NFO-207 (AV10709: US Farm Report:The Nation's Dairy Program

U.S. farm report a public information program brought you in 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 received 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 presents the nation's dairy program with Ed Graf director of the NFO dairy commodity department and Rick Avilla very commodity assistant here now is Ed Graf there certainly are some problems that every farmer must recognize especially in the dairy industry today I have a magazine here a leading farm publication that would startle anyone that's interested in the production of dairy products it says butter for sale 12 and 1/4 cent per pound well before an American dairy farmer could produce butter for 12 and 1/4 cents a pound we realized that you had just better quit but this isn't the price that farmers receive regardless of where this butter comes from this is a dumping price I have a chart here that I'd like to have you see and maybe it will make it more understandable why this butter could be priced for 12 and 1/4 cents a pound from a foreign country remember I said the farmer didn't produce it for that price I have a graph here and it says dollar distribution of South Dakota wheat and immediately we may think that maybe wheat is something odd to be talking about on a dairy program but notice that the price of a bushel of wheat in Rotterdam is three dollars and 42 cents per bushel now this means the Miller in Rotterdam will pay three dollars and 42 cents per bushel for wheat whether it's growing in Rotterdam or whether it's shipped there from this country this bushel of wheat happened to be produced in South Dakota and it was shipped to Rotterdam and we have the charges on this wheat it says down here the local grain dealer received five cents for storing it the transportation of the Gulf was 38 cents shipping to Rotterdam was 11 cents and transportation to the warehouse was six cents but there was an import duty of a dollar and fifty-five cents that's the area here more than the South Dakota farmer got for the bushel of wheat this money this import duty was paid into the European Common Market that money paid the farmer in the European Common Market a fair price for the dairy products that he produced and that that he had as a surplus was sent out on the world market the dumping market price the twelve and a quarter cents shall we try to compete on twelve and a quarter cents butter or shall we do something about it we can do something about it first of all the Dairy Farmers of this nation come together through an organization and certainly in the NFO dairy program we have been able to do something about this problem and I think the biggest stride that the American dairy farmer made was when he used the holding action of 1966 because again I'm going to show you exact figures and prices that farmers received prior to that holding action these figures on this chart are from a large Midwestern manufacturing dairy plant and the years are given here 1962 1963 64 and 65 with the price of manufactured milk received by that producer in sixty two of three dollars and forty six cents sixty-three 3.48 cents sixty-four 3.51 cents and in nineteen sixty five three dollars and fifty five cents over those four years you will see that there was a total increase of nine cents per hundred on milk remember the holding action in 1966 that the dairy farmer participated in an increase came about that year of fifty nine cents a hundred to this same producer in 1967 the price increased to four dollars and thirty four cents one hundred an increase of another twenty cents one hundred when this charge was made up we had a 1968 estimated increase of 20 cents one hundred which at the last check was nineteen cents exactly and it says a total increase of ninety nine cents the nineteen cents would have made it ninety eight cents compared to nine cents in the four previous years it means that the program that the NFO has the NFO dairy bargaining program isn't a program that might work it's a program that is working it actually has increased the price almost a dollar a hundred you will hear a lot of people would like to take credit for an increase in the price and some I like to use this term that success has many fathers but failure is an orphan so everybody would like to take it credit for this increase but remember this is when NFO had the holding action and our program now is proving that farmers can price dairy products this is in the manufactured area and Rick I'd like to have you explain a little bit why they have a problem in the class one market pricing milk under the old structure all right thank you very much we've heard different groups talk about the tremendous size of their organizations and what they've been able to accomplish especially in class one milk and I have several examples here on the chart we see the Great Lakes milk Federation which covers about three or four states now maybe five which operates and has a total supply of seven and a half percent of the market P ma a very large group in Chicago about four percent mid-America in in Missouri and Island areas and at about three percent dairyman incorporated now which is merged with Great Lakes which gives about another two and a half percent to this block of production and we see that the block of production the rest of the production that is divided up into very small groups I don't know where you might ship your milk as NFO people or as non-members out in this group but when your coop tells you that they were able to negotiate or get you a price for this ninety nine cents a hundred you can see how divided and aisle unorganized this entire segment of the dairy industry really is now in truly woven in each one of these groups are in fo production and you can see that if we would take and pull all the production together that we then would have enough effect or be able to effect enough of the total supply to be able to effectively price milk whereas any one of these individual groups are still too small people in the industry tell us that it takes in a neighborhood of maybe 20 to 25 percent of the total production in the country to be able to effectively have a tremendous influence or of influence on the price of milk now we in NFO operate over 45 states and so you can see that we can have a much greater effect on being able to price and have an influence on the pricing of milk the present time we depending somewhat upon federal orders to give us a minimum prices and to get our farmers educated is the fact that this is only a minimum price throughout the dairy industry and that premiums can be negotiated above the minimum pricing structure also included but not shown on this's groups in the East which I work with primarily such as Eastern which panels about two and a half billion pounds of milk or in a neighborhood of two and a quarter two and a half percent of the market very large group yet still singly not able to affect enough of the total supply to be able to price it Dairymen's League it also handles about three three billion pounds there in the ECP hood east which is the largest independent bottler in the country and yet not able as within their own group to affect a price increase on their own I have series of meetings set up for these areas in which we'll be doing some further negotiating with with these independent groups to be able to consolidate this entire block of production in the east and to show them what has to be put together in order to price milk we need consolidations and mergers and we need our farmers to be aware of what is happening and what taking place in these consolidations and mergers which I'm sure it'll discuss with some of the later pictures that we have certainly I wanted to go into the little farther Ric but I think that graph makes it easy to see that existing groups just are not large enough and if you compare the volume that they could possibly have and that is the volume that's shown there they will change from time to time but it certainly shows why NFO is the answer because we're talking of 45 states right now at this time and this move by these people putting this block together among themselves is what NFO suggested in 1961 and we are going into that that I'd like to show you on some more of these graphs that we have to follow I'd like to show this graph not to graph the picture you might say here of the United States and if you'll notice down here in the left hand corner it says Associated dairyman designating the yellow section or this middle section on the graph the Great Lakes showing this section here in this color and that's also extended down into Georgian Florida and Carolina and then a northeastern block and by this I'm trying to show a regional marketing structure they are regional structures now NFO has always said that there must be mergers and consolidations and the dairy industry should stop competition among itself so that the farmer was actually suffering and put them in themselves into a position of a marketing agency in common whereby they could compete with the major handlers and be as big as they are and the buyers so they could do something about price well we always think of the majority of the milk being under the co-operative structure which it is so here's another chart I'd like you to look at and you'll see three circles and it says coops on it now really what's the difference three circles where it says coops and the united states map when I speak a regional group remember NFO as rick said is organized in 45 states today I'd like to show you the power in NFO marketing within this structure the regional structure are the three circles and the co-op's I want to draw a circle here and if you can see that you'll see that the circle encompasses part of all three of the other groups in other words NFO has production in all of the regional marketing areas phase two of the dairy program gives an fo the right to bargain for and make sales of the dairy products not in one region but over the entire United States I might say that these circles and this picture of the United States is outdated already because NFO is organized in California and Washington and Oregon Idaho all these states where there are is dairy production and this production is being brought together into Phase two of the dairy program and remember this that production brought together all over the United States is the power that NFO has in making sales bargaining for the sales of that production so this is why it's so necessary for farmers to block their production together and then put it into this phase two of the dairy program or step two of the dairy program this is happening in the West the Midwest and the East and Rick I know you're familiar with some of the meetings that have been held in the East some of the meetings that have been held or they've talked mergers and consolidations and many of these are happening maybe you could fill them in a little on some of these yes I was in Pennsylvania in Ohio two weeks ago we're visited with some co-op managers and some of our friends in the dairy industry and they filled me in on quite a bit that's going on in in their locality as far as the merger especially in northern Ohio you have about six plants that are putting together a merger which we in which we in NFO feel it is needed within the industry to bring this milk in to economically sound plants to unwind you might say the transportation problem that we have in the dairy industry so that the economies it can be realized in the dairy industry can be passed on to the farmer one point I'd like to make is that in the consolidation and merger and bringing the industry together the farmer thinks well automatically that he's going to receive the benefits but the thing of it is if he isn't there to bargain and he isn't there to sit across the table and bargain for what economies can be brought about through mergers and consolidations it doesn't necessarily have to be passed on to him so and I think this is a realm into the position that we take an NFO that we must be there to know the availability of the milk in an area the plant structure and the people involved transportation all these factors is involved in bringing together sound economies within the framework of our dairy industry in Pennsylvania we are seeing a resurgence of interest in pricing milk the price out there is considerably higher than what it is of course in the base area of Wisconsin and Minnesota and but they rely on them in Minnesota Wisconsin pricing series for establishing their class one price so you see we have much more to offer than any regional marketing area because we operate not only in the base area but also in the area of bargaining within the locality of where the price in the east eventually is established for those people so you see that the complexities of the whole structure the whole picture can be handled when you are a national organization much easier than when you're just a regional marketing error order or cooperative I'd like to mention this right at this time quite often we have calls coming into this office and someone will say have you heard about this merger or that merger or this consolidation and yes we have heard of them and we see them happening a faster rate than ever before usually the caller says is this good or is this bad well of course this is what NFO has suggested several years ago and we're seeing it happen today it's very good but I like what you pointed out Rick what guarantee does this give the producer unless he organizes to bargain and the other point I'd like to make very clear is a giant is being created a giant in the dairy industry would you think of buying one of the largest most powerful tractors on your farm without a steering wheel would you think even though you had all that power blocked together you could steer it or direct it without that steering wheel a giant is being created would you know the manager would you know the board of directors who will represent you NFO is the bargaining agent and fo is getting into a position to market milk and bargain for the sale of that milk that's the phase 2 program a giant is being created will control it and I think Rick had some of the explanations at meetings that we've held very recently a lot of farmers didn't realize this that a giant was going to get going together out there because of the drive of NFO and we're the ones that are going to control it were the ones that's going to guarantee though that farmer a fair price really it's very gratifying to have people within the industry call and discuss what NFO has really accomplished and why don't we take more credit for this or more credit for that and I think it's it's to me and in the time that I've been here with the international office very gratifying to talk to these people and I'm talking about people within our industry and I use that term our industry because I feel I'm very much a part of it coming out from the dairy farm in Indiana the ability with which I see that this organization is growing and developing all across the country is it's quite edifying to even be a part of it we have many many people who probably could and should be accounted for as far as what we've been able to do in in NFO but the list would be to long division sit down and mention here this afternoon I know exactly what you mean when people in the industry do recognize that this bargaining in this widespread national bargaining is the key to pricing any agricultural production in the dairy department we know that there's no difference in bargaining for milk than there is in bargaining for meat or green marketing yes there's a difference but not in bargaining NFO is that bargaining agent that nationwide bargaining agent that all of our dairy farmers today are recognizing and coming into and and spreading this organization so to any of those that are wondering about it some of these actual figures that we have should prove that NFO isn't about to work NFO is working our dairy program is working this means dollars and cents and the pockets of the American dairy producers one of the things that has happened just recently in dairy bargaining and in our overall program is we're receiving many calls from the west coast and the fire West states to come out and get phase two of our dairy program started I think probably one of the trips when I was out there and met with the general manager of a large association in the West when he made this statement to me he made it because of all of the NFO dairy producers throughout the Midwest and east he said we recognized what you people are doing he said we know the effect that you're having we welcome you to come to this area in other words this points out that collective bargaining for agriculture collective bargaining in the dairy field he's being accepted it's a popular term it's something that the American farmer has waited for he probably didn't even recognize it so phase two of the dairy program this second step in bargaining is very important and when Don's agricultural service made this study and found that over ninety six percent of the farmers believed in collective bargaining assualt collective bargaining was going to be necessary to solve this problem we're seeing this true come true here in the national office the calls from all over the country and this is from class one areas and the manufacturing areas and certainly the gains that have been made in the manufacturing area we saw in the charts here these same gains have been projected through the other areas into the class one market in the bargaining that we've done all over very - especially in New Jersey I was talking to our marketing area chief in New Jersey and the difficulty seems to be lessening quite a bit because we're getting through to the idea that even though they're priced out there I think is 6.73 on class one blending out about six thirty that cost of production is still the important factor that we're trying to determine and establish in the bargaining that we're doing price alone are just what you pray what you have to work with and to work back from you might say was the way we've been developing our marketing or we get to melt chakma and try to stretch it through 30 days that's the way it been operating but the business of producing milk and of staying in business and getting new people in business is more than just the establishment of a 30 day period of being able to stretch a milk jar it's it's definitely a a science and criteria that go into the development milk markets production and all these things are are vitally important to dairy farmers and I think this is what we're developing with the educational series that we have to being able to get two into two thousand or better counties with overhead projectors and with giving a market information being able to do all these things over such a wide area is really helping to solve some of the problems in the dairy industry when you mentioned being able to give market information the service that NFO can give the producers today I'd like to use another chart that I have here it points out three steps that are going to be necessary in dairy Bargaining says successful dark berry bargaining is as simple as one two three it is number one block production together on Phase two agreements block it together this is true in all commodities number two market through financially sound plants based on market information what is market information through the phase two of this dairy program all participants do have market information as to whether or not the buyer of your milk is in a sound financial position this service is available to you only to those that are participating in phase 2 along with that an insurance program that ensures from 100% to a partial insurance on your production this is quite important in four years, two thousand four hundred and seventy some farmers lost their milk checks in the state that I'm from Wisconsin thirteen miles from my home they lost sixty thousand dollars because of plant failure and number three make sales under contract to Borden, Kraft, and so forth all the buyers of our production contract sales that's what we want as producers that's what we want whether we produce dairy green or meat phase two of this dairy program we'll give you that you have the structure the structure in every county to block this production together the power of Phase two is what we all want put that production on Phase two and we will have contracts with an established price for the American dairy farmer u.s. farm report as presented the nation's dairy program with that graph director of NFO dairy commodity department and Rick Avilla dairy commodity assistant 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 true nation's prosperity level and the national farmers organization represents new thinking and a new generation of agricultural producers a brighter day for American agriculture