NFO 145 (AV10643): Marketing Through the NFO

welcome to us farm report a public information program brought to you in the interest of agriculture rural business and the well-being of our nation by members of the national farmers organization in this local area the national farmers organization takes pride in inventing a marketing system to meet the needs of the 20th century collective bargaining for agriculture NFO represents new thinking in a new generation of farmers u.s. farm report presents marketing through the NFO today's host and moderator mr. ed Shima of Morango this is Ed Shima reporting for us farm report the nation's most widely viewed farm TV program today on today's u.s. farm report we have two guests from first of all Willis Rowell from Eastern Iowa Edgewood Willis is a member of the National Board objections of the national farmers organization and has a 400 acre general farming set up in Clayton County also with us is John Engels from Rockford Iowa in Northern Iowa and John is a past member of the National Board of Directors and now works closely with the grain department of the national farmers organization today's pro- oon today's program we'd like to go primarily into the NFO's of various marketing programs and how you can sell to the NFO and the benefits of it I think that some of you people in the audience may wonder why the NFO what's the reason for it and so on and I think to sob summarize this real briefly is I'd like to read you a quote or two from the United States House of Representatives printed recently and it's it says that while the study published here is basic statistics and facts of 1966 and prior years this forward must take note and and of and gives emphasis to the distressing distressing development in agriculture occurring in the first month of 1967 some of these developments are from the from August of 1966 to April of 1967 agricultural prices suffered their sharpest decline since the late 1920s and early 1930s prices received by farmers in the marketplaces dropped to the lowest level in 33 years in relation to the rest of the economy these prices declined 10% between August of 1966 and April of 1967 although there was some recovery in May and June the parity ratio dipped in April to 72 percent the lowest for any month since 1934 and I think that vividly illustrates why the NS whole you cannot have a situation like this continued in agriculture over a long period of time without seriously damaging and also not only agriculture but the economy of the nation as a whole we the NFO some time ago had a large meeting at Des Moines Iowa a meeting for action and at this meeting where several loved things that were decided upon and I think there are three important points that were brought out at this meeting those three points was the adoption of a policy of no price no production the second major point was that NFO would build for an all-out holding action on all commodities and we'll go into more detail on this and a little bit and then the third main point is that at this meeting was adopted a NFO grain bank program and we'll go into some detail on these various programs in just a little bit and at this point I'd like to ask Willis Rowell what his impression of the Des Moines meeting was well of course had the statistics you quoted a few minutes ago were the motivating force when the Board of Directors decided to have this meeting fraction to mid represented historic landmark in agriculture in this United States number one the fact that there were thirty five thousand four hundred farmers from a twenty-eight state area they were willing to travel to Des Moines Iowa at their own expense to spend the day to help the Board of Directors set up policy future policy for the organization a sense of direction for the organization to me this was historic in itself also this great number of people would certainly prove the white acceptance of the NFO collective bargaining program the determination that was showed by these people was certainly gratifying to me as a member of the Board of Directors when they adopted the policy of no price no production to me it means just exactly that this is exactly what these people proposed they have authorized the National Board of Directors to take whatever steps are necessary to prepare for an all-out holding action on all commodities and they are determined enough in this effort to go as far as authorizing us and our membership to close down the in total agricultural plant in the United States if this is necessary to get a fair price going to John Engels why would it be necessary to do this on all commodities at one time John well and I think that without question that we must always remember in farm commodities that one commodity the price on one commodity hinges on another and naturally because of this you cannot bring the price up in one commodity without also bringing it up into another commodity otherwise you will run into many problems in the commodity in which the price was raised going on then to the NFO Grain Bank John what would be involved here with just briefly well the NFO grain bank was conceived I believe it germinated actually almost a year ago because of some of the things that we learned in our imposition sales program NFO grain bank is merely in operation by which the NFO members will sign up at least a very minimum of 50 percent of their total saleable grain into a grain bank which will not move out of that bank for less than a dollar and a half a bushel on corn and similar prices on soybeans and wheat now going on a little farther well Willis along with these various programs that NFO has is the fact that farmers need to sell together in order to make this work now we we hear very supposedly so on and why is it so necessary that we sell together well of course the very heart of collective bargaining is cooperation it is pulling your production together as individual farmers bargaining together selling together enhancing the price of your product and putting yourself in a position where you can put your own price tag on your product there's a group I think in explaining it a little farther let's use the corn as an example let's say that we put corn in a green bank and that moment it rose to got to a dollar and a half a bushel and let's say that I as an individual sold my corn then just as an individual solar almost immediately then that cloud will say well sure corn is only worth the dollar 45 and so you sell yours the next day a dollar 45 is an example and then the next day John is going to sell his and lo and behold the markets going down to a dollar 40 and so I think the key point on this is that we not only hold it together but we sell it together and that we all sell together at one time the dollar 50 and not me a dollar fifty one day and immediately drive the price down for you this would tell the next day now going on the NFO has a marketing program for all commodities all major commodities and I suppose we should probably except fiber products from this we don't currently have a program for fiber products which would be primarily cotton but this can be developed at the point that the cotton or fiber people would be interested in a program now as far as the selling through the NFO the NFO is proposing and attempting to challenge or change the status quo in farm marketing and this certainly as it been brought up means selling together holding together and selling together and not only selling together but going through a contract now in order to bring ourselves to the point where would be really effective we had some various programs that we are using and have been real effective and we need further participation to make them work even better and we'll go into the details of this and a little bit now first of all would be on life talking as the initials marketing arrangements to sell your life stock through will go into a little more detail on this and a little bit then second would be the on dairy products would be the NFO's milk lockup programs and then on grain would be the NFO Green Bank which John has gone into a little bit of detail on and we're going to a little bit more in a little bit here now backing up to the livestock marketing arrangements Willis would you like to go into some of the details of this and what's involved yes Ed we decided that to implement our bargaining power for our members somehow we had to devise a structure that would disrupt the normal marketing of animals through the normal channels this in turn would create competition among the buyers because at this point they wouldn't be as sure their normal supply channels as they had been in the past so we set up our NFO meat marketing arrangements we call them they have been developing over the past two to two and a half years to the point or now we have a hundred and eighty delivery points now these are either collection points or their direct plant delivery we're expanding these constantly just this past week I worked in 11 counties in northeast Iowa to establish four new collection points where our members can sell their livestock on given days it has gotten to be a large operation to handle and oversee 180 delivery planes all over the Midwest we're moving moving huge amounts of livestock we certainly feel sure ed that this is has enhanced our price level to a great degree now as an individual farmer first of all you have to join NFO before you sell through the marketing range that's right very definite why is this this is a legal point it just is not allowable for the NFO as a service organization to bargain for the products of non-members this is written in the law then as far as this member is concerned how does how did you go about selling it who did the contact am this sort of thing first we set up a collection point roughly a 20-mile radius this is urea we we plan to cover with our point this is the area that ours what members are invited to sell their livestock through a given point in about a 20 mile radius we have our local elected County Meath bargaining committees that handle the program so any of our members that prefer to sell through these points simply call the county chairman of his County or the chairman of the county meat bargaining committee that's all taken care of now what are some of the benefits been now will itself selling through the marketing arrangements and you have a chart here that maybe would Joe we could have the camera focus on it it would explain this a little bit better would you want to explain that then Willis this chart we also be glad to certainly all farmers have benefited from the NFO marketing arrangement now if you will note this chart the supply line on the bottom indicates the supply of hogs from January 1961 through July about the middle of July 1967 and if you will notice this supply line is relatively stable of course we have our seasonal dips and our seasonal rises in supply but overall it's quite a stable picture on the supply line the top line indicates a price line received for hogs now these are not figures that were put together at the NFO office in Corning these are USDA figures it covers the same period of time January 1961 to July 1967 and you'll note that the top or the price line follows to a great degree the supply line on the bottom until we reach a point in the middle of February of 1965 for the arrow point this is what NFO marketing arrangements came into being on a small scale you will note the price line goes up sharply very sharply and it stays much higher at from that point on to the end of the chart then the supply lines should indicate if supply and demand were actually the total influence on the price now we have delved real deep into this we have found no other factor involved in the price of these hogs than the NFO marketing arrangements that created this sharp rise in prices well certainly the supply claims the bottom line stayed relatively stable and in the price did change in the NFO marketing range was the only difference is yes my chart would indicate that it changed from four to five dollars 100 weight this certainly should be ample proof to any and all farmers that the initial marketing arrangements on life that can have an effect on the prices and for this reason now it's a tried and proven program we certainly encourage all of the farmers to market join the NFO and market their life talk to the NFO marketing arrangements now with 180 collection points Willis certainly no one would have to go out of their way very much deliver hogs their lifestyle in to these points right this is right the total structure is designed so that our members none of them should have to travel more than 20 or 25 miles we draw a circle around the point about a 20-mile radius and of course this would be as the crow flies but by Road it might even extend up to 30 mile but certainly it still is a convenient market I know in my area that we have two points that we can go to one at West Branch Iowa and one at Belle Plaine Iowa both of these are within nice driving distance with the trucker pick up either one and now going on to the NFO's milk program Willis would you elaborate on this somewhat now I know that the milk program isn't quite as well-developed as our meat program but we're working on it and would you explain the details on this we call it the lockup in our dairy program it was developed shortly after the major holding action was over last spring it amounts to the farmer selling his milk to a designated in a full plant the plant manufacturing this raw milk into one of the various products cheese butter or powder and then selling this product the finished product to the commodity Credit Corporation where it is stored and I've I think I'm right on this it cannot be released to the market again at less than a hundred and ten percent of the the cost when it was put in this isolates this much milk product from the market and certainly as the program builds and the supply going into the program becomes greater that it can been influenced and will be an influence on the price of milk now as far as an individual farmer that would be milking how would he go about arranging for this Willis well of course first this again is confined to NFO members it is an NFO designed program but then of course you must sell through a plant that has made these arrangements with the national farmers organization and has equipment to meet the quality specifications the packaging specifications are the commodity Credit Corporation and then as you would get more and more participation in this program what would be the general overall effect but certainly should have effect the price of dairy products this in turn will affect the price of raw milk this amount is isolated from the market then going back to the holding action that the NFO had time ago and milk what was some of the results our effect of this in Lois we do know of course there was a planned decrease in the price of milk in the federal order areas it would have amount- would have amounted to about 40 cents a hundredweight this was prevented federal ordered hearings were called ran rapid-fire very fast after the conclusion of the holding action and and great discontent of the dairy farmers this is a severe financial bind the dairy farmers are in federal order hearing for call real fast after the holding action the 40 cent price drop that was in the planning was eliminated through the federal order hearings there was about a 27 cent a hundred increase in the price of class one milk this were the immediate effects of the holding action and of course lockup dairy program is more of a long-range effect I think well it's when you look at the not only the dairy program but also the market Arrangements on life stopped it well a lot of people say well you cannot hold or this is a problem and so on but I think probably in looking at the thing realistically farmers are gonna have to be like good businessmen and every good businessman holds every day that he has anything to sell and what the marketing range was doing the lock-up program and dairy and so on is to put you in a position where you're you're actually selling your products but you're still strengthening your bargaining power because if you sell them together as a group then the processors must deal with you it's a group and certainly if you have a volume of several thousand here to hog today you'd have a lot more bargaining power than I'd had with a couple three truckloads today the case might be and this is true all the way through the NFO program of course now going on to the NFO rain bank which is a relatively new program for the NFO and I at this time we don't have quite all the details on it but I'm sure the time this program is shown in your area that probably the details will be out get them from your NFO grain committee in your county and the other officers and members and so on probably now going to John Engels would you explain what some of the proposals are in terms of this and what's involved John well Ed I would like to just briefly here going to the background of our grain programs and probably elaborate somewhat on the reasons why this has taken such a or rather has received such wonderful acceptance among our members and among farmers in general I think if we'll all think back to about one year ago we had all kinds of Statistics government reports and private reports and everyone was stating of something to the effect that we were now approaching the threshold of a golden era in agriculture the farmer in the past year has witnessed a great decrease in the price of grain due to the fact primarily that he has agreed to increase production along with the thinking and the lines and guidelines set out by the United States Department of Agriculture I think that farmers have a great sense of patriotic duty both for their own country and also for human welfare throughout the world and when they were encouraged to increase their production they of course did this and were quite well satisfied to help out but this is boomerang so to speak to to the degree that this actual small amount of increase that they did plant has depressed their prices far beyond what we would term to be a reasonable drop as a result of this there has been great concern in the Midwest about grain prices in general particularly in wheat and of course somewhat in soybeans and and principally also in corn now the grain bank program was derived from the fact that we had learned in our imposition grain sales through the year that and of course these are just proof that we have picked up of some of the things we always did surmise or at least had a good indication was true and that is that anyone who controls a large quantity of grain in this nation can practically by the by the direction that this grain moves controlled to a great degree the price of this grain now in the past we have seen two dominating factors and of course there are several factors in the grain market but we've seen two dominating factors in the market one was the reserve that the federal government had and one and the other of course was the amount of grain that the large grain companies were handling this affected the price and influence the price to a great degree and from this we learned or at least it was confirmed that if farmers ever wanted a price grain that they had to have a large quantity of grain that would move in a one direction as farmers wished it to move and then of course we could become effective in price and this is the seed or the germ that brought about the the imposition grain sales and the grain bank program now we are of course as I stated earlier we are going to ask all farmers and specifically NFO members to sign up at least 50% of their grain saleable grain in the grain bank and of course that that cannot move into the normal market channels with a dollar and a half we will use the facilities and the leads that we have developed in the past year to export this and I might add very firmly here that NFO has the leads has the contacts and has the ability to export green and they've also had a considerable amount of experience in exporting grain up to this point right yeah this is true we've worked very closely with some of the grain people in the grain trade and also our own man Sam Hoffmeyer in Kansas City now Willis as far as the grain program is concerned what's the what would this have on the overall picture of Agriculture if you worked on grain and did something in terms of a better price for grain of course we've always known all our [unclear] those of us who farm that grain prices do influence the price of all other products because after all it is a basic commodity of commodity it's fundamental so as we look back over the 52 year period of the livestock industry we find this if people are wondering what they might expect next year for hog prices or cattle prices this might give you some guideline if you want to use 52 year averages then about 13 times the price of a bushel of corn it will be the price of hogs about 18 times the price of one bushel of corn will be the price of fed cattle so if anyone is curious about it if you believe in 52 year averages this might indicate to the farmers what to expect in the livestock industry with grain selling at what it is right now well certainly that indicates that something should be done about the rain pricing Sam now when it's John going back to John again John Engels there's- this grain is put into the Green Bank how would you understand that now how would this be handled what would the farmer need to do well of course the farmer first of all would have to be an NFO member to participate in this and then of course he will sign this grain on a grain sales agreement in which the grain will actually be tied up under an NFO sale the purpose of all of our programs and I'd like to point this out very very emphatically the purpose of all programs in NFO is to establish the contracts at the marketplace which will stabilize prices in the future it doesn't do us any good just to hold for a little while and temporarily take the price rises that may occur the thing that farmers need to do is establish their power their bargaining power by selling together and then of course in the ultimate end arriving at contracts which will stabilize a mark conditions and prices of their products well it real briefly explained could you explain what these contracts would involve in a general way that John mentioned of course all contracts are subject to the approval of both parties involved the seller and the buyer an NFO contract would be no different it would involve moving a certain amount of production a given amount of a given quality to a given market and at this point the farmers would be the controlling factor in the price they would put their own price on the product about simply as you can state of it well as our time is drawing to a close and do you have a few closing comments to make I've noticed since our meeting for action in Des Moines an increased acceptance of the NFO program I've seen a tremendously increased flow of new membership coming into the into the NFO in my 11 County area where I spend most of my time I couldn't help but notice a remark made by the president of United States at his news conference shortly after our meeting and it I quote farmers he said are on the short end of the stick unquote this marked the first time in the history of our country at this news conference that the president came out in favor of collective bargaining for farmers so to me the increased acceptance of the NFO program just since the meeting for action is real heartening yet certainly the NFO is the leader in collective bargaining in agriculture today and I think quoting again from the House Committee on agriculture report it says that the projected net income of Agriculture for 1967 is fifteen and 5/10 billion compared to 17 and 1/10 billion in 1947 while the national income shows an increase of 223 percent farm income is down nine percent and certainly farmers need to reverse this trend of agriculture income going down while the rest goes up and I would urge you that are not yet NFO members to contact your neighbor who is an NFO member and ask him to join the NFO today [music] members of the national farmers organization invites you to tune in again next week for more facts on agriculture and rural America the gear wheel in our economy that produces the majority of our nation's new well the national farmers organization represents new thinking in a new generation of farmers the farm income pattern sets the nation's prosperity tune in again next week at the same time for another edition of us farm report sponsored by members of the national farmers organization in this local area [music]