NFO-87 (AV10493) US Farm Report: Bargaining Power for the Dairy Farmer

us farm report presents bargaining power for the dairy farmer with elven rust head of the nfo dairy commodity department and aura scanner baa farmer and member of the national board of directors from Minnesota the US farm report is being brought to you by members of the national farmers organization in this local area nfo collective bargaining for agriculture the economic keystone of america here is Alvin rust and Horace kanaeva on bargaining power for the dairy farmer bargaining power for the dairy farmer bargaining power for dairy farmers can be obtained on several levels actually dairy bargaining and bargaining for better prices for dairy farmers can take first place first on the processing level or it can be used on the farm level itself however I'm going to spend a few minutes on talking of bargaining on the plant level rather than the farm level itself one of the things basic things i think the american dairy farmer should understand is that his dairy group that he is marketing through today could become a part of any dairy group or any number of dairy groups and these groups as groups could bargain for higher prices on the production they represented if the block of production they represented were large enough so that the large volume buyers would have to come to this particular block to deal for its supplies on those basis we all know that any company any business group anyone in the buying and selling field works on a volume basis this we as farmers can do also but it can be done easier from the plant level why hasn't it worked from this level in the past one of the big faults of bargaining from the plant level has been that the individual selling groups have been in competition with one another makes no difference where they're located or how much volume they represent as long as the independent groups stay small and do not work with one another in a buying and selling program they'll have to contend with the prices they're getting today but certainly the large volume buyers butter cheese and whole milk well know that if the farm cooperatives have selling and handling dairy products were to sit down around the bargaining table and all shoot for the same goals the same goals on prices grade standards and qualities that these could be had almost overnight the laws setting this type of bargaining up for farmers basically has been on the books since 1922 the big problem has been to find some way some means to get the independent farm groups to recognize that the problem they have as an individual producing group is the same problem that the group lying next to it has it's the same problem for example in Wisconsin that it is in Minnesota Iowa Nebraska Ohio Michigan makes a little difference where you would move in the dairy industry the same thing applies we and nfo many times have mentioned marketing agencies and commas these marketing agencies are not something new to the dairy industry as a whole there's something that the dairy industry has used in large numbers but with small volumes behind each independent group as we see the group's welding themselves closer together through our efforts of signing contracts and putting the necessary agreements down on paper so that each groups becoming a part of a larger bargaining Association or selling unit that these groups all abide by the same standards of buying and selling and thereby set up business practices as much as we see handle on other commodities sold to farmers or the general public as a whole the big reason we feel that farmers should become part of a marketing agency is quite basic we as farm groups have stayed as independent producers representing our local cooperative structures these structures in ton have stayed pretty much as they were set up thirty years ago while big business the people buying and selling to the American consumer have coordinated their buying efforts throughout the nation and it now has run to the point of where we have a very large dairy buying concerns that do buy and market between 30 and 35 percent of all the great a male those of the American public each day or each week these big eights have to buy the volume they need from somewhere between 750 and 800 individual selling groups or producer groups it should be quite obvious for anyone to see at this point why bargaining hasn't worked on the processing level let's say for example that we had only 750 or 800 selling groups and that the big 8 handled all the sales of the product this would still leave the American farmer in a very weak bargaining position or his selling groups in a very weak bargaining position because the large volume buyers would have a chance to Pit one buyer against 100 sellers every day of the week and if you want to multiply it a little further than that or divide it down break it up as buying and selling patterns are set up and establish today you would find that these 750 to 800 dairy marketing groups are selling to a far larger number than what it actually looks like basically there is no independent bottler or handler that takes all its supplies from one individual farm Marketing Group they all try to buy from two three or four sources by doing this if one of the farm marketing groups did back out of the selling program naturally the party's buying it still would not have to sit down and bargain because it could obtain the balance of their needs from the other four or five that were supplying them but it's quite necessary for the farm marketing group to set up buying patterns or selling patterns in the same sense that big business has used I don't want anyone to think that we in an apple are opposed to big business in this sense we are not we do say and we do believe that these people should buy as cheaply as they can and sell as cheaply as they can but at the same time we say that the American farm producer groups marketing dairy products or their stockholders should set up like selling programs so that they also can receive a fair position in bargaining they can receive a fair pricing structure and assure the big volume buyers of adequate supply once this has been accomplished to even a reasonable degree certainly dairy prices can be changed and certainly they will we and nfo have came a long ways in working with the different cooperative marketing groups and blocking production together and obtaining better prices in this form for the farmers that have become members of the organization but on an overall basis bargaining in the first instance should take place on the farm level this is a business of its own it's one that farmers themselves can protect without necessarily asking the cooperation of the individual marketing group that they today see as their selling units at this point I'm going to ask mr. canola over here to take the next step on the ladder pertaining to bargaining for dairy production production produced on the farm and arsh would you explain a little bit about bargaining on the farm level the next step below the processing level how this could be accomplished as well as it can be accomplished on the processing level and I thank your Elvan bargaining power at the farm level would take very much the same type of application as we have already been explained here by mr. rush the dairy farmer and the farmer in general has for decades for centuries considered himself to be the rugged individualist that could survive and would survive under all conditions we've seen the development of bargaining power from the very infantry in the farming our dairy cooperatives and the fact that we are taking on dairy today these dairy cooperatives were formed by individual farmers out of sheer necessity realizing that they had reached the stage where as individuals they found it impossible to survive under the tremendous pressures that they were subjected to by we fight with buying sometimes it's to the eternal credit of the founders of the co-operative moments that they realized that collective bargaining that bargaining power was necessary and that this was available through the forming of bargaining groups but we today know as cooperatives and which have existed for the past 50 years but let's take a look at a collective bargaining for them such as proposed by the National Farmers Organization the farmer is an individual who produces and efficiently so a much needed commodity that we call food one that we all need and one that everyone buys we have seen the decline of the farmers economic lot gradually year by year of this in spite of the fact that we have had and continue to have cooperatives and other bargaining groups but primarily cooperative now then the farmers today is being advised by the National Farmers organization primarily that he must become part of a group that is devoted a hundred percent to the basic principle of bargaining or to be more specific collective bargaining this means that the farmer would join a bargaining group and organization which proposes a businesslike approach through the fire the farmers business problem these problems we have commonly referred to as the farm problem in general but really it breaks down to a problem faced by each individual time we advocate that the farmer become part of Lexie's bargaining group this collective bargaining group must be tied together by means of membership agreement in our case this membership agreement lasts for three years flin stability with the organization and also to assure those people who will be buying this commodity that this farmer group is not a fly-by-night operation but said it will stay intact and continue to operate as long as there is business to be conducted and certainly this ring remains so as long as there are people on this earth the farmers lanes a collective bargaining group and then he pulls his production he blocks his production together with his neighbor he works together with his neighbor and he must learn that the basic principle and the muscle to be found for bargaining is in the use of his production together with his neighbors at this point we probably come into and maybe a slight disagreement with some people who in the rad vacate this strong individual approach and which we have seen visually fail in the very recent past the farmer must work with his neighbor and his business help his ability to survive is going to depend on how closely is willing to work with his neighbor now the more farmers get together work together ships together sell together with their neighbors and work toward this all-important fact pact of contracts that we in the nfo advocate in our opinion stability in marketing and a good collective bargaining program will only come about when there sufficient number of farmers have understood the fact that their economic survival hinges on whether or not they are willing and capable of working together with their neighbors then they secure contracts with the processing plants in most cases these plants would be cooperatives in the case of dairy and from there then as mr. rustlers pointed out this collective bargaining effort is extended even further and for the area of marketing but basically we want to be able to get across to farmers that there is and we have had available tremendous bargaining power available only to us based on laws as was pointed out by mr. rest dating back to 1922 we are encouraged in the fact that we find more and more farmers becoming cognizant of this fact and that they are not only willing to but are becoming eager to work together now we recognize that at this stage of the game we in the dairy industry and that the producer level have become extremely aware of the fact that there have been a lot of very very interesting things happening in the area of supply and in the pricing of these commodities and mr. rust if you please would you care to comment on the supply situation today and what in your opinion is transpiring in the area of these overall supply for the dairy industry as a whole I think your the dairy farmer possibly doesn't realize the drastic effect that cheap milk prices have brought about I have a little clipping laying in front of me here I'm gonna read just part of it in Wisconsin the nation's number one dairy state fourteen dairy month on an average have been quitting every day that report comes from H M Walters head of the state office which keeps records on farm statistics this means that more than 5,000 Hertz have been liquidated in the past year the flight from Wisconsin dairy farms is growing in the last nine months of 65 the state lost as many dairy herds as in the previous five years this spells out quite a story if we were to dwell and spend a lot of time on it but naturally as the dairy farmer quits milking these cows moves to other types of work for livelihood naturally the overall supply of milk will shrink now it used to be that the recommendations on these bases were that well we could get rid of half the farmers and we'd still have enough production to go around I'd like to inform the dairy farmers listening here today mr. Koerner and myself just made a trip through the southwest and we can assure you that the supplies of milk are definitely short and they're going to be shorter there is a very good chance of this nation of dairy farmers not even producing enough milk so that the necessary pounds of butter will be obtained in the coming 12-month areas or the necessary volume of powder to make ice cream and that volume of milk that has to be put into cheese and it's all come about through the lack of one specific thing the lack of the ability for farm groups to bargain successfully for prices certainly we in nfo know that all local farm marketing groups want and need better income for their producers but they seem to fail to take the initiative and grasp the need that they themselves are the basic units that can start bargaining and start this picture chain of reaction moving that could change the whole picture in a very short period of time I have another little clipping here in front of me that spells out farmers income to get at this story of well maybe the guy's been milking 20 cows and ten years ago they told him he should mill 40 and then he was told he should milk 60 and now it's being recommended that he should bail 800 mmm oh this is well and good we have no objection to farmers becoming larger businessmen but we do believe that the American farmer with the very large investment he has that the earnings from this investment and the hours worked from his family is not adequate at the present time the figures I'm gonna read you here now come from the state of Vermont and New Midwest farmers have been told for many many years well if you can't make a living producing milk here in the Midwest move to these that's where you get better prices and you can get better income but look here what's going on over there some Vermont dairy months have more than m-file a hundred thousand dollars invested in their farms but are getting less than $60 per week for their leaves and interest on the investment combine many dairyman have records showing average weekly income of 30 dollars per week this is income for hourly wage not just for the owner of the farm or the manager the boss or the farmer himself but this is income for his whole family certainly it is not adequate to keep it on the phone so what's happening is they are leaving and the nation basically is running short of supplies Mystica nervous to the point that I believe that in the next few months we may see government take a change of attitude and certainly we believe they should the positions they've taken in the past certainly haven't been to the interest of the producer nor the consumer either one we have made specific recommendations on these points basically we get back down to a point of where it is a problem for the farmer himself so he doesn't have to go to any outsider and say wow my day's wages aren't enough it should be left in his hands for him to take in his own hand and correct would you agree mr. Russ that we have the day two factors that would indicate that the farmer today has an excellent opportunity to use his bargaining power bargaining power that he is becoming more and more aware and becoming more and more cognizant the fact that he needs it and he needs this now we have two factors apparent from what it had been brought up here and but there is a smaller supply than there was a year ago and the farmers are becoming more and more aware of the fact that they can do something with it now we are discussing basically bargaining power for the very common and what can be done to solve the problem that we are all confronted with would you want to comment on this these two factors mr. Russ I'm talking mainly about prices and supplies but yes the dairy marketing groups today ours could well increase their income for farm for honor weight of production for the American producer we do find that number one the government is quite concerned about the production figure on an overall basis it is dropped to this point the second thing that disturbs us in this area is the number of farms that have already gone along with the number of head of cattle that have disappeared along with dementia Tuscan Farms himself naturally dairying being what it is you can't take a bunch of seed out here and sprinkle it on the ground and get a new dairy cow back in production tomorrow morning or three months from now this is a long gone out procedure of breeding animals and getting good efficient stock on a farm in the first place so it takes years to build an efficient dairy producing heard many many farmers spend a lifetime building a herd for example that will produce five hundred pounds on an average this again is something they cannot do overnight but the thing of it is that as the supply is shrink it wiii happen by accident week ten days ago through all the different Department people in Washington and check out world supplies our dairy production there's been a lot of talk about the import of peas supposed to come into the United States this hasn't got here yet the quarter of something short of a million pounds of cheese was set up the cheese has not got here and as I read to you this morning horse in the office we're down 16 percent this month from what we were a year ago at this time on the production of cheese so when you move this around into your powder butter a whole milk box the people testifying in federal orders and the st. Louis earrings we had some remarks from people in the Chicago area the Chicago area figures that their utilization would be up around 67% in another month and some of the handlers and bottlers coming into the st. Louis earrings testified that today they were getting 25% of the volume of milk that they actually needed it seems quite strange that all these short supply factors can be right here with us and that this thing supply and demand hasn't changed the price I mean we see this a lot cleaner than most people do moving around like we do I'd like to insert a comment and if I might would you say that the price increases like we have seen there have been some would you say that these are adequate or would you say that these price increases are such that they would reflect the real application of bargaining power on the part of the farmer well I would say basically the price changes we've had have changed basically because of government action at this point the government this year didn't lower the seasonal differential and the upping of supports by secretary Freeman this again wasn't a lowering but I think I think the pricing structure the truth of the matter is there has been no free market change on its own in other words the collective bargaining principle of bargaining power itself has not been felt in the marketplace as yet no but it can be felt it could be found almost overnight at the present time as we found out in our little airplane excursion that it doesn't take too long to run into somebody that actually needs more milk and this being the case let's hope that the cooperative selling groups basically and that's the American farmer in general no matter what farm organization he belongs that he gives second thought to farm organizations especially marketing groups and give me some serious consideration and see once how bad he would hurt himself if he became part of them myself I'm sure I at least I'm tired of pricing my production so cheap that the neighbor has to leave the farm you would say studies the various organizations and make an intelligent choice based on the one that shows the best promise the US farm report has presented bargaining power for the dairy farmer with Alvin rust head of the nfo dairy commodity department a norske Nerva farmer and member of the National Board of Directors from Minnesota Marketing for price at the market is the key factor for the dairy outlook in America the US farm report has been brought to you by members in this area of the national farmers organization more information on the nfo meetings in your area contact the national farmers organization corning iowa join with the other farmers in the united states in the successful n fo collective bargaining program for agriculture family farm agriculture the grass roots of America