Ag convention offers dairy, grain and livestock marketing workshops, farm speakers Jan. 15-18 in Quad Cities

     AMES, IOWA (December 21, 2006)—National Farmers’ annual winter convention will feature grain, livestock and dairy workshops for conventional producers, as well as organic grain and dairy offerings at its national farm business and marketing meeting Jan. 15-18 in the Quad Cities at The Mark.
    Dr. Daryll Ray, director of the Ag Policy Center at the University of Tennessee will address farm bill policy, and Montana Governor Brian Schweitzer will also speak on farm issues in America.
    National milk pricing will be discussed in a special offering, The Future of Dairy Pricing, Wednesday afternoon Jan. 17. A survey, conducted by National Farmers and distributed in the Sept. 10 issue of Hoard’s Dairyman, revealed farmers are eager to find new ways to address the problem of low milk prices. Respondents from 40 states overwhelmingly thought that dairy cooperatives should be doing more to negotiate fair and stable milk prices. 95 percent said their dairy cooperatives should begin working more with other co-ops to help solve this pricing problem. Dr. Richard Levins headlines the The Future of Dairy Pricing.

Other Farm business workshops include:

1. Protecting Your Livestock Investments
2. Forming a Grain Marketing Club
3. Understanding Livestock Grade & Yield performance to increase profits
4. Developments in the Organic Grain Industry
5. Organic Dairy Management & Certification
6. National Dairy Situation and Outlook
7. The New Farm Bill

National Farmers Convention ’07 will be held at The Mark in the Quad Cities. Producers can visit www.nfo.org or call 800-247-2110 for detailed convention information. Media can contact National Farmers Communications by calling 515.450.7200.

New dairy producer survey shows farmers want co-ops more active in pricing milk
Majority of respondents say dairy cooperatives should work together to raise milk prices

     AMES, IOWA (Nov. 2, 2006)—Fewer than 3 percent of dairy farmers responding to a new survey thought they could survive and prosper at today’s low milk prices. “This is a very serious situation,” said Bradley Rach, National Dairy Director for the National Farmers Organization. “Even the most efficient dairy farmers are having trouble now. We need new ways to keep dairy farmers profitable.”
    A survey, conducted by the National Farmers Organization and distributed in the Sept. 10 issue of Hoard’s Dairyman, showed that farmers are eager to find new ways to address the problem of low milk prices. Respondents from 40 states overwhelmingly thought that dairy cooperatives should be doing more to negotiate fair and stable prices for milk.
    A little over one year ago, farm level milk prices were in the $20 range. Recently they have been barely half that amount. “It makes no sense that a small increase in production has caused all of our milk to be sold at disposal prices,” said Rach. “But that’s what we can expect if we don’t develop negotiating power.”
    Of dairy producers responding to the survey, 95 percent said their dairy cooperatives should begin working more with other co-ops to help solve this pricing problem. “National Farmers is certainly willing to do just that, to work with other co-ops toward a new pricing system that would truly help America’s dairymen and women,” Rach said.
    “Farmer-owned dairy cooperatives control more than 80 percent of the nation’s milk. Furthermore, the Capper-Volstead Act allows cooperatives to work together in pricing milk,” Rach said. “Certainly the Cooperatives Working Together program (CWT) has proven that once dairy producers believe in a program, they can voluntarily work together to achieve real results.”

National Farmers is a price negotiation and group marketing organization for the nation’s farmers and ranchers.

National Farmers encourages strategic food security system, other policy in farm bill feedback to U.S. House Ag Committee

     AMES, IOWA (July 25, 2006)—Focusing on the economic well being of America’s independent producers in the next farm bill, National Farmers Organization submitted its feedback to the U.S. House Committee on Agriculture yesterday. Key recommendations include establishing a Strategic Food Security System (SFSS), providing more aggressive anti-trust enforcement, leading an international effort to support the world’s independent food producers and promote environmentally sustainable farming.
     The organization believes a food security system is not only important to consumers but would, by its very nature be price supportive for America’s grain and oil seeds system. Crops allowed into the reserve system would be those from the Commodity Credit Corporation’s (CCC) nine-month loan program. The proposal enables USDA to allow ending stocks of grain exceeding 10 percent of current stocks to use ratio to be admitted into the program.
     “The new SFSS program is focused on the security of our grain and oil seed system and should be structured so that a target price is achieved on grains before the products in the food security system are released,” said National Farmers Ag Policy Analyst, Gene Paul. “Producers would be paid 25 cents per bushel for storage annually.”
     A major concern of independent farmers in the past decade has been increased concentration and the lack of competition in the agri-business market place. National Farmers calls for a stronger and more vigilant Antitrust Division at the Justice Department and at USDA's Packers and Stockyards Administration.
     The group also suggests establishing a Producer Advisory Board, where a majority of the members are independent producers. The group also advocates a ban of meat packer ownership of livestock prior to the time of slaughter.

Other farm bill legislation recommendations include:

1. Support for the extension and broadening of the Conservation Reserve Program
2. Endorsement of faster implementation of the Conservation Security Program
3. Support of implementing mandatory Country Of Origin Labeling and labeling of all food containing genetically modified organisms
4. Endorsement of every country's right to "Food Sovereignty"
5. Opposing the renewal of Trade Promotion Authority for the President of the United States

    And finally, the 51-year-old farm group believes continuation of the dairy price support program at a minimum level of $12.50 cwt. is important to domestic dairy producers’ viability.

National Farmers is a group marketing and bargaining organization for the nation’s farmers and ranchers.

National Farmers Organizations’ Farm Kids for College announces top scholarship award winners

     AMES, IOWA (April 27, 2006)—National Farmers’ Farm Kids for College national youth scholarship has named its top three award recipients for 2006. John Bell, Hodgenville, Ky., earned first place, Jodi Marshall, Viola, Wis., was awarded second place, and Kari Gillespie, Kevin, Mont., claimed third place honors.
     “The Farm Kids for College national judging panel selected John Bell as the first place winner in National Farmers’ scholarship competition,” said Farm Kids for College Scholarship Coordinator Helene Bergren. “We were impressed by this year’s candidates; they really exhibited a breadth and depth of farm experience, along with academic achievement and public service that is exemplary for America’s rural youth.”
     The national scholarship competition is open to high school seniors committed to pursuing college degrees in agricultural fields. The Farm Kids for College competition is based on students’ academic achievement, extracurricular activities, character and future contribution to agriculture.
     Bell is a senior at LaRue County High School in Hodgenville, Ky. He is president of his Future Farmers of America (FFA) state Leadership Training Center, and vice president and senior representative for his high school band council, and a participant in the Institute for Future Ag Leaders. He also serves as the secretary and historian for his FFA chapter. He is actively involved in his church, helping with vacation Bible school and for a local mission.
     Bell works for a local grain producer, assisting with sub-soiling, planting and harvesting of grain crops. He plans on majoring in the field of agricultural engineering with an emphasis in machine automation. He will receive $1,000 toward his education.
     Marshall is a National Honor Society member, salutatorian of her class and has earned a 4.0 grade point average thus far during her high school career. She is class treasurer and secretary, a member of the forensics team and an academic math team participant. Active in FFA, she served as chapter president for three years, and as a member of the dairy product evaluation team. She is also a Star Greenhand Degree recipient.
     Marshall helps with feeding, animal health care and managing records on her family’s farm in Viola, Wis. She will receive $750 toward her education.
     Gillespie, considered a model student, is hard working and conscientious. A Gold Honor Roll student for 14 quarters, she was also captain of the Academic Bowl for four years. Born and raised on a registered Angus ranch in Montana, she earned the Grand Champion for special breeding display in 2004, as well as several other county and state fair awards. She earned the outstanding journalism award, and was the best junior science student in 2005. A top science mentor, she also was voted most valuable student council member for two years, and earned the top world history award in 2003. She will receive $500 toward her education.
     National Farmers, a non-profit organization, provides professional marketing services in grain, livestock and dairy commodities, as well as farm financial services for producers nationwide. “It’s natural that we would encourage and help young people to pursue their goals in American agriculture,” Bergren added.

As America’s milk labor under a forecasted $2 milk pay price drop, culling of cows urged

     AMES, IOWA (Jan. 27, 2006)—As producers have watched their forecasted pay price for milk on the farm fall by nearly $2 from year-ago levels, a national dairy marketing group is urging farmers to take another step in their supply management efforts.
     “With predictions as low as $11.50 per hundredweight (cwt.) for Class 3 milk this year, prices could easily drop 2 dollars,” said Bradley Rach, dairy division director for National Farmers Organization. “This, combined with increased fuel and fertilizer costs will severely strain dairy farm families economically.”
     Because butter stocks are 27 percent higher than last year, and American cheese inventories are 8 percent greater, the national milk marketer is urging producers consider taking another step to reduce milk supplies.
     “The Cooperatives Working Together (CWT) program has been an excellent resource for dairymen, but as we face lower milk price predictions once more, I think it may be time for producers to consider taking another step toward additional supply management,” said Rach.
     A simple supply management option the organization recommends to producers is that they cull one cow for every fifty in their herd, helping to reduce domestic milk production capacity. But the 51 year-old farm marketing group underscored the fact that a majority of producers nationally would need to participate in the program to maximize its effectiveness.
     The organization provided the following example for every 50 cows in a herd:


    “Cheese prices have dropped 13 cents in the past week alone, and are 52 cents lower than a year ago,” Rach noted. “That, along with the fact that December milk production was up 4.3 percent should signal to producers that it’s time to act together to reduce the milk price slide.”
     With a continuing increase in production anticipated through spring, and industry needs fulfilled until Easter, the organization expects price levels will continue to fall unless some action is taken by dairy farmers themselves.
     National Farmers’ Livestock Division is offering the use of its marketing facilities so the cull cows can be marketed in an orderly manner. Cows that are marketed through National Farmers are guaranteed to be slaughtered and will not return to dairy farms. For more information call 1-800-247-2110.

National Farmers Organization’s Agricultural Issues Forum and Dairy Media Roundtable headline final two days of Convention 2006

    SIOUX FALLS, S.D. (Jan. 13, 2006)—Wednesday and Thursday event lineups at National Farmers National Convention provided American producers gathered in Sioux Falls, S.D., with information to help them profitably market their commodities, insights from dairy media leaders, updates on farm legislation progress and the goals and achievements of farm group partners.
    Wednesday’s dairy editor roundtable, which included Hoard’s Dairyman Managing Editor Steve Larson, Agri News Editor Mychal Wilmes, Dairy Star Writer Jerry Nelson and Wisconsin’s The Country Today Editor Jim Massey, highlighted Wednesday for National Farmers’ dairy producers. The journalists discussed ideas to encourage beginning dairy farmers, the potential for farmers partnering in their marketing and the definitive success of CWT, and the importance of positive relationships with consumers. They also shared methods they have seen dairy plants use to handle rising energy costs, and ways they protect the integrity of their news from the influence of advertising and corporate ag interests.
    Also on Wednesday, an ag issues forum, moderated by South Dakota’s Judy Stratman of WNAX radio in Yankton, provided dairy, grain and livestock producers with updates about ag legislation being addressed inside the D.C. beltway. Major issues included potential impacts the budget reconciliation process would have on current farm bill program payments, and the design of a 2007 farm bill.
    Forum panelists voiced their support for continuing the current farm bill for one additional year, in order to provide more time to properly construct a bill that would take into account growing federal budget deficits. Panelists included Gene Paul and Bob Cashdollar, representing National Farmers, American Corn Grower’s Larry Mitchell, and David Senter, an agricultural consultant from Washington, D.C. National Farmers Union’s President, Dave Fredrickson, who spoke to convention delegates on Thursday, also voiced his support for continuing the current farm bill for another year.
    The progress of WTO talks and their direct impact on a new farm bill, along with the implementation of COOL were also discussed.
    The National Farmers Livestock Division commodity marketing workshop focused on marketing tips for cull cows, fed and feeder cattle, and new opportunities in pork. The Grain Division workshop featured Dakota Marketing Coalition, a marketing group including National Farmers Organization, Farm Bureau, National Farmers Union, American Corn Growers Association, South Dakota Soybean Association and the Corn Utilization Council. Coalition members shared their profitable marketing accomplishments, and ideas for working with other groups.
    Thursday’s National Farmers Convention schedule brought R-CALF’s CEO Bill Bullard, who shared four strategies for increasing profits to U.S. cattlemen. U.S. producers need to have the ability to distinguish their products from those of other countries in the marketplace, he said, with the vehicle being mandatory Country of Origin Labeling. He also noted the need to “meaningfully address captive supply.”
    Bullard also shared examples of safeguards placed in trade agreements to protect American cattlemen, such as an agreement with Australia. He emphasized the importance of continued progress in trade agreements, and the need for enhanced competitiveness of American beef in the market. He noted opportunities because of the United States having the highest health and safety standards compared to the rest of the world’s beef. That wholesomeness results in the high consumer confidence U.S. beef enjoys domestically. Bullard noted concern with importing beef from Japan and other countries that do not adhere to the strict standards of the U.S.
    In additional convention activities, leaders from National Farmers Union, Institute for Rural America and American Corn Growers also addressed the National Farmers Organization members.

Leveling the Dairy Marketing Field: It’s Time We Began Building Market Power at the Farm Level

By Bradley L. Rach

I often hear dairy farmers talking about "leveling the playing field". Usually, they are talking about issues of global trade. However, there is another playing field that does not favor dairy farmers. That is the playing field between a handful of corporate giant buyers and thousands of dairy producers. A dairy producer acting alone cannot reasonably expect to get all that their milk is worth when the dairy marketing field is so tilted against them. Our buyers have market power, and so should we.

Dairy producers have always acted together in ways that increase efficiency. Programs that coordinate generic hauling are a prime example. More recently, we have seen success with CWT, a program that allows dairy producers to work together in managing milk supply. Unfortunately, a third part of working together, that of effectively negotiating fair and stable milk prices with our buyers, is not as far along. Today, I would like to talk with you about ways to strengthen the dairy farmer’s position when it comes time putting a price on milk.

Before starting, I want to stress that what I am going to say is meant to be some general guidelines we can discuss, and not a detailed plan we should implement right away. I’ve given this a lot of thought, and have heard from many people I respect. At the same time, there are many more perspectives that must be considered before we can build enough agreement to move forward. What I will say today is meant to get us started, but it is a long way from being a final plan.

Now, down to business. First, let’s talk about the current NFO dairy program. It is one that is growing, that is vital, and one that I am very proud of. Job number one must be to continue that growth. Growth in the program benefits participating farmers, it benefits NFO as an organization, and it serves as a model for one way farmers can cooperate in pricing milk.

As you all know, the current NFO dairy program requires participating producers to ship their milk to buyers that NFO selects. The way we select buyers is by choosing those that we can negotiate the best prices with. I think we are doing a good job with that now, and hope to do even better in the coming year.

One way I intend to continue the growth we are seeing in our dairy program is by building on our advertising and public relations. I am very pleased at how responsive producers have been to the ads we have placed in farm publications, some regional and some national. And I am way beyond pleased in how many of our members and staff have successfully written Letters to the Editor. I can see the positive effect this is having on attitudes everywhere I go. Once again, I can’t thank you enough, and hope more of you will follow this example in the year to come.

The other way I hope we can grow our program is by addressing the issue of pay price. I appreciate the way the Administration has been trying to contain the assessments that have been made to the dairy program. This alone helps us be more competitive. There are two other ways I am exploring, too.

For one, I am looking into the effect that growth will have on our costs. Some preliminary analysis shows me that as we grow, our costs per hundredweight will go down. The reason is simple enough. Some of our costs are fixed, so the more we spread them around, the less they fall on any one producer’s milk. As the numbers I am working on become clearer, I will have a better idea of the degree to which we can increase pay price in anticipation of growth.

The second way I hope to address pay price is by more carefully studying how much we can realistically expect to negotiate higher premiums as our volume continues to grow. If those higher premiums become available to us, we can also build those higher premiums into pay price. I have asked our Dairy Regionals to look for targeted areas for procurement that will best respond to our bargaining program. This, too, should help with our pay price.

In spite of all this, we must be realistic in terms of how much more we can squeeze out of the market if NFO continues to act alone. Buyers are now big enough to play entire cooperatives, let alone individual dairy producers, against each other. So, just how will we become strong enough to better affect the general price of milk in the United States? I don’t think we will do it solely with our shipping program. Don’t get me wrong—our shipping program will always be an integral part of any national program to move milk prices. But at the same time, we will need more.

To see why I say this, let’s begin by taking a look at processing dairy cooperatives. There is a simple story to be told about dairy cooperatives that process raw milk into cheese, butter, fluid milk, and other consumer products. When milk prices are low, the processing cooperative will make up the loss by passing higher operating profits back to the member. The member is therefore at least partially protected from the bad effects of low farm prices by belonging to a processing cooperative.

This story is true only if the dairy cooperative processes all of its members’ milk. That may have been true a long time ago, but things have changed in a big way. Every five years, USDA surveys dairy cooperatives. The most recent one covered operations during 2002. Cooperatives were responsible for 86 percent of the total volume of raw milk in that year. But the survey also found that: "Cooperatives sold 62 percent of their volume as raw milk, up 1 percentage point from 1997. In other words, cooperatives processed or manufactured 38 percent of the milk in the plants they operated."

Here’s another way to look at the same situation in a different way. In its June, 2004, issue, Dairy Field indicated that the two largest dairy processors, by far, were Dean and Kraft. Both are private processors. DFA, on the other hand, handled the largest volume of milk, but was only in tenth place on the list of the nation’s largest processors. DFA’s total dairy sales were reported as $6.9 billion. Their sales of processed dairy products were around $1.4 billion. Put another way, for every dollar’s worth of processed product DFA put on the market, they sold almost four dollars worth of raw milk.

None of this is meant to be critical of DFA or any other dairy cooperative. My goal, and yours, too, I hope, is to work even more closely with other dairy cooperatives as time goes on. But we must acknowledge that we are obviously a very long way from a world in which dairy cooperatives process all of their member milk. Instead, the dairy cooperatives act as handlers for roughly two out of three hundredweights of milk. They pass this along to private processors in one way or another. The remaining third gets processed by the cooperatives in the traditional way. Judging by the trend here, dairy cooperatives are slowly going from a role of "eliminating the middleman" to one of "supplying the middleman".

I suspect that what has happened is this. As smaller cooperatives merged into bigger ones, many of the less profitable plants were abandoned along the way. The members stayed on with the new cooperative parents instead of signing contracts with private companies to take their milk. However, the new larger cooperatives didn’t have enough capacity remaining to process all the milk, so they became suppliers to the privates. And, apparently, they are the low-cost suppliers, because the privates don’t seem to be working very hard to win those dairy producers over. In fact, the share of the nation’s milk handled by cooperatives actually increased a bit between 2002 and 1997 even though the number of cooperatives was in decline.

What we have, then, is a situation that doesn’t make as much economic sense as it did decades ago. When milk prices are low, only one-third of that low-priced milk benefits members by raising dairy cooperative processing profits. The other two thirds of that low-priced milk benefits private processors who are beholden to shareholders, not farmers. On the other hand, higher milk prices benefit all dairy producers in a very direct way, Since cooperatives aren’t processing all the milk, shareholders in private corporations absorb much of the impact of higher milk prices.

This is why programs like CWT make so much sense. The more dairy cooperatives function as suppliers, rather than processors, the more they will measure benefits to members in higher farm-level milk prices. CWT has been shown to be a good step toward getting those prices.

But CWT is not the only way to get those prices. The reason is expressed very well by USDA economist James J. Miller in an article he wrote for Hoard’s Dairyman (October 10, 2005): "drops in the number of milk buyers in all markets may mean that no markets have enough active competition for milk." I am reminded of something Dr. Neil Harl of Iowa State University wrote a few years ago. He said that when players in a market get so big that competition is compromised, prices are negotiated.

Surely, the market share of the corporate processors is large, and that can bring a certain level of power to negotiate prices that do not favor dairy producers. But we can play that game, too. A recent survey by Hoard’s Dairyman (October 10, 2005) showed that only 50 cooperatives handled 82 percent of the nation’s milk. No single buyer or retailer has a market share even close to that large. Such a large percentage of the market represents potential for considerable market power.

However, that market power will only be valuable if dairy producers and their cooperatives choose to use it. We can stay with an "old school" strategy for increasing dairy producer income that relies on two principal directions: (1) take advantage of low milk prices with higher processing margins, and (2) depend on government programs to compensate dairy producers for low prices in one way or another. Or, we can take a more contemporary approach that uses market share to build pricing power.

Even though dairy cooperatives are getting bigger by the day, their clout as processors is giving way to that held by giant corporations. Government programs seem to have one foot in the grave and the other on a banana peel. CWT, on the other hand, has shown us what can happen when large numbers of farmers work together in the market place to influence price. It is time that we paid much more serious attention to what can be done with an 82 percent market share. It is time we looked to market share as our real strength and began pricing milk at the farm gate.

Now, back to the question of how to do this. Many of you have suggested a two-tier pricing system for milk. I agree with you wholeheartedly on this. Why work so hard to match supply and demand for milk, and then reward those farms that put things back out of balance by overproducing? We need a high price for what Dr. Richard Levins once called "the nine million cow dairy" and lower prices for those that take us beyond that level.

As I think of it, the idea of a two-tier price system is hardly new. Almost every cooperative I know of already has one. They pay different prices to different sized farms, usually rewarding the larger farms at the expense of the smaller ones. This encourages larger farms and more production, which in turn makes our job of balancing supply and demand all the more difficult.

What if we had these two prices: one for milk from the nine million cow dairy, and one for milk in excess of that amount? Generally speaking, this could be accomplished by first acting together to negotiate a fair price for the milk from the nine million cow dairy. The milk that remained would be used by cooperative processors. Since those cooperative processors would have to use all of the remaining milk, what they could pay for that milk would depend on how much excess milk was on the market.

Let me be very clear on this--I have no interest in putting any processor, private or cooperative, out of business. There are few enough buyers as it is! But I want the powerful processors to have every incentive to pass costs UP to the retailers and not DOWN to the farmers in the form of lower milk prices. I think the system I am proposing would move us in that direction.

Now, the biggest question of all: who will do this? It will have to be an agency that represents at least all of the milk now in cooperative control. It will, to borrow a phrase, involve Cooperatives Working Together. What we might think of as "CWT Phase II" will do for milk pricing what "CWT Phase I" did for managing milk supply. But it will do it in a different way. It will involve a marketing agency in common among all dairy cooperatives that is focused on one thing: getting the best raw milk price for all of the nation’s dairy producers. I think we can, and should, be working this way and invite all of my fellow dairy leaders to join with us in finding the best way to proceed.

Where does this leave our NFO dairy program? It leaves us right where we are, only better. We will continue to grow and improve. But we will also benefit from a stronger, more focused partnership with dairy farmers that now belong to other cooperatives. That’s why I will soon be contacting the leaders of all of our dairy cooperatives to ask them to join with us in formulating a workable plan to build and use market power. Together, we will find a practical way to level the dairy marketing field.

I thank you for your attention. I look forward to talking more with you about these ideas. And most of all, I look forward to an even more prosperous dairy industry in the United States, one that is led by farmers who get paid what they deserve.

Text of an address given by Bradley L. Rach, National Dairy Director of National Farmers Organization, at the NFO National Convention, Sioux Falls, SD, on January 11, 2006.

National Farmers proposes Nine-Million Cow Dairy marketing agency-in-common
Dairy cooperative leaders invited to partner in raising prices for producers

     SIOUX FALLS, S.D. (Jan. 11, 2006)—At National Farmers Organization’s annual convention in Sioux Falls, S.D., Dairy Marketing Division Director Bradley Rach outlined a vision “to strengthen the dairy farmer’s position when it comes time to put a price on milk.”
     The intent of National Farmers would be to partner with multiple players in today’s milk marketing to maximize prices and market leverage. “My goal, and yours, too, I hope, is to work even more closely with other dairy cooperatives as time goes on….” Rach emphasized.
     So, for the benefit of dairy producers and all of their marketers - cooperatives and National Farmers included - Rach suggested a two-tier pricing system. The idea stems from an initiative suggested by Dr. Richard Levins, a Minnesota agricultural economist. Levins coined a term, the nine-million cow dairy, referencing the size of the nation’s dairy herd. (Read the text of his Nine-Million Cow Dairy paper at www.apec.umn.edu/faculty/dlevins/NineMillionCow.pdf.)
     “What if we had these two prices: one for milk from the nine-million cow dairy, and one for milk in excess of that amount?” Rach asked. “Generally speaking, this could be accomplished by first acting together to negotiate a fair price for the milk from the nine-million cow dairy. The milk that remained would be used by cooperative processors. Since those cooperative processors would have to use all of the remaining milk, what they could pay for that milk would depend on how much excess milk was on the market.”
     “A recent survey by Hoard’s Dairyman (October 10, 2005) showed that only 50 cooperatives handled 82 percent of the nation’s milk.
     “No single buyer or retailer has a market share even close to that large. Such a large percentage of the market represents potential for considerable market power,” Rach told the audience of dairy producers from across the nation. That is market power the dairy director urged producers and dairy cooperative leaders to leverage to the fullest. Because, even though dairy cooperatives are getting bigger by the day, their clout as processors is giving way to that held by giant corporations.
     “What we have, then, is a situation that doesn’t make as much economic sense as it did decades ago,” Rach said.
     The most recent USDA survey of dairy cooperatives, addressing their operations in 2002, found cooperatives processed or manufactured just 38 percent of the milk in the plants they operated.
     When milk prices are low, only about one-third of the low-priced milk benefits members by raising dairy cooperative processing profits. The other two-thirds benefits private processors who report to shareholders, rather than farm producers. “On the other hand, higher milk prices benefit all dairy producers in a very direct way,” Rach said.
     “…. I want the powerful processors to have every incentive to pass costs up to the retailers, and not down to the farmers in the form of lower milk prices,” Rach emphasized. “It is time that we paid much more serious attention to what can be done with an 82 percent market share. It is time we looked to market share as our real strength and began pricing milk at the farm gate.”
     “The more dairy cooperatives function as suppliers, rather than processors, the more they will measure benefits to members in higher farm-level milk prices,” Rach emphasized. The National Farmers goal is success for all parties, including buyers and processors, which are already too few.
     CWT, the milk supply management program, has shown dairy producers what can happen when large numbers of farmers work together in the market place to influence price, Rach pointed out.
     “What we might think of as “CWT Phase II” will do for milk pricing what “CWT Phase I” did for managing milk supply,” Rach said. “But it will do it in a different way. It will involve a marketing agency-in-common among all dairy cooperatives that is focused on one thing: getting the best raw milk price for all of the nation’s dairy producers. I think we can, and should be, working this way, and we invite all of our fellow dairy leaders to join with us in finding the best way to proceed.”
     For the complete text of Rach’s address, see www.nfo.org.
Editor’s Note: Please feel free to use this release as an independent article, or as a guest editorial on your opinion pages.

First day of National Farmers ag marketing convention features U.S. Senator, farm leaders

     SIOUX FALLS, S.D. (Jan. 11, 2006)—Engaging National Farmers Organization producers from the Midwest to the coasts, U.S. Senator Tim Johnson, D-S.D., on the first day of National Farmers’ annual convention, echoed the organization’s position regarding COOL, highlighting recent legislation for accurate meat-grade labels.
     And National Farmers President Paul Olson, Taylor, Wis., reached out to other farm groups and encouraged continued partnering in regional marketing groups. The presentations highlighted a week focused on improving farmers’ prices and profits in their grain, livestock and dairy operations throughout the USA. The National Farmers national convention is happening in Sioux Falls this week, at the Sioux Falls Sheraton and Convention Center.
     Tuesday evening the South Dakota senator addressed an issue National Farmers has long supported, the right for consumers to know where their food comes from. “I’ve offered legislation, The Truth in Quality Grading Act,” the U.S. Senator said. Seen as an initial step toward full COOL implementation, Johnson said he believes consumers and producers would benefit from truth in meat-grade labeling. He is co-sponsoring the legislation with U.S. Senators Byron Dorgan and Kent Conrad, both North Dakota Democrats.
     Although all meat in stores may be grade-labeled with a USDA category such as choice, select or prime, that doesn’t mean the livestock was raised within the U.S. borders. Johnson co-sponsored a bill that would prevent imported meat from reaping the marketing benefits of the quality grading system. The legislation was introduced in November. Johnson cited the statistic that says 84 percent of American consumers want to know whether or not the food they purchase is U.S.-produced.
     A friend of National Farmers, Johnson noted positive attitudes internationally for independent agriculture production. “Some countries recognize that keeping a fine network of family agricultural producers is not just a good thing to do, but an essential thing to do for national security,” he explained.
     “I want to thank the NFO for your guidance and leadership and for your insights on so many aspects of American agriculture,” Johnson emphasized. “You’ve been a wonderful resource to my staff, to myself as we go through all of these things.” The U.S. Senator shared his appreciation for National Farmers’ leadership, involvement and energy in the agricultural marketing and policy sector.
     In his President’s Address to the National Farmers convention, also Tuesday evening, Paul Olson encouraged positive relationships with other farm groups, with effective marketing partnerships already in place. The Dakota Marketing Coalition includes five other groups, and has resulted I higher grain price returns for participating producers. Those groups are Farm Bureau, Farmers Union, American Corn Growers Association, Corn Utilization Council and South Dakota Soybean Association. Olson advised leadership to expand those efforts, encouraging a growth mode going into areas needing National Farmers’ marketing services.
     The organization president encouraged producers and the group as a whole to remain future-focused, using every available tool to protect their farms and enhance their bottom lines. Olson also said National Farmers would continue teaching young farmers about marketing, enabling them to secure a solid future in family agriculture.
     And he emphasized that National Farmers would continue to fine tune current marketing programs. The organization offers six main marketing and risk management program, plus additional services in dairy, grain and livestock marketing. It also offers a Farm Financial Services program, giving producers the edge in areas of financing, farm management, and estate and farm transition/succession planning. Olson also noted the positive financial footing of the organization.
     Tuesday afternoon, National Farmers Vice President, Leonard Vandenburg, Ripon, Calif., shared an inspirational message regarding the positive focus of the organization.
     “We’ve always stood for the common good,” said Vandenburg. “The National Farmers Organization and the programs we have for the common good are the right thing.”
     “National Farmers…It’s for the large producers,” he said. “It’s for the medium producers and it’s for the small producers. It’s for all producers.”
     Tuesday’s events also included agricultural policy resolution committee meetings, an address from Gene Paul, Delavan, Minn., the organization’s ag policy analyst, and Mike Stumo from the Organization for Competitive Markets.

Ag economists’ new book shows market power drives profit

     SIOUX FALLS-S.D. (Jan. 10, 2006)—Want to learn how producers can make more money on their farms in an easy, 60-page read?
     In his book being introduced at National Farmers Organization National Convention, happening Jan. 9-12, in Sioux Falls S.D., a Minnesota farm economist spells out how farmers increase their bottom lines in his book, Market Power for Farmers – What It Is, How to Get It, How to Use It.
     Dr. Richard Levins, professor emeritus at University of Minnesota, Minneapolis, in his book, details four examples of agricultural marketing groups that have helped producers earn higher returns. Levins’ book includes case studies of CWT, state bargaining groups, OFARM and National Farmers Organization. The results are illustrated with the author’s use of tables, comparison bar graphs and well-explained economic principles.
     All producers are receiving the book when they register at the National Farmers National Convention, and the book is proving to strike a chord with many producers. “Producers here at National Farmers know how well gaining market power works, because they reap the benefits of marketing together through all the marketing and risk management programs of National Farmers,” said President Paul Olson, Taylor, Wis.
     “They have been reaping the financial rewards of price negotiation and market power throughout the decades we’ve offered such programs. Dr. Levins’ book provides the hard, academic evidence of what they know from running their farms.”
     Market Power for Farmers was published by the Institute for Rural America and is available by calling the Institute at (800) 858-6636.