Wednesday, October 29, 2008
Good afternoon. Welcome to Nashville, and NMPF's 92nd annual meeting. For some of you, it may be the first time you've come to an NMPF conference. For others of us, it will be our last time, but for all of us, it's a great time to find out what's been happening in the dairy business in the past year. And it's been quite a year indeed.
When we met in Florida last November, the prospects for the 2007 Farm Bill were very unclear. The House had passed a bill we liked, but its fate in the Senate was anything but clear. After another six months of hard work, we got a Farm Bill approved in May that's a major achievement for the entire dairy producer community. So, we need to reflect on what a profound victory it was for this organization to work toward the successful passage of a new Farm Bill.
And here are some highlights of that legislation:
- The Dairy Product Price Support Program
The Farm Bill adopts NMPF's new design for the program which supports specific product prices at current purchase price levels. This makes the price support program more predictable and less of a challenge to defend domestically and internationally, where it may be an issue at some point in the World Trade Organization.
- The Milk Income Loss Contract Program
The MILC program, starting this month, reverts back to its initial payment rate, and will apply to a larger volume of milk production. Perhaps most importantly, with the inclusion of a feed adjuster, the payment target will now reflect changing input costs, and the Class I price target will rise when corn, soybean and hay prices rise. We fought hard for this change to make the MILC program more workable in the future.
- The Promotion Assessment on Imported Dairy Products
After eight years, we've finally succeeded in getting the domestic checkoff applied to dairy product imports. This was perhaps the hardest-fought dairy item in the entire Farm Bill. It may not be exactly what we asked for, but we can take satisfaction that importers can no longer evade their obligation to help promote a market they benefit from.
The Farm Bill also includes more resources for conservation, environmental remediation, farm-based renewable energy programs, and other elements that are important to our industry.
All told, the 2008 Farm Bill is a tremendous accomplishment for NMPF and its members. I want to thank everyone who helped with getting it passed, and everyone who participated in the process deserves thanks for their contribution. It couldn't have happened without you.
As consuming as the Farm Bill was, it was by no means the only big battle in Washington for NMPF in the past year. Our other priority was - and remains - the reform of our nation's immigration laws, so that dairy farmers and other employers continue to have access to a reliable workforce. Immigration reform is as important as any of the other farm policy challenges we've faced in the past.
NMPF remains engaged in the larger AgJobs coalition that is battling for legislation to ensure immigration reform. At the same time, however, we've also done what we've needed to do to ensure that the unique labor needs of dairy farmers are met. We formed an immigration task force chaired by Mike McCloskey, to oversee our efforts. We partnered with Texas A&M University on a comprehensive labor needs survey, to document the employment challenges that dairy farmers across the country face. I want to thank every producer who filled out that survey, it will be invaluable in helping us make our case to elected officials. The task force also looked at changing the visa regulations to make them more favorable, specifically to dairy farmers.
As I said last year, the Farm Bill won't matter tomorrow, if the cows don't get milked tonight. We've passed the Farm Bill, but we still have a tough road ahead of us on immigration reform. We'll have a new administration in three months, and be assured that this will be the first thing NMPF will discuss with the new team at the White House, regardless of who that is.
In fact, we've already met with the campaign teams for both Senators McCain and Obama. We've shared our views on agricultural policy, and the other things important to dairy farmers, such as trade and energy. It's only prudent that we have a good relationship with whoever that new team is in January.
A related challenge we faced this year, which also affects our bottom line, is the explosive growth in input costs at the farm, especially feed grains. The rise in corn, soybean and hay prices is the biggest story in agriculture in 2008.
NMPF coordinated with other livestock groups to let our elected officials know that what's good news for crop producers - and the ethanol distilleries - is not necessarily good news for those of us who have to compete for that corn in order to keep the cows fed. We didn't go out there and blast away at the ethanol sector, because politically that would have been counterproductive. But in measured, persistent terms, we've let our displeasure with the renewable fuels mandate be known. That mandate is still there, as is the distiller's credit, and the tariff on ethanol imports. I believe we've made a clear case that the ethanol subsidy and the current approach to biofuels is hurtful to our dairy industry, and it's bad news for consumers. As the true economic cost of the ethanol mandate becomes apparent, we can hope for better balance in our energy policies in the future.
Also on the economic front, NMPF's Federal Order Task Force, chaired by Dave Fuhrmann, kept plugging away to proactively revamp our national milk pricing system. As we've seen in recent years with the battle over make allowances, Class I differentials, regional pooling requirements, and the like, there is room here for change. There is certainly a need for change. Whether we seize the opportunity to make change happen is the big question. Our task force has had some serious deliberations, but no final results yet. I hope that changes, and Jerry will be talking more about it tomorrow.
Another challenge we faced this year was unwanted attention in the area of how our dairy cattle are treated. Most of us by now have seen at least one of the several undercover videos generated by the Humane Society of the United States. The first one, released last winter, was enough to trigger the largest-ever beef recall, putting the Hallmark plant out of business. It also cast a harsh spotlight on the issue of downer cows - which in the videos were almost all dairy cattle.
In response to this major public relations challenge, NMPF worked with other organizations across the food supply chain to coordinate a unified response. We joined with the meat packing organizations in asking for an end to the regulation that allows animals that go down at such facilities to get reinspected and approved for slaughter. That's what made the Hallmark videotape so problematic.
The other thing we did is to remind the rest of the industry that the key to preventing these incidents is education. NMPF's Animal Health committee worked with the American Association of Bovine Practitioners to put together a simple, science-based list of pointers about the right and wrong ways to handle cattle that are either downed, or need to be transported. Thanks to the support of DMI, we were able to print up copies of this poster and distribute it across the industry. This is a tangible piece of evidence of our commitment to animal welfare. Beyond being evidence, it also serves as a useful tool on your farms.
NMPF remains engaged in many of the other big, even global, issues that can affect each of our farms here in the U.S. In the area of trade policy, the World Trade Organization met again earlier this summer in yet another attempt to come up with a new trade deal. NMPF has been closely engaged with U.S. trade negotiators to ensure that we get the best deal possible for our dairy farmers. Of course, that's what every other country wants as well. So we have to be sure that our government doesn't trade off our dairy interests for another commodity in order to seal the deal.
Another global issue affecting the entire food industry is that of global warming. The Senate considered legislation earlier this year to create a cap and trade system that would regulate the production of greenhouse gases that can contribute to rising temperatures. There is a big opportunity here for livestock producers to take advantage of a booming market for greenhouse gas credits, but we need to get the policy right, before the market develops. Whoever is elected President next week will likely take up the cap and trade proposal in the future, so this is an issue that we will continue to be engaged in going forward.
Along with those efforts, NMPF is engaged with DMI in the overall issue of sustainability, a term and a topic you'll be hearing more about, not only in the next couple days, but also for the foreseeable future. Our focus is on portraying dairy production, and producers, as good stewards of the environment and our natural resources - not because it's good PR, but because it's true. We know that animal rights groups, environmentalists, and others want to paint us as part of the problem. We're the solution, at least a part of it, and our commitment to sustainability must never lose sight of that fact.
I also have to focus this afternoon on the continued success of Cooperatives Working Together. Of the many accomplishments of NMPF in the past five years I've served as Chairman, none has been as important or far-reaching as CWT.
Those of you who attended the Town Hall meeting this morning heard about the work of our three CWT Task Forces. You also heard the latest analysis of CWT's impact. Dr. Scott Brown from the University of Missouri's FAPRI center, who has tracked the program for several years, calculates that the impact of CWT in 2008 is 71 cents per hundredweight. Since the program began in 2003, it's lifted our prices by an average of 55 per hundred, generating more than 4.6 billion dollars in revenue for dairy farmers that wouldn't have been there otherwise.
We conducted the fifth successful herd retirement earlier this summer, and in fact we just announced the 6th herd retirement. Meanwhile, CWT's export assistance program has helped facilitate the sales of more than one billion pounds of butter and cheese so far this year.
It's my hope that our industry will continue to embrace CWT and what it can do for each of us, and for all of us collectively. It's not a perfect program and it won't satisfy everyone, all the time. But during my time as a dairy producer, I can honestly say that no other self help tool has had the impact, or has the potential, of CWT. Farmers have complained for a long time, that we need a means to regulate supply, and our prices. Now we have it. Has CWT reached maturity? Has CWT achieved it potential? I don't think so. We need to ensure that we don't lose CWT, or lose sight of what we can accomplish by working together.
Let me close by telling you what many of you already know. This will be my last NMPF annual meeting as a member of its Board, as an officer, and as Chairman of National Milk. I've had the distinct pleasure to serve in all of those capacities over the years. In fact, my first time at an NMPF meeting was in 1971, in San Francisco, I attended with my wife Mary as part of the YC advisory council. So that's my advice to the YC's here in Nashville: if you keep showing up at these meetings, eventually you'll wear them down and you might just get to be Chairman of the board.
In all of those roles, and particularly in the past five years as Chairman of NMPF, I hope I've been able to provide some valuable input, counsel and leadership. But in the end, I know that what I've received in return: a unique perspective on our industry, the opportunity to grow personally, and the chance to make some lasting friendships - I know that I've received so much more than what I've invested.
Making the decision to retire from dairy farming and the elected positions on the cooperative, promotion and National Milk boards wasn't easy for me. As Mary and I discussed this life change, it certainly wasn't a decision we took lightly or without a lot of soul searching. We're both comfortable with our decision and look forward to what life brings us. Simply put, I'm going to practice what I've preached: "Every leader has to know in their heart when it's time to go home."
Serving the industry over the last thirty eight years has blessed us with so very many special friends and experiences, and that's what I'll miss the most. In closing, allow me to publicly thank just some of those who are so important to me personally and to the Dairy Industry:
* Mary and my family
* The DFA Board
* Tom Camerlo
* The Promotion Community, including:
- Dairy Max
- UDIA
- DMI
* Tom Gallagher
*NMPF Board and Officers
- The NMPF Staff
- Jerry Kozak
Change is the one thing in life that we can be assured of, nothing ever stays the same, nor should it. I've thought a lot about what to say right here and the old saying is that "We can only take our memories with us and we'll only leave our footprints behind." And so, for the memories and friendships, I sincerely thank you from the bottom of my heart. And I can only hope that in the last 38 years, at least some of my footprints were pointed in the right direction.
So finally, I want to thank you for your attention this afternoon and for all of your kind words. I wish you long life, and may God continue to bless us all.
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