NFO-188 (AV10688): American Marketing System

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 area and others interested in having American agriculture receive cost of production plus a reasonable profit the American farmers and ranchers are building a brighter future for agriculture through the national farmers organization the organization that awoke America and represents the leadership of Agriculture u.s. farm report now presents American Marketing System with Paul Schmucker Indiana director of the national farmers organization from Nappanee Indiana here now is Paul Schmucker presenting at Corning Iowa headquarters of the national farmers organization American Marketing System ladies and gentlemen today I'd like to talk to you about the farm problem almost everybody in America is aware of a farm problem I don't think you could pull anybody off of the street at random that and asked him about the farm problem but what they would be aware of a farm problem what the problem is may vary in people's minds I have also an opinion of the farm problem what it is and what it takes or what the solution to the farm problem is many people talk about the farm problem it's not too many people really feel that there is a- an easy good solid solution to the farm problem and in doing this I'd like to show you two comparisons two distinct different market systems that are in operation in America most people feel that the farm problem is surplus in other words the American farmer has simply out produced himself and caused his own problems through his own efficiency by producing more food than the American people can consume in the process due to his market system he receives a lower and lower priced for the products that he risked that he produces well over the past 15 years almost every farm release whether it was in a daily newspaper or there was in a farm magazine or whether it was in a radio release the one word that I remember most is the word surplus surplus we hear it over and over and over again once in a while I feel maybe this word was pushed that the American farmer intentionally to get him to feel that here is that he is hopeless in his market system to help himself I'd like to show you today how to eliminate farm surpluses this is I would like to do it on the blackboard and in doing this again I will be comparing two distinct market systems in operation in America first of all I'd like to talk about the manufacturers market system the manufacturer the man that buys screws bolts rubber steel and the things that he uses to build the product and then starts to market with it so if you can read my writing I'll put down here at the bottom the word abbreviated manufacturer he builds that product and after he has it built he pays for Freight he pays for labor and after he has all his costs added up the product is built he then needs to reach the consumer and in the process of reaching that consumer he starts to market through a market system composed of various people we have the dealer we have the wholesaler we have the distributor we have a lot of other people in that market system each one of these people are operating with what is commonly known as a markup a protected markup and as he goes to market each one of these people is quoted a price and at the very top we have what I call a consumer retail price again abbreviated everything we buy in America today has a consumer retail price on it it doesn't make any difference what it is whether it's a piece of chalk a blackboard or a farm tractor or a combine or an automobile and you can go on and on and on and on each one of these items does have a consumer retail price connected with it this is how it's marketed and in this market system this manufacturer the man that built the product at that point controls his market he tells the people in his market system the various steps what procedure how it will be sold what the price level is what's the level or how much floor space he uses how much window display he uses on the way to market he says you can't mix my product with my competitor's product in certain instances consequently he controls his market system he tells the people in the market system how it will be sold and he always ends up with a consumer retail price this is normal we expect this everybody expects this farmers expect this they do business this way and then I go on the other side of the board and I will show you what kind of a market system the farmer uses it's a little different again food here at the top of the board the product the American farmer produces has what I call a consumer retail price the box of cornflakes the bottle of milk the pound the meat anything that is labeled food again has a consumer retail price and on the bottom here we have the farmer he creates a product at least that's the way I like to look at it he's the most important man in America as far as professions go that again is an opinion he puts fertilizer seed into the soil and he depends on nature to help create the most important product in America bar none no exceptions sure the other people are important sure we need refrigerators we need automobiles and we need farm tractors we need a lot of things but most of all we need the farmer the man that produces the food that everybody needs every day no exception so he creates this product the most important and he again has a market system and he again starts the market with his product and when he gets to the consumer retail price he again has a dealer in his market system we usually like to think of the dealer as being the chain store because the chain store handles most of the retail retailing of the farmers food most of it goes through the chain store he is the farmers dealer we again go all the way up here we again have the arrow here going to the consumer retail price of food we again have the market system same is on the other side we again have the wholesaler we again have the distributor and we again have the dealer we could put more people into that system but this is enough to bring out the story but here you see the arrows that running the other way we again have these people in here the wholesaler possibly could be the man that the farmer sells his grain to the first step or where he unloads his livestock the local buying station the local sale barn almost every place where he unloads it first this is the wholesaler again there's a markup connected with it and again there's a protection for the people within the market system just like this one the same kind of a markup it may vary maybe the local elevator has six to ten cents per bushel as a markup the very same same thing is over here except you notice the arrows going the other way why because of the way the farmer sells he doesn't sell like this man he has no voice in his market system he has nothing to say about grading or condition of sale there for somebody else someplace in this area here the points that go into the market system originate backward from this one the farmer at this point accepts the fact that these people are in his system they should be there the same as over here he they should be there they should have a markup or they won't be in business very long so therefore they're in there it's accepted why doesn't the farmer price his product how does he sell what are the terms that he uses I'm well aware of what the terms are and if you're acquainted with other farm producers you also are aware of what they are for example how much are you paying see the arrows going this way how much are you paying what's the price today what will you give me this type of thing this is how the farmer goes to market he doesn't really sell he disposes of his product by saying what do you give me a beggars market with the arrows running down instead of up with the most important product in America why is this necessary why does this come about let's talk about the answer to these questions why this why that why does the farmer sell different than anybody else when he has the most important product in the world no exception in order to do that again it's only because this is the way it has always been people are reluctant to change this brings me to the number one goal of NFO and that is for farmers as well as manufacturers to be able to set a price to be able to have a voice in the market system of the product that he produced too so I will abbreviate here again in real short sentence the word charge and put this dollar sign here to promote charging a price for the product that he produces why can't he charge you notice here at this point the consumer retail price is on at this point it is not the farmer again is told that he can't charge a price because he has too much he is operating with this market system he's operating with what is called the supply and demand market system why is it then that with the very same supply that the farmer produces these people here are able to charge a price with the very same demand that the farmer works with where is the difference why should there be a difference these people will not sell like the farmer sells although they sell all the farmer produce these people cannot seemingly sell all that they produce the farmer has always been able to sell every bushel every quart every pound that he produced we have sold at all we have disposed of all of it it all went to market yes surplus they said so but they priced it here they priced it here very unusual they told us we had too much if we had too much how could they resell it I keep bringing this point back because this seems to be where the whole problem is hinging on to be able to charge a price like these people do and to have a voice in this market system here to be able to do that there are three things that need to be put into a system into a market system to permit this to be possible to charge a price for food from the farm and be a businessman like to manufacture I'm actually proud to be a farmer because I do produce a very important product until the day I sell I'm not so proud then because then I have to say what will you give me for my product there were my sweat my toil my labor my investment all that I have is in that commodity it may even have taken as much as two years to produce before it goes to market I have to say or what will you give me and yet these same people use the same supply with the same demand and they price it this is the number one goal of national farmers organization to maneuver the farmer into a position where he can charge a price like everybody else to do this first of all we must organize organize bringing farmers together bringing production together into a pool or buy the buyers of farm commodities can get enough production without coming to the pool for a supply whenever that pool is big enough at that point the farmer will also be able to charge a price these people charge they also have what I call an oversupply I use as an example shoes for no reason really except it comes to my mind I have never been in a shoe factory but I can imagine I would see shoes all over that factory lots of shoes and when I get back at that factory I would a guess I would see a warehouse probably half maybe 2/3 full of shoes lots of shoes if they would quit building him in the factory today maybe they could run for two or three months without replenishing that supply shoes all over the place and then this starts to market from the warehouse and I get in the shoe store and there is where I really see shoes all over on both sides and down in the middle is all I see shoes shoes shoes shoes shoes yet they are able to charge a ply- a price even though they have more than they can sell today again the question comes how is it done where is the difference is it possible that they have been able to charge a price because they are at this point organized I recall a lots of names of organizations Manufacturers Association Bankers Association Medical Association veterinary association Dental Association on and on and on and now I find that everybody has organized the farmer is told he has surplus the farmers told he should not organize because he may lose freedom and yet who is telling the farmer this it normally is not farmers it seems to be coming from people somewhere in this market system up to here or maybe over here and back down someplace in this area is where this is coming from do not organize do not lose your freedom and yet these people have all organized I like to think of the attorney and again I don't know much about this profession but I'm told that their rate runs something from sixteen to twenty dollars per hour for their services because they are organized had they really lost freedom I ask you the same product that I produce let's take a specialty crop popcorn for an example the popcorn that I may produce on my farm that possibly brings 5 cents a pound after it is sent to market through these channels here after it is processed after it is popped and put in the sack and sold out that may be 10 cents per bag this turns out to be two thousand dollars per ton the same product the same supply that I was only able to get 100 dollars per ton does it pay to organize did the popcorn processors lose freedom when they organized it doesn't appear that way to me so this is the thing that the farmer at this point must turn to organization collective bargaining charging a price the only way he can do this is if he first of all puts into that organization builds into it some mechanics to make this possible and feasible number one he has to work with all commodities we are in national farmers organization working with all commodities we are starting with the major commodities dairy grain and meat realizing that you cannot put a price tag on farm commodities on one commodity only this is a formula or the solution to the farm problem that I'm giving you now you have to include all commodities because if one commodity starts down and begins to show a loss on the farm the farmers at that point begin to turn to another commodity raising the supply and at that point wrecking the market jumping from one to the other one farmer competing with another one the peanut farmer in the South is competing with the soybean farmer in the Midwest the cotton farmers at the back of farmers a specialty crop farmer they are all in competition and in order to be able to charge a price the goal of NFO you have to include all commodities bringing them up in relative balance so that you do not have one crop out of balance with the rest at that point you can raise your price level be able to charge have a voice in the condition of sale and put the price tag on right the contract put it in there like these people over here this is what you need to do all commodities point number two that needs to be in this formula for success point number two is this you have to go nationwide we realize that in order to be successful in charging a price for food from the farm you can't do it in one County in one state or in one area we know that this milk can be shipped from Wisconsin Minnesota into Indiana Ohio or even as far away as the coast we know this but what happens what has a dairy farmer been told over the past number of years he's been told that you can't raise the price of milk in Michigan because of the cheap Wisconsin Minnesota milk but what happens when you organize bring into one large pool the Minnesota Wisconsin New York Michigan Indiana Ohio and the rest of the the dairy farmers in the nation bring them all together into one common cause to be able to charge a price you have to go nationwide I understand this this is NFO we are now in 40 one of the nation's States organized prepared ready this is the formula for success this is the solution to the farm problem it's only a matter of whether farmers will at this point adopt this solution and make it work it's a program that they can get at their problem sure it won't happen by pushing a button pulling a chain or waiting for somebody to do it but it's a way for you mr. farmer to solve or at least get at your own problem you can't solve it this way because you can't get at your problem you have no voice in your market but when you go nationwide with all commodities this gives you an opportunity through an organization to meet your problem the same as each people do you see I mentioned shoes a while back they do have lots of shoes but they don't have a surplus because a heavy consumer retail price and it turns into an inventory but the farmer has no inventory he only has under this system here a surplus because he hasn't been able to put on the kitchen table everything he produced today if he did the wheat crop the soybean crop if he were able to sell it all tomorrow and get it on the kitchen table the day after harvest what would you do the day following the week following and so on so you have to have a problem of nationwide and to turn the system around and at that point the farmer will enjoy an inventory the same as these people over here this is an absolute month inventory sure the crop that is in my field now back home is going to be needed at a later date it should be an inventory the men and I price it it will be an inventory the local elevator will have an inventory the commercial storage is a commercial elevator the large terminal warehouses will be full of inventory needed to come back in at a little later date and inventory and the US government their consumer everybody should be concerned about an inventory in the USA and the USA the government of the United States of America will have to buy a supply at this point and label it Reserve this takes care of all the supply that we produce on the farm there will be none left for surplus it will turn into an inventory and this is a solution if we do end up with a little more supply under this program here then we are able to sell the American people we need mechanics to take care of it this brings me to point number three surplus disposal a way to meet your problem the amount that you cannot sell to the American people you need a way to handle it like these people did you've seen it on Main Street clearance sale surplus disposal getting rid of the old merchandise making room for the new under this system here we can have a set of mechanics to move the amount that we can't move into the American market system we can move it out into a world trade situation if there is no market anyplace in the world to sell the amount that is left over after everybody has had enough to eat then it's when we can go into a giveaway program from run by our own farm organization by farmers themselves giving it to the people that are starving to death we are willing to do this under this set of mechanics and make some friends for today there may be enemies anyplace in the world this is the NFO program this is a solution to the farm problem farmers getting together meeting their problem like the manufacturer has taking a lesson sure we are faced with imports sure we're faced with imitations but so is the manufacturer he meets his problem he's not concerned about import he may be concerned about him but he doesn't lower his price because of imitations or because of imports he doesn't lower his price under the old system we can't meet our problem under the new system we can meet it as far as imitation goes it comes back to this point here they talk about imitation milk where do they get it it still comes from the farm and when you price all commodities you solve that problem if the American consumer would rather buy milk that is produced from soy beans and coconut oil or other items this is okay providing you price all commodity this is again the formula the solution to the farm problem once in a while it may be necessary in order to church to charge a price in order to turn this arrow around to go into what we call a holding action all this really is is charging a price emptying the pipeline's between the farmer and the processor to bring him to the bargaining table and turn the arrows around at this time mr. farmer I ask you whose side are you on are you willing to help turn the arrows around as you become a member of national farmers organizations and place your production into the pool that says let's charge a price as you do this you become a part of the solution if you don't you seem to be a part of the problem because our problem is the way we sell the solution is turning the arrows around and taking charge of our markets and acting like a businessman patterned after the manufacturer us farm report has featured American Marketing System with Paul smut ger Indiana director the national farmers organization from Napa News Indiana members of the national farmers organization invite you to tune in again next week at the same time for more facts on Agriculture and Rural America which is a gear wheel in our economy that produces the majority of our nation's new wealth the farm income pattern sets the nation's prosperity and the national farmers organization represents new thinking and a new generation of agricultural producers