NFO-4 (AV10413): Midwest Farm Report: Purpose of Holding Action/Staley

NFO number four [music] today on our Midwest farm report we have president Oren Lee Staley discussing the purpose of the NFO holding actions ladies and gentlemen I'd like to take this opportunity to come into your homes and visit with you for a while about the NFO I think that the purpose of a holding action that the NFO calls is probably the most misunderstood part of our program many people cannot understand why we call a holding action many people cannot understand the purpose of a holding action and a holding action in itself would accomplish nothing if it were not for the objectives which this organization is trying to achieve so I want to talk to you today as a businessman talking to business men and women because that's what we are in agriculture as farmers and every member of the NFO and every member of our staff there's a farmer and a producers so we know the problems that our agricultural industry faces no one else has to tell us we know it from our own operation and so consequently I would like to visit with you today and I'd like for you to reason with me for a while because I believe that there are many many farmers that have not really given NFO the thoughtful consideration that they should have and for their own best business interest should give to this organization because the NFO represents farmers working together with nothing to offer for sale but just working together to get into position to price our products together and because of the fact that we're doing this there are many many rumors that are spread about NFO and why wouldn't there be because there are many people that are farming the farmer today the knows that if the farmers ever once recognized that they have the ability and the power and the strength to start pricing their products and meeting the marketing problems of their industry that they will no longer be able to farm the farmer and so consequently they are the ones because they're trying to protect a salary or because they're trying to protect a profit that they're making off of farmers they spread all types of rumors so consequently this medium of visiting with you in your home gives us an opportunity as NFO leaders and members to bring to you factual information about the organization and it has to be factual because when we come before the public as we're coming today we have to be giving the facts about the organization and so consequently farmers are making some great decisions about their business I want us first as farmers to think what's been happening to us in the last twelve years you know the price problems that farmers have today are not problems that came about one or two days ago or two or three months ago or a year ago they are part of a long time price trend and that trend is a lowering trend of farm prices I can remember as most other farmers can when we were getting 38 40 cents a pound for prime steers today when you've been selling your cattle most of the time from 20 to 22 to 23 cents a pound and even lower and when your hogs a few years ago we're bringing 25 to 28 cents a pound down the 15 16 17 18 cents a pound now but the products that you have to buy in order to produce those hogs and cattle or milk or grain are certainly much higher today than they ever were before so this means the price the products that we've been producing been going down for some 12 years all the prices the products that we have to sell will continue to go up and I say to the consuming public and I say to every fair-minded American citizen that you cannot expect fair profit in industry or fair wages for labor unless the American farmer can also get fair prices for their products I say this simply because American agriculture is still the biggest industry in America the greatest purchaser of goods and if we're going to buy what we would buy and what will keep the factories humming in the profits building it means we must be able to buy those products that come from the factory so what let's reason then as farmers about our problems why is it that we've had this continual drop oh yes an occasional rise once in a while but never back near to the level that it was before why has this been happening simply because we're the only unorganized group in an organized economy and we had better start realizing that at this great retail level today there are economic forces that are powerful enough to say to the meat processors and every other processor of agricultural products these are the prices we're going to be paying there's no collusion necessarily involved in this it just means that there's a big enough economic power at the retail level to be able to say this is the price we're paying and this is what is happening at the chain store level today we could expect it to happen as this great economic power bill did you drive from city to city and you see they're the same name on a supermarket in City after City it simply means that this is the first time in the history of our nation that any economic force the processing or a retail level has been able to build enough economic power that they were volume buyers enough that they were able to say the price and this simply means that if I'm a large higher than you are a small buyer that if you buy first you are risking your business because all I have to do is to wait because of my volume buying and then I can buy cheaper and you would soon be out of business but the laws protect you if I buy first because the laws backed up by our law enforcement agencies will make it necessary for those that sell to me as a large buyer to offer you the same products at about the same price that means I have to buy first this is the type of economic power that's been built at the chain store level and this is the pricing limit that is really keeping our prices at a certain level then the processors have no other alternative than to come on back down the ladder and the farmers are the lowest rung of the ladder and when they are the bottom of the ladder it means whatever level up here profits increase here more services and marketing added or marketing costs it means our prices go down and so for this reason we have been going down and down in price now how do we meet this problem one thing should stand out to the American farmer and that is we are the only business group in America that goes to the marketplace and says what will you give me we produce the most essential commodities in America and still we do are the only group that doesn't put a price tag on our products or our service this doesn't even make good common business sense either we start realizing this or we are going to get lower and lower income we're going to have a cost for quiet price-squeeze that gets tighter and tighter this simply means that we as American farmers have got to realize the problems we're up against on this hand we have those that have been marketing our products and what does it mean it simply means through that structure we have been getting lower and lower prices while everyone else kept going up price-wise this means that we had better start taking care of our own business for a change and start saying just as a man that sold me this set of clothes this is the price but of course if we as farmers put a price tag on our products we must assume some other responsibilities and that responsibility can be brought together in the words of a marketing structure this means that we must also set up a marketing structure that can take care of any surpluses that may exist or develop we must realize that there's never about a small percentage of the total production at any time that could be considered surplus and this is almost always used sometime at a later date but the three or four percent of the total production can be used to kill the price level on all of our production and we can do nothing about this as individual farmers so farmers on one side have a pattern that is developed in the last 12 years price-wise what we have to realize that we're trying to market our products as we were 50 75 or a hundred years ago and we're either going to realize that all the changes that have come on the rest of the economy that have brought about organization and economic power being focused down on us as long as we're an unorganized group in an organized economy so the NFO is offering the farmers an alternative an organization made up of farmers run by farmers whose collective bargaining program has been completely financed by the dues and fees that have been paid in by our members who are all farmers and producers this means that all were saying is that it's time to forget our past animosities it's time to forget our past differences they don't ask us what farm organization we belong to when we go to the marketplace and what church we go to or what political party we support they just tell us this is the price and we meekly go on back home maybe grumbling to ourselves sometimes but as long as we sell as individuals one going to the marketplace now and one tomorrow and one the next day we are going to continue to get lower and lower prices for our products now what alternative end is NFO offer the NFO offers the alternative of bringing together our production is farmers individually and voluntarily into a group for the purpose of bargaining together selling together in order to price our products together now what steps do we have to take in order to do this first we have to organize this is always the most important point and this organized effort that the NFO is carrying on is being done by farmers entirely by farmers many many many others thousands upon thousands donating their time their efforts from their own business operation farming to talk to their neighbors so I say to those that make the decision that they want to join the NFO that don't wait until somebody comes and sees you go do an NFO member and tell them you want to join that you want to be a part of this effort to get a fair price for your products now then organizing is always the most important part this means bringing our production together for the purpose of as I said bargaining together selling together in order to price our production together and where our organization gives us the the opportunity that has never been given farmers before is the structure we're organizing over the area of agricultural production we're now in some 23 states and what we're doing is simply organizing the major commodity but cause ladies and gentlemen you could have no hope of success if you only organize in one commodity whether it be milk meat grain or whatever it might be because if you just have one commodity organized and you're successful in raising the price everybody will jump in to produce that tomorrow but if you bring them up and relative balance there's no more incentive to raise something different tomorrow than there was today or no more incentive for substitutes tomorrow than there was today then you have to talk about increasing the entire agricultural plant not just the production of one commodity and then after you have brought it together enough of the total production so the present volume buyers cannot fulfill their needs from other sources then you are getting in a very strong bargaining position so then if the buyers do not decide as businessmen that they want to buy from you you have to use a holding action to back up your bargaining efforts a holding action is as old as business itself the man that put this price tag on this suit of clothes had a holding action in effect the price tag was there I either paid their price or i left so we're using in the holding action the oldest business principle that is known in business our price tag backed up by a holding action but because of the nature of our production and the way it's produced the type of production we must use holding actions at intervals for the purpose of making our bargaining powerful to make the volume buyers realize that it's costing them more not to deal with us than it is to deal with us in cases to show to them that here's a volume production brought together and if they're going to fulfill their needs they must come to this group of farmers at home but the objective of a holding action is were we have a great deal of misunderstanding people sometimes interpret a holding action that is that is called as as being called simply for the purpose of raising the price this could be nothing could be farther from the facts and this because we call a holding action for the purpose of using the bargaining power that we have gained and showing and proving to the buyers that we have this volume power so that in our fourth and final step where we're signing contracts that this is the step that we're able to keep working toward and gain and we're in this fourth step our last holding action was strong enough to start processors signing contracts that would stabilize our future prices and also make it possible for us to set up a surplus disposal system that would take care of surpluses that exist or develop now then we are in this fourth and final stage we're not starting out to get the first processors to agree to contracts we already have them but you cannot expect one or two or three or four processors to start paying a price no more than you can expect one or two or three or four are a thousand farmers to be able to price their products all the buyers have to do is to wait until some other farmers decide to sell if just a few of them are trying to do it but if you bring it together over enough area then those buyers in order to fulfill their needs must come to those farmers at our home so this means that the farmers today are making a decision of whether they want to support the NFO so that they can support the NFO if they're not members by joining the organization and supporting the effort or whether they want more of what they've had and they know the future it means 14 to 16 cent hogs are not the too distant future in a few months the cattle market up temporarily yes but it won't last very long because you have no way of meeting the marketing problems that farmers face and the industry faces as long as you're selling as individuals now then the point that I want to bring out is that's because it's so misunderstood I people saying well suppose you get up the price suppose you get the price up what this is going to mean what are you going to do with all the surpluses you know this is something that really amuses me sometimes because farmers haven't thought this through very well because first there's never more never has been more than a three or four percent was well maybe you want step two nor two up to six or seven percent of time or two in a commodity for a short time but it's usually the two to four percent overproduction that is used to kill our price industry-wide but let us see what it means under the NFO program how it can be handled and how those problems can be met there's nothing we can do about it as individual friends we either decide that we're going to meet the industry problems of Agriculture or else we're going to continue just as we have been going down the ladder now under the contract signed with processors it simply means an on meat for example you have the base price of 20 to 75 on hogs or you have a 30 to 45 base price on cattle choice steers but these are adjusted seasonally in order to take care of the difference in production costs but the important part is that you have on this contract the ability to change the price differential and this means incentive when you see production developing out here that's going to be burdensome what you do is make it more advantageous to sell at lighter-weight there has never been a time in marketing history that with farmers putting the price tag on their products that they could not even have made the nation hungry if they had so desired and this is not their desires by any means by using this incentive structure far as dairy is concerned you could put use part of your surplus disposal program money to foreign incentive to sell choice veal dairy heifer calves this would break the dairy cycle for example the same could be done as far as beef cattle maybe it goes on bred heifers for example on grain you have a 12-month production that comes to market within about 30 to 45 days that's how long it takes to harvest normally you have to store at harvest time and this means that at the end of the year there's never been a too large an overproduction in any one given year but if you store it year after year it builds up to a tremendous amount so it means that if you're going to do an industry-wide as an organization that you have to take care of that production at the end of the year then why the holding action and why is NFO called the holding action the NFO made enough progress in the last holding action to start processors signing contracts where they would pay these base prices and these are not prices that farmers have never received before we're not trying to get something we've never had we're just trying to get back part of what we've lost now this simply means that a holding action is called for the purpose of giving the farmers the opportunity to suddenly stop the punishment they've been receiving at the marketplace from low farm prices because if a farmers hold what else is there to eat besides food and this means simply there that the farmers hold sufficient numbers the volume buyers must come to them to fulfill their needs and we're not thinking about a temporary price increase we're not thinking about one load of cattle or one load of hogs being sold that may be a $0.50 mark it up for a dollar mark it up we are working and striving toward achieving contracts that will make it possible for us to stabilize our prices at fair price level and to set up a surplus disposal system that will take care of our surpluses that may exist or develop now in a holding action is called we know that we're going to expect several things this we have been taught by past experiences after all we now have more bargaining experience in the NFO than has ever been gained in agriculture we've been at it now more than five years we're in some 23 states and we have a tremendous amount of production that has been joined together for the purpose of selling together bargaining together in order to price together so consequently when a holding action is called there are really in our minds three groups of producers there's a group of producers out here that we call captive sellers and other groups within that group that are going to sell we know they're going to sell there's no reasoning with them as far as we're concerned because many of them have no choice some of them are broke or practically so and those that loan them the money say sell and then there are those that are really captive Sowers who do not even own the livestock somebody else owns and so those that own it are almost always in opposition to our efforts because they want to see farmers sell at low prices and they want to see you continue to sell as individuals so consequently we know this production is going and then there's a group that I really feel sorry for that are misinformed that have really never taken time to study the NFO program all they've done is heard somebody else's conversation on NFO they've heard what the opposition has said and ladies and gentlemen when a holding action is called the then you really find who's on the farmers side and who's on the side of the buyers you find out who once continued low farm prices and you find out who is willing to fight with all the effort and energy they can muster to get farmers fair prices but cause immediately coming out of those people that have been farming the farmer wanting to protect their salaries or they don't tell you that or to protect their profits off of marketing no they don't tell you this but they immediately come out and say no NFO won't work you shouldn't support the effort it's going to disrupt things yes it's cool it would probably disrupt their little Playhouse in a lot of cases but they are the ones that always come out and then there are those farmers that that also you might have to frankly say are in the greedy the selfish by Nature they know that any advantage they get is due to their neighbors efforts but they have complete disregard for this then you have two other groups of farmers that have the production the first group the quicker those that are going to sell anyway sell the better off our program is because then it leaves the production a greater percentage of it in the hands of those farmers that are either in sympathy with the NFO efforts that are non-members or the other group the NFO members and so this this is these are the two groups that we want to get down to down to those that are either in sympathy or down to the NFO members because this is the production that's in strong hands so this means then you're getting down to the real hard core of the holding action install at this point after that production that has been gone and have been organized to sell ladies and gentlemen when they ask you to sell whether it's your uncle your nephew or your cousin remember when he's asking you to sell he's asking you to keep taking the low prices oh yes he might get you 50 cents or a dollar but wonder where he'll be when the snow flies you know where he'll be back in the warm room just waiting for you to come to the market and sell as an individual saying what will you give me so it simply means that the quicker it gets down the production in the hands of those farmers that are going to home the quicker you get down to the hard core of the holding action you'll get down to the real real core and then the opposition the only thing they can do to win is to convince farmers that it's no use that it's having no effect so consequently you immediately find that receipts are directed to the terminal markets where most of the publicity is directed and so it may mean that from auction barns you see livestock going through the terminal markets that would have never gone there from direct buying points or shuffling from market to market to make up as much receipts as possible you see a lot of lightweight hogs and lightweight cattle being rushed to market by those that have the control over them in order to try to build receipts this is not building much tonnage but they can only kill them once that's what we always say so this means that the efforts in are directed psychologically to convince farmers that they shouldn't hold but if the farmers after the first group is sold really decide to hold and the non members decide to start joining the NFO as they've been doing joining the NFO and supporting our efforts and don't I again stress wait for a NFO member to come to you go to him if you want to jump in and help get fair prices for all of us and so it simply means that the only weapon those opposing our efforts have is psychological they've got to convince you it's no use but if you hold together the buyers must come to you when they cannot fulfill their needs from other sources and I say at this point they must sign contracts which will give you fair prices and give you the opportunity to set up a marketing structure that can take care of the surpluses that exist or develop farmers are making very very important decisions do you want more of what you've had or do you want to join with other farmers say this production is ours we're going to keep our lot gates closed until the buyers have to come to us instead of us going to them with our hat in hand saying what were you going to give me only farmers themselves can make these decisions that determine their future prices and their future destiny NFO farmers who brought you this program are calling on the rest of our nation's farmers to join with them and support their efforts to solve our farm problem [music]