home. But what was it like interviewing and making a career transition at that point in time during the height of the pandemic?

[06:06] Stephen: Yeah, it was tough. It wasn’t great. It’s tough joining a new organization and making that transition just in general but then being in a virtual environment adds a layer of complexity there. But with National Milk and USDEC, everyone here is so smart, so great at their jobs, and is a very welcoming environment so in that sense, it wasn’t too difficult to transition and hit the ground running with so many smart folks here. It was a bit of a transition being virtual but thankfully we were able to get back into the office not too long after I joined. I am one of the weird folks, I guess, that enjoys being in the office more than working from home, so it was a welcome change in my mind.

[06:47] Eric: You and me both, my friend. So, when I first saw your name pop up in the dairy industry, my colleagues mentioned you were with US Dairy Export Council, which you mentioned, but when you look on LinkedIn, your official title is with National Milk. But you are listed on USDEC’s website on the Economics Team. So talk to me and our listeners about how your role supports both organizations.

[07:11] Stephen: Yes, so on paper, I’m a National Milk employee but kind of in how we roll, we’ve actually initiated a new joint Economic Division between National Milk and US Dairy Export Council. Both organizations work so closely, hand in hand as it is so when we were able to join our Economic Division, that allowed us to streamline all of our resources there and better serve the industry for what it is we are trying to accomplish. It’s been a great opportunity, we’ve been able to bring both the domestic side and the trade side together and provide what I think is really great analysis and work there for the industry and our members.

[07:49] Eric: That’s great. Stephen, let’s tease your HighGround Outlook Conference session a bit here, as you will join Mike Brown from International Dairy Foods Association on the dais to discuss the latest scuttle in the dairy policy world, which is quite a lot right now!  Most important, there are proposals and hearing requests on the table for modernizing milk pricing in the United States. Of course, the 2018 Farm Bill expires this year as well so assuming efforts will be made to create new legislation for the upcoming five years. What broad strokes can you paint about these two critical policy initiatives taking priority this year and what else is important that I might be missing?

[08:31] Stephen: I know. Those are definitely the top two pieces for this year. The Farm Bill rolls around every five years so it’s always a big issue when that comes up for renewal and that’s a big topic of conversation that we’re still working on. Again, the debt ceiling conversations are really sucking up a lot of the oxygen in the room right now on Farm Bill talks but we are still in the process of finalizing some of our recommendations there as it pertains to DMC and more evolutionary rather than revolutionary updates there and making some small tweaks. Again, we’ll get a little more into that after we get past the debt ceiling conversation.

[09:12] On the Federal Order reform, that is in a process that has been in the works for quite some time at this point. Just in general, the Federal Orders really haven’t been updated in pushing twenty years now and the industry has changed a little bit over the last two decades. Really what we’ve done is come up with what we think is a pretty comprehensive package of recommended changes to the system there. We’re not looking to fundamentally alter how milk is priced here in the United States. We are looking at making some updates and some adjustments that really just bring the system in line with how the dairy industry operates today. Importantly, I think, how we’ve done it is a big bonus or benefit for how we’ve approached it. We’ve taken more of a holistic approach—if you change one piece of the order, it’s going to affect another part so we took a step back with the whole system and came up with a package that we think is really going to help benefit the industry moving forward. It took a lot of time to get there as well. We’ve been working on this for well over a year. I think we started in December 2021, working on our updates and package of recommendations so it’s been a long time coming. We’ve had 150-160 meetings at this point amongst our members and we’ve come up with a package here that’s been approved by our board unanimously which I think is great. We, the National Milk members, represent the majority of milk produced here in the United States so I think it’s comprehensive and it’s a good thing for the entire industry. Our proposal differs a little bit from some other proposals that are out there right now but in general, ours is a little more comprehensive than some others are. We have seven key pieces here for our proposal and I won’t walk through all of them right now—don’t want to spoil the fun for the conference here in a few weeks—but a couple of big ones: we are looking at the return of the higher Class I mover, looking at making some adjustments on make allowance and also some managed plant cost studies as well that will help with make allowances. That’s some broad strokes on the Farm Bill and the Federal Order but it’s going to be an exciting year for both, that’s for sure.

[11:23] Eric: I’m certainly eager to get that debate rolling, whether it’s in the session or at our Outlook Conference in a few weeks to really address those issues. I think a lot of industry participants—market participants—really have exposure to milk or dairy commodity price risk, we don’t spend a lot of time on what the potential issues, changes, things that may be coming down the pike when it comes to dairy commodity pricing and policy changes. for a lot of these things, it takes some sort of act of Congress to make the adjustments. So, it’s certainly a long time coming to have real, legitimate conversations that come up at the higher levels. I know that these things have come up in the past during my 22 years of being in the dairy industry and it’s wild that we’ve had like one major adjustment in so long. So, I’m eager to see how that all pans out and excited that we’ll have you and Mike at the conference and I’m sure our attendees will have plenty of questions and opinions of what they think should happen and it’ll just be an interesting process to move down the pike, so we are certainly appreciative that you’ll be contributing to that discussion in just a few weeks.

Stephen: Absolutely, sounds great.

[12:45] Eric: So, last question: I’ve asked all my podcast guests so far about their favorite things to do or eat in Chicago, but for you, I’m going to pivot and ask about DC. I am such a huge fan of US history, and with you living right upon the nation’s capital, there’s so much in DC to take in. As someone that has been there for more than 5 years now, why don’t you tell our listeners what are two attractions to you that are absolutely can’t-miss for someone if they plan a trip to the area?

[13:14] Stephen: That is a great question. I think the first is probably just walking the Mall. It’s hard to beat just walking down from the capital to the Washington Monument to the Lincoln Memorial. There is so much history there and some great architecture. My favorite thing that I always tell people when they come visit is to go to the Library of Congress. That is my absolute favorite building in DC. A little-known fact is as a tax-paying US citizen, you are entitled to a free library card to the Library of Congress and the library card gets you to the reading room in the main building there, the Jefferson Building. So that’s always been my favorite. You get to skip the line, skip the tours and be in the middle of the Reading Room which is, in my opinion, the best room in DC.

[14:03] Eric: That’s really cool, I appreciate that input and I’m happy I asked that question. I have something new to do next time I get to DC.

Stephen: That’s right!

[14:10] Eric: Stephen, I really enjoyed our time chatting today and am excited to have you as one of our esteemed speakers and panelists at this year’s HighGround Dairy Global Outlook Conference, taking place here in Chicago June 20th through the 22nd. Thanks so much for joining me today!

Stephen: Thanks a lot, really appreciate it, Eric. I’m looking forward to the conversation in a few weeks.

Eric: You bet. Listener, if you have not yet registered, or have not shared our event with all your industry colleagues, I would highly recommend that you—and your friends—visit our website at highgrounddairy.com/conference and take care of that today. I’ll be back with you all on Friday afternoon to recap what happened this past week! Can CME spot block cheddar rebound after setting a multi-year low this week at levels not seen since May of 2020? Be sure to tune in to our next episode of Let’s Chat Markets. Have a great day, all!