November 13, 2007
Good afternoon. And welcome to NMPF’s 91st annual meeting. I think in the next day or two we’ll enjoy hearing of all the exciting changes taking place in our dairy industry. Let’s consider Orlando “The Wonderful World of Dairy”.
If there was one theme that kept resounding in 2007, in the dairy industry, it was price. Farmers kept watching their record-high prices. Consumers did the same, in the dairy case. And unlike last year, when talk of high prices primarily meant high grain and fuel prices, this year, we could finally apply that term to our milk checks. What a difference a year makes.
Whenever you talk about the price of anything, especially a high price, one thing that often gets overlooked is its value. Oscar Wilde said a “Cynic is someone who knows the price of everything, and the value of nothing”. Today, what I’d like to discuss, is the value of NMPF, and the value of belonging to an organization with more than nine decades of proud history and accomplishments. Because whether you’re considering $4 for a gallon of milk, $4 a bushel for corn, or $3 for a gallon of gas, the true value of any product may not always be apparent at first glance, especially to those who are cynical by nature.
Let me start my review of the past year by looking at the valuable things we’ve accomplished with the Farm Bill. Farm Bills are kind of like presidential elections: they’re complex, subject to so many competing interests and pressures, and so much rhetoric, that we should really be glad they only happen every four, or five years.
NMPF’s preparation for the Farm Bill began last year, when we held our Dairy Producer Conclave meetings. That consensus-building effort created a blueprint for the types of programs our producer community said it wanted. From that grassroots input earlier this year, NMPF’s Economic Policy Committee and NMPF staff developed a specific set of proposals for the Farm Bill. Our comprehensive package contained specific recommendations for conservation, energy, nutrition, animal health, and the environment – all the other things that affect the dairy business.
We assembled them all in a booklet that we provided to members of the House and Senate this past spring. Thanks to the hard work of our members, and our outreach activities, the House Farm Bill that was passed in July contains just about everything we wanted. Here’s a list of those achievements:
• The Dairy Product Price Support Program
The House Bill restructures the program from supporting an all-milk price, to support of specific product prices at current purchase price levels.
• The Milk Producer Security Program
NMPF sought a direct payment program for producers; we preferred one that is decoupled from price and production. The House chose to extend the MILC program at current levels.
• The Promotion Assessment on Imported Dairy Products
The House Bill includes a technical fix to finally implement the assessment that was actually included in the 2002 Farm Bill, but never put in place by USDA.
• The Dairy Export Incentive Program
The House extends the DEIP program, and directs the Secretary to use it to its full extent each year.
• The Market Access Program (MAP) and Foreign Market Development Programs (FMD)
The MAP funding is increased by $25 million, and the FMD is extended at the current level.
• The Federal Milk Order Hearing Process Is Streamlined
The House bill includes language suggested by NMPF to streamline current procedures and expedite the often lengthy timetable for changing federal orders.
• Forward Contracting
The House, while authorizing forward contracting, contains all the safeguards requested by NMPF: a sunset clause to end the program with the rest of the Farm Bill, language preventing producer coercion, and giving the Secretary of Agriculture the authority to review complaints.
• Dairy Indemnity Program
The House extends the indemnity program, and includes a technical fix to allow livestock producers to receive disaster assistance.
• Conservation Programs
There are more EQIP dollars, specific funding for addressing air emissions issues; and financial incentives for farm systems to better handle animal waste.
• Energy Programs
The House increases the loan guarantee cap maximum to 75%; “animal waste” is added to the definition of biomass projects; and biogas produced from manure is deemed an integrated renewable energy system.
• Animal and Public Health Programs
Among other things, the bill reauthorizes the Johne’s Control Program; maintains animal disease programs such as those for TB and Brucellosis; continues animal health and disease research programs; and it has specific language, to specify that CERCLA provisions are not intended to include animal waste as a toxic substance, under Superfund laws.
• Human Nutrition Programs
The Bill encourages the USDA to use nutrition education which could increase the likelihood of additional purchases of dairy products.
So now, we need to get the Senate to pass something similar. We have faced a predictable struggle with processors over the import assessment. They’ve fought us tooth and nail on the matter of applying the same 15 cent checkoff to imported dairy products that all of us farmers pay for promotion. It’s time to end the free ride that importers have enjoyed for more than 20 years.
Over in the Senate, the Farm Bill is being debated even as I speak. The bill overall, is similar to the one in the House, with both good and bad news aspects: The good news is there’s more money for direct producer payments; the bad news is that the import assessment is not in it. When the Senate is done, leaders from both chambers will have to meet in a conference to iron out the differences. We’ll be working hard to ensure that NMPF’s priorities prevail when all the dust settles.
So I hope you’ll agree that when it comes to value, no organization can represent the interests and needs of dairy farmers in Congress like NMPF. We were able to speak with one clear voice about our expectations for the Farm Bill. Your investment in NMPF, I’m confident, will pay off handsomely with a Farm Bill we can be proud of.
The other big legislative push in 2007 for NMPF was for a sane, sensible reform of our immigration laws. Just like the Farm Bill, we actually started that process more than a year earlier, when we established an immigration task force to examine how Congress should reform immigration laws while taking into account the unique needs of dairy farmers. As many of you know, that task force developed a set of three principles, and we applied those principles to the legislation that the Senate considered earlier this year.
Here are those three principles:
1. An affordable & efficient guest-worker program, that ensures the continued availability of immigrant labor for all of agriculture, including dairies.
2. A provision that allows those currently employed or with recent employment history in the U.S. to earn the right to work here legally, regardless of their current legal status.
3. A provision that specifies the responsibility for ultimate verification of the legal status of a worker lies with the government, not with employers.
NMPF and its members worked as hard on this issue in 2007 as any I can remember since I became chairman. We locked arms in common cause with a broad coalition of other agricultural organizations, who are also dependent on immigrant workers. Together, we were emphatic in making the point that our needs as employers must be taken into consideration during any discussion about our immigration laws. Right now, I can tell you that those laws are in serious conflict with reality, in so many ways.
Congress can’t seriously believe that it’s feasible to lock up and send back 11 million undocumented workers. And it can’t really want to be responsible for the amount of damage to our economy from such an approach, when cows don’t get milked, houses don’t get built, food doesn’t get processed, rooms don’t get cleaned, lawns don’t get mowed, and the many other things people take for granted, suddenly cease.
We all understand the issues of national security and border security inherent in this issue. But making employers liable for playing cop, where even doing the right thing could be the wrong thing, is a terrible predicament. Farmers have to walk a razor-thin line between being charged with discriminating against workers, and violating the Immigration Service rules.
The only way out is to convince our elected officials that enforcement and economic reality have to go hand in hand. NMPF has supported the AgJobs legislation, which does just that. It was part of the Senate compromise that failed earlier this year, but to quote from the movie “Apollo 13,” “failure is not an option.” We need to get this problem solved, by Congress.
Last month, the federal judge in the Social Security no-match lawsuit issued a preliminary injunction blocking implementation of the Department of Homeland Security rule until the Court has the chance to fully examine all the issues. But that’s only a very temporary stop gap measure.
NMPF and its members have to remain focused on getting our message to Congress that we need the AgJobs bill. If you’re not part of the solution, you’re part of the problem. We need you to get engaged in this fight, because the future of the dairy industry depends on having people working in it. The Farm Bill won’t matter tomorrow if the cows don’t get milked tonight.
In another area crucial to all farmers – the economic regulation of our industry – NMPF has been proactive by forming a Federal Order Task Force. Our business keeps changing, and this group of industry leaders is looking at how federal orders must change to serve the industry.
Some of the Task Force’s ideas have already been used to:
• Propose a streamlined Federal Order hearing process, which can speed these decisions and is likely to be part of the Farm Bill, and;
• Recommend price survey standards and methods to USDA and the California Department of Food and Agriculture.
Other issues this group is examining include:
• How best to address cooperative balancing costs, and;
• Most importantly, we’re looking for a good alternative to the current product price formulas. These formulas create winners and losers whenever they have to be updated. If we succeed, we can move beyond the make allowance dilemma we’ve been dealing with for more than two years.
I want to thank our members for their commitment to making this Task Force work for all of us.
Another area in 2007 where we’ve put a lot of resources is trade policy. As this past year has well demonstrated, opening up export markets can mean big improvements in milk prices. Our record high prices in `07 are partially the result of record exports this year. That’s why NMPF has supported the completion of free trade pacts with South Korea, Panama, Peru and Columbia. All of these represent new opportunities for U.S. dairy producers to boost their overseas sales. All are in various stages of completion and review by Congress, but we’re going to need to push our elected officials to seal the deal on these.
We are also battling to make certain that we get the best deal possible in the World Trade Organization, where talks have dragged on for years, but there is still the possibility of a final agreement. Our big concern here is that we avoid a bad deal for dairy farmers that cuts our farm programs, without any concessions from our trade partners in the form of greater market access. NMPF’s ongoing message has been, and continues to be, that we don’t want a bad, last-minute deal to be made that sacrifices America’s dairy producers for some other sector of the economy.
NMPF continues to work on air quality issues. This was the year when six farms around the country were monitored by university researchers so we would have a precise accounting of the amount and types of substances coming from dairy operations.
Let me once again thank the members of the National Dairy Board, who voted to approve funding to study the air emissions from dairy farms. The environmental impact of farms of all sizes, in every state, is an emerging issue we cannot afford to ignore. The research generated by the air emissions study will help all dairy farmers defend themselves from baseless allegations about the environmental impact of their farms.
Another thing affecting our ability to farm is the perception consumers have about the welfare of cattle on our farms. That’s why NMPF played a key role in bringing together a coalition of dairy industry stakeholders into what’s called the National Dairy Animal Well Being Initiative.
This is an effort led primarily by producers and cooperatives, who recognize that we are getting questions from food marketers and our consumers about the conditions under which milk is produced. So, the NDAWBI is developing some broad, umbrella principles that address basic on-farm practices such as housing, transportation, neo-natal calf care, and so forth. Since there are already a handful of industry standards that have been developed, this initiative isn’t about yet another set of new criteria. It’s about an overarching set of principles that specific plans would fit into, such as the Dairy Quality Assurance Center’s 5-star plan.
The NDAWBI was announced last month at the World Dairy Expo, and the principles are now available for review by coops and farmers. Many of NMPF’s members have already endorsed this effort. We will continue our involvement, as will DMI, because it needs our input and because this is an issue that needs our proactive leadership.
Another example of the value of being proactive, is in the area of animal identification. Two years ago, NMPF joined with five other dairy organizations to form a coalition called IDairy. Since then, we’ve stepped up outreach to producers about the importance of getting your premise registered with the appropriate state agency. We’ve also come up with criteria for individual animal identification RFID tags. And we have endorsed the national FAIR database, as the official dairy data collection point for tag information.
Now, we are partnering with the USDA’s Animal and Plant Health Inspection Service to take our game to the next level. The IDairy coalition received a one million dollar grant this summer from USDA, to be spent on encouraging producers to register their operations.
Such information is crucial to improving our ability to respond to an animal disease outbreak, and helps address public health concerns. It also recognizes that the marketplace increasingly demands traceability, from farm to fork. We’ve seen, just in the past year, problems with contaminated spinach, pet food, lead-painted toys, and one of the largest ever ground beef recalls, putting that processor out of business. Animal ID is necessary to the integrity of the food system going forward, and it’s something we need to get in front of, just as we’re doing with air monitoring and animal care standards.
When you talk about value, in the dairy business, you have to talk about Cooperatives Working Together. We all know there’s a price for membership in CWT. It was ten cents a hundred this year, and it will be the same in 2008. But the evidence is overwhelming that the true value of CWT is so much more than the investment our cooperatives and producers are making in this program. As we saw earlier today during the Town Hall meeting, Dr. Scott Brown’s latest analysis shows that the impact of CWT this year is a 75 cent increase in our milk checks. That’s nearly an eight to one return on investment.
But the value of CWT extends even beyond just the raw economics. This program, after four and a half years, remains a unique way for dairy farmers to help influence their own destiny. Because we operate it and fund it, CWT has the flexibility to take actions when we want, without being beholden to government oversight, or someone else’s political whims. We have options, for how we use CWT revenues to reduce supplies.
And most of all, CWT still sends a signal to everyone in agriculture that farmers can, and will, commit to a common purpose that is bigger than just one person or one organization. Sure, there are cynics about what CWT has done, will do, and cannot do. Those are the folks who only calculate price, but won’t consider value. For everyone who is part of CWT, thank you for seeing the true value of cooperation, the real value of working together for everyone’s benefit. Your contributions are, in fact, priceless.
So that’s quite a list of accomplishments for National Milk this past year. None of it would have been possible without the hard work of NMPF’s Board of Directors, and I’d like to thank them for their input, just as I’d like to thank our Officers for their advice and consent. I also need to recognize NMPF’s hard-working staff; they are truly a very valuable asset to our organization.
The family that owns the Gucci clothing company has a saying many of us probably are familiar with: “Quality is remembered long after the price is forgotten.” NMPF is a quality organization: high-quality staff, members, programs, and most of all, achievements. Our farmers produce a quality product, which, regardless of price, provides a lasting benefit to consumers. This organization does the same for its own members, and I’m proud to be a part of it.
Thanks for your involvement in and your support of NMPF this year and for your attention this afternoon, may God continue to bless us all. Thank you.
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