member, indy 500 milk presenter says dairy … discovery 8 national farmers ... steves, gengler,...

National Farmers’ Farm Kids for College national youth

scholarship named its top three award recipients for 2008 on April 22. Three high school students earned $1,000 each; Kristen Steves, Escalon, Calif., Justin Gengler, Beloit, Kan., and Laura Mooney, Fredericktown, Mo.

“The Farm Kids for Col-lege national judging panel selected three top farm kids to receive $1,000 scholarships each,” said Farm Kids for Col-lege Scholarship Coordinator Helene Bergren. “The 2008 scholarship season presented a fi eld of excellent students with a passion for agriculture. We’re proud to help them gain their college educations.”

The national scholarship competi-tion is open to high school seniors committed to pursuing college degrees in agricultural fi elds. The Farm Kids

interviews surround the Indy 500. And the Indiana ADA engages in many. Schmitt and Schwoeppe spoke to about 10 reporters, from ABC and ESPN, to local television, sports radio, Hoosier Ag Today and Brown-fi eld Network.

“Sam and I rode in the fl oat in the parade. It was great publicity for Indiana farmers,” she adds. “People were yelling slogans. ‘Milk. It does a body good. Got milk? Winners drink milk.’ They were giving thumbs up and everything else,” Schmitt says.

“We just thought that was fantas-tic.”

for College competition is based on students’ academic achievement, ex-tracurricular activities, character and future contribution to agriculture.

Steves was a senior at Escalon High School in Escalon, Calif. She was Central Region President of her Future Farmers of America, as well as

Escalon FFA chapter president. She earned a Star Chapter Farmer Award, a FFA Chap-ter Degree and Star Greenhand Award.

She was a member of the state champion team of the Agriscience Fair. She was student body president and a member of the varsity football cheerleading team. She received

the Daughters of the American Revo-lution Citizenship Award, and was a San Joaquin Fair Swine Showman in 2006. She plans to major in agricul-

Kristen StevesEscalon, Calif.

877.899.5325

First-Rate Health Insurance

◆ Mission Possible

National All Staff Meeting 3

◆ D.C. Grain Talk

Paul on price discovery 8

National Farmers Mission Statement:To provide greater opportunities through collective bargaining systems, to obtain a fair price from the marketplace for the commodities produced by member farmers and ranchers.

Dairy Trends USA

Steves, Gengler, Mooney earn Farm Kids for College scholarships

June/July 2008 A publication of the National Farmers Organization

www.nfo.org ◆ e-mail: [email protected] ◆ 800-247-2110

In this Edition

◆

America’s maximumdairy marketing 4

Organization commends farm bill veto override in House and Senate

Member, Indy 500 milk presenter says dairy producers win with race publicity

◆ Cow Lowdown

Ag Secretary proposes new rule 6

Continued on page 3

877.899.5325877.899.5325

Sporting just 16 percent of its $307 billion earmarked for producers, the new farm bill now gives farmers the information they need to make business decisions, according to Na-tional Farmers Organization.

The presidential override was complicated by an accidental omis-sion of a 34-page section of the bill.

Organization members were most concerned about the Milk Income Loss Contract (MILC) payments to dairy producers, country of origin labeling and a livestock packer owner-ship ban. The packer ban was not included in fi nal legislation.

“The MILC payment is at 45 per-cent, which is higher than where we were afraid it would settle,” says NFO Ag Policy Analyst Gene Paul. “We’re very happy that country of origin labeling was included in the fi ve-year farm bill, as well.”

The Senate passed the bill 81-15 May 15, and the House 318-106 a day earlier. President George W. Bush vetoed the measure, but the House

Continued on page 2

Cel

ebrate Dairy Month

.DairyTrendsUSA Winners drink milk, India-

napolis 500 winners in particu-lar. Gulp. Aaaahhhh.

On May 25, two National Farmers women led the 53-year winner’s circle milk presentation tradition.

Anita Schmitt, Indiana National Farmers member and dairy producer, served as offi cial Indiana American Dairy Associa-tion milk presenter to the ’08 Indianapolis brickyard champ. Sam Schwoeppe, who markets cull cows through Cash Cow Plus, assisted.

New Zealander Scott Dixon won, and the cameras were roll-ing when he took a drink of milk, and then christened himself.

In the winner’s circle, the owner and crew chief stood

nearby, waiting for their milk bottles. “It’s their trophy,” she explains. “The owner was just loving it. . . .because he got a bottle of milk.”

But Schmitt focuses most on one thing. “For milk promotion, it’s when [the driver] drinks that milk – that big, beautiful bottle of wholesome milk,” that really reaps publicity, Schmitt says.

Schmitt dairies with her hus-band, Jim, near Evansville, Ind., marketing their milk through Max-imumMarketing’s Milk Profi ts Plus since 2002. They also belong to the Southwest Indiana Holstein Associa-tion, Evansville Young Dairymen’s Club and Farm Bureau. Schwoeppe dairies near Huntingburg, Ind., with her husband, Darren. She will be 2009 lead milk presenter.

A host of events and media

DairyTrendsUSA

See Center SpreadSee Center SpreadSee Center SpreadSee Center SpreadSee Center SpreadSee Center Spread

DairyTrendsUSA

Kansas Aug. 1-2 ◊ Contact Harold Walker 785.966.2160

Indiana Aug. 16 ◊ Contact Ben Rudecki 574.586.3590

Michigan Aug. 21 Owasso—GiGi’s Speaker, Paul Olson ◊ Contact Wayne Prichard 517.765.2708

Missouri Sept. 20 Jefferson City—Rickman Center Speaker, Ron Mattos ◊ Contact Ken Schlottach 573.619.5745

Kansas 785.966.2160

Indiana 574.586.3590

You won’t want to miss National Farmers Convention ’09 in Coralville, Iowa Jan. 12-15.

Hosted by the Marriott Hotel and Conference Center, it’s located in Edgewater Park, an exciting new entertainment and recreational district with dining, shopping and night life.

Our Convention will be held on the banks of the Iowa River, just minutes from downtown Iowa City and the Eastern Iowa Airport.

the banks of the Iowa River, just minutes from downtown Iowa City and the Eastern Iowa

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Mission Possible headlined the annual National All Staff Meeting held May 6-8 in Ames, Iowa.

Presenters updated our staff and independent contracters with National Farmers divisional infor-mation, and provided program details attendees will use in the fi eld to help producers.

Our evolving marketing and bargaining eff orts were addressed by Brad Rach, Procurement and Dairy Divisional Director, Gilbert Kleaving, Acting

Grain Director and Garry Crosby, acting director, livestock division. The Mission Possible theme fi t well with the organization’s eff orts to help

producers cope with buyer concentra-tion and shrinking market access by evolving our producer marketing and bargaining services.

And, I’m happy to congratulate our dedicated employees who were recognized for their service to the organization. You can read about the meeting on page 3.

In the center section of this edi-tion, you will read about trends in the dairy industry, and how the Brickners, Door County Wis., use Maximum-Marketing bargaining and risk management tools to help them secure a bet-ter future. And, I recommend you look at our testimony to the U.S. House Ag Committee about futures price discovery on page 8.

In other organizational news, National Farmers divisional and regional managers are beginning initial work crafting their budgets for the next fi scal year. Along with that, senior leaders continue strategic planning focused on the organization’s long-term future.

We all face a year that may well be framed with volatile market prices com-bined with high input costs. The agriculture climate defi nitely aff ects how we do business. We’re working hard to develop alternative ways to deliver solid prices to producers and their families.

the dairy industry, and how the Brickners, Door County Wis., use Maximum-

The agriculture climate defi nitely affects how we do business. We’re working hard to de-velop alternative ways to deliver solid prices to producers and their families.

President’sMessageBy Paul Olson

President — Paul Olson, WI Vice President — Ron Mattos, CATreasurer — Michael Miller, IASecretary — Dave Reed, IABoard Members Frank Endres – Corning, CADavid Lusk – Arbon, IDRon Schultz – Stewardson, ILJerry Maxheimer – Mt. Pulaski, ILBernard Rudecki – Walkerton, INGilbert Kleaving – Tell City, INRhonda Bakken – Decorah, IAPaul Riniker – Greeley, IAHarold Walker – Mayetta, KSCarl Wahlmeier – Jennings, KSAubin Mattingly – Rineyville, KYGeorge Field – Auburn, MEWayne Prichard – Burlington, MIGordon Turner – Hemlock, MIMark Rohr – Bluffton, MNRichard Shilling – Fort Ripley, MNJoseph Neaton – Watertown, MNKen Schlottach – Owensville, MOMark Manford – Holden, MOWayne Forder – Highwood, MTNorman Stokebrand – DeWitt, NECarroll Wade – Jasper, NYDaniel Casler – Little Falls, NYCalvin Shockman – La Moure, NDPat Lampert – New Bremen, OHChester Stoll – Marshallville, OHDennis Hadley – Silverton, ORKaleb Wolfe – Centre Hall, PAJeff Rose – Sochranton, PAJames Brown – Dell Rapids, SDArlen Hanson – Columbia, SDRaymond Tardif – St. Albans, VTGarry Crosby – Shell Lake, WIDonald Hamm – Fredonia, WIDon Mielke – Menasha, WI

THE REPORTER

NFO Offi cers and Board of Directors

The Voice of family farmers and ranchers

The NFO Reporter is published six times a year by National FarmersOrganization, 528 Billy Sunday RoadAmes, Iowa 50010-2000(515)292-2000 e-mail: [email protected]: http://nfo.orgNon-profi t third class postage paid at Princeton, Minn. Postmaster: Send address changes, along with mailing labels, to: The NFO Reporter, 528 Billy Sunday Road, Ames, Iowa 50010-2000.

Subscription price for members, $1 per year; for non-members, $5 per year.

National Farmers est. 1955Collective Bargaining

for Agriculture

2

—Continued from page 1

45-year South Dakota member passes away

and Senate voted to override him, before the 34-page omission became an issue.

Under the livestock title, pro-ducers will no longer be forced into arbitration in livestock or poultry contracts, and be allowed to litigate a dispute in their own state, instead of where the contracting company’s headquarters are located.

Producers will also now enjoy a three-day contract right of cancel-lation, the same as under consumer protection laws.

And, if large capital investments are required of a producer, the con-tractor is legally obligated to dis-close that such investments may be required over the life of the contract.

The nation’s poor will see help from the bill that provides a $10.3 billion increase for nutrition pro-grams and food stamps. Rural devel-opment and land conservation will realize spending increases as well.

The Livestock Mandatory Price Reporting measure allows for more timely and accurate reporting of wholesale and retail meat prices. And new contracting and market pricing information will help producers learn more about livestock sales. The new law will go into eff ect July 15.

Mandatory country of origin labeling promises to end confusion surrounding food labeling require-ments. The 2008 Farm Bill created the basic framework for M-COOL (mandatory country of origin label-ing), which now allows USDA to draft rules. Implementation will not occur until March 2009.

Retail meat will now have to be labeled on individual consumer pack-ages, not just on shipping containers when entering the country.

New bill good for rural America, ag producers

Richard Bjerke, longtime mem-ber of National Farmers in Water-town, S. D. passed away April 8.

An active farmer, NFO and Farmers Union member, he operated a feed grinding business in Crocker, S.D.

A former school board member, he also served on the Spring Valley Township board for several years.

He is survived by his wife, Esther, daughter Barb Erickson and son Michael, along with several grandchildren.

Iowa to host national convention

Attend your state convention

updates them on market conditions. He said forward contracting is more of a challenge now and credit is not as readily available.

Acting Livestock Director Garry Crosby revealed livestock producer participation growth in select states, noting his pride in the dedication of the Divi-sion’s staff and their attention to detail. He said cow numbers increased 3.5 percent overall, with North Dakota and Illinois leading volume increases.

Dairy and Procurement Director Brad Rach reported on dairy market conditions, and that foreign companies are taking over domestic dairy entities.

“That’s adding to mergers and con-solidations, making it more diffi cult to place milk,” Rach said. Market access has become an issue and he noted the need to work together to

truck, place and price milk. Dedicated Service Awards were presented

to staff ers with service ranging from fi ve to 40 years.“National Farmers employees

and independent contractors have proven time and time again they are up to the challenges laid out before you,” Rach said. Whether you are on the front lines servicing members or pursuing new ones, or if you’re a support person or a leader, we are all an integral part of

what needs to be done. And that is to keep collective bargaining in the forefront, because we can keep fam-ily farmers strong and independent through the NFO.

Kris Tillo Joyce Jenkins

tural communications in college.Gengler was a senior at St. John’s High School in

Beloit, Kan. He has been a member of the National Honor Society all four years of high school, and was National Honor Society president. He was basket-ball team captain, and participated in track, football, speech and drama, Students Against Drunk Driving

and earned academic letters all four years. He earned the best actor award in 2005. Justin served on the Beloit Youth City Council, and in Catholic Youth Organiza-tion, as 2008 president.

He operates a tree-cutting business and works for a seed company when he’s not working on his family’s farm opera-tion taking care of cattle and helping in the fi elds.

Justin plans to major in agribusiness at Benedictine College, Atchison, Kan.

Mooney was a senior at Fredericktown R-1 High School in Fredericktown, Mo. She served all four years as FFA chapter president and area 15 vice presi-dent. She earned the State FFA Degree, Star Green-hand Award, and State Leadership Medal.

She was senior class president, student council vice president and senior drum major in the FHS band. She is involved daily in agriculture, taking care of several head of beef cattle and sheep as a part of her FFA project. She markets alfalfa hay, straw, sweet corn and bulk honey each season. She plans to major in animal science and veterinary medicine at the University of Missouri, Columbia.

Mooney intends to own a veternary clinic in the future, and fulfi ll her dream to help farm-ers keep their livestock healthy and safe.

“Farm Kids for College coincides well with National Farmers’ focus on profi table farming, and helping young people is good for the next farming generation,” Bergren adds.

The three national scholarships awarded each year, honor individuals important in National Farmers history. The Al Scott Memorial Scholarship remem-bers the long-time dairy division director who helped dairy farmers receive fair treatment in the market-place.

The Oren Lee Staley Memorial Scholarship hon-ors the well-known fi gure in agricultural history who began agricultural bargaining and marketing programs to return profi ts to producers in rural America.

The Founders Scholarship honors the original founders of National Farmers Organization.

Laura MooneyFredericktown, Mo.

“That’s adding to mergers and con-solidations, making it more diffi cult

truck, place and price milk. Dedicated Service Awards were presented

to staff ers with service ranging from fi ve to 40 years.

Mission

Possible

If you’re over 40, you may remember the Mis-sion Impossible (MI) series on broadcast television. Or perhaps you’ve seen Tom Cruise in the MI big screen movies. In both, the team of agents always accomplishes the mission, regardless of the obstacles presented.

At this year’s national All-Staff meeting in Ames, Iowa May 6-8, more than 60 staff members and independent contractors from across the country donned sunglasses and declared the plan to expand the organization’s marketing and bargaining procure-ment goals Mission Possible.

“What you do as staff is truly appreciated. You are the front lines,” said National Farmers Vice President Ron Mattos. “It makes me proud to know we have people who truly care about what they’re doing, and understand how important their work is.”

Divisional directors updated attendees on activities within their departments, and echoed Mattos’s enthusiasm.

Gilbert Kleaving, acting grain director, spoke about robust price up-ticks in grain markets, both organic and conventional.

“We have to be very attentive to what is happening in the industry….Farmers themselves are very uneasy about market conditions, and they are looking for help in marketing,” said Kleaving.

He noted that the Grain Marketing Plus pro-gram doesn’t just sell grain, but protects farmers and

3

Mission Possible banners organization’s recruitment focus at May All-Staff Meeting

California, Kansas and Missouri students shine in Farm Kids for College

5 YearsDale CurrentDon HammDon HarnishSherry KempDenise MehringerCarol StennesKris Tillo

10 YearsJames HeinenDorothy ImrickDon MoosTracy WebbGene Wharton

15 yearsFrances ArellanoMelanie DunganBobbie HendricksonPat LampertFred ShawScott UptonHubert Zuiderveen

20 YearsNancy CollinsJim Steier

25 YearsScott Benedict

30 YearsWayne MooreCarl Schroeder

35 YearsDave Kaseno

40 YearsJoyce Jenkins

Staff Development Director Judy Meierkord presented service awards at the national All-Staff meeting in Ames, Iowa, May 8. Pictured from left: Nancy Collins— Field Rep., Iowa, Dave Kaseno—Northeast Dairy Regional Director, Scott Benedict—Field Rep., Wis., Hubert Zuiderveen—Field Rep., Mich., Don Harnish—Dairy Inspector, Penn., Wayne Moore—Dairy Risk Management Coordinator, Iowa, Scott Upton—Field Rep., Ohio, Kris Tillo—Pro-curement Assistant, Iowa, Sherry Kemp—Receptionist, Iowa, Pat Lampert —Director of Livestock Operations, Ohio, Melanie Dungan—Travel & Convention Coordinator, Iowa, Carl Schroeder—Field Rep., Ohio, Jim Steier—Dairy Division Manager, Wis., Joyce Jenkins—Payroll Manager, Iowa.

Employees recognized for dedicated service to the organization

—Continued from page 1

Justin GenglerBeloit, Kan.

Justin Gengler

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Most clubs cover risk managment basics, the importance of making a business and marketing plan and knowing your production costs. Then, members talk about what deter-mines milk prices, and how to factor basis.

Producers learn about factoring their basis by pullling out their milk checks for the last three years and compar-ing those with Class III prices for the same period.

“Producers quickly understand what their basis is, and how it varies seasonally,” Moore empha-sized. They also better understand the mechanics of hedging, and how it can be used in their opera-tion.

Club costs are minimal, unless the group opts to do some test trading. Then, some producers may want to contribute funds to establish an account with a bro-

ker and trade as a group.MaximumMarketing representatives are

happy to provide leadership in helping a pro-ducer group get started in their area. But it’s also important that club members believe it is their club, assisted by the National Farmers representative.

Dairy marketing clubs are a great way for producers to learn how the National Farmers marketing toolbox helps minimize downside price swings and maximize higher prices.

Contact Wayne Moore at 800.247.2110 in the National Farmers home offi ce to learn more about how price risk management can assist you in maximizing your annual returns. And, how a MaximumMarketing Dairy Club can help you and your neighbors profi t more.

IN

FOLINK

Dairy Futures Line: 800.724.9444

Daily access to marketing professionals: 800.247.2110

For further information:www.maximarketing.org

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Dairy Marketing Clubs help milk producers focus on education, profi ts

Been meaning to read up on milk risk man-agement? We have a new approach for you. It combines fun and camaraderie, with effec-tive milk pricing.

It’s the MaximumMarketing Dairy Club. Because learning about how to maximize your milk price months into the future can be an important way to lock in a secured return on a portion of your milk.

And our marketing club con-cept can bring that future much closer to reality for you.

Marketing club sizes usually range from fi ve to about 20. The group should not be too large, because that limits discussion op-portunites for everyone.

The club usually includes at least one producer with experi-ence using National Farmers UltraOptions or UltraFutures programs, and shares his or her knowledge and fi rst-hand experience with participants. Often, a banker, dairy plant fi eld representative, input supplier and other agribusiness professionals are either group members or presenters.

After an initial learning period, club mem-bers can engage in club trading in dairy futures and options as a group, or as individuals. When the club reaches that point, a broker becomes involved.

“Our marketing club idea is a great way for dairymen and women to get together periodi-cally as a group and learn about protecting their milk prices,” said National Farmers Maxi-mumMarketing Futures and Options Coordi-nater Wayne Moore. Producers support one another as they study the strategies behind price protection.

OUR MORTGAGE LOAN PROGRAM IS A REAL WINNER.

800.824.4448 May not be available in all areas.

Minimum credit standards and loan amounts apply.

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CALL FOR DETAILS.

Wayne Moore, MaximumMarketing Risk Management Adviser

Wayne Moore, MaximumMarketing

❄ Mexico has seen a 20 percent increase in U.S. imports annually since 2002. dairyreporter.com

❄ Fluid milk consumption in China has expanded by 21 percent per year since 2000 – incremental consumption growth equal to an entire year’s milk production in Wisconsin.United States Dairy Export Council

❄ California’s 2,200 dairy families house 1.5 million milk cows. Approximately one out of every six dairy cows in the US lives in California. California Dairy Herd Improvement Association - CA DHIA

❄ Upping the genetics ante, a new sort-ing process combines traditional parental prediction tests from pedigrees, with genomic information from DNA tests. It increases reliabil-ity for young bulls and heifers to 18 percent. The improvement amounts to nine daughters in a bull’s proof or four to fi ve lactations of production data for females. Hoard’s Insight, April 2008

Dairy World Trends

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“With Maximum Marketing, it allows us to be

represented in the market-place, as a large volume of milk, rather than going in alone.” Larry Brickner

Steve Graczyk (l) MaximumMarketing representative visits with

Pete Brickner (r).

Larry Brickner, Wisconsin Dairy Producer

Brickners stairstep profi t with National Farmers

The face of National Farmers in Door County, Wis., is a youthful one.

Door County ranks in the middle in terms of National Farmers membership numbers in the state. But the number of dairymen 40 and younger (in Door County National Farmers) has “blossomed in the last couple of years,” says Pete Brickner, a producer who himself falls into the young category, and serves on the Ledgeview Marketing Center Board.

Today, two-thirds of Milk Profi ts Plus pro-ducers in Door County are less than 40 years old.

With the topographic issues of shallow limestone with fractures, and necessary, conscientious soil and water oversight, it’s not the easiest place to get started in dairying. “But these young guys have grown up and wanted to farm,” Brickner says.

Some of the young producers grew up on farms that marketed through Milk Profi ts Plus, and some did not. As a young producer, Pete sees National Farmers giving him repre-sentation and infl uence in the marketplace, something he can’t get individually, he explained.

National Farmers pays, and Pete has conversed with the young producers about what brought them into the Milk Profi ts Plus program. “The young producers certainly compared prices, and National Farmers compared very favorably,” Brickner says.

“Combine that with the assistance of fi eld staff, and it’s an outstanding program, not just in pay, but also in how the staff helps maintain quality.”

Young producers go through Door for MPP

800.247.2110

Pulling into the driveway of the Brickner dairy farm, Door County, Wis., visitors enjoy the broad expanse of green yard in front of the towering navy silos and red farm buildings. The clean, welcoming farmstead offers a clue to a well-run operation, one that relies on hard work and continuous improvement for success.

Larry and Bernie Brickner dairy in partnership with their son, Pete, and his wife, Angela, milking 120 cows. They keep about 100 - 120 head of young-stock.

Larry and Bernie started marketing their milk through National Farmers Milk Profi ts Plus in October 1985. “Shortly after, I jumped in with both feet, and became county president.”

Larry has held many leadership positions, and is now treasurer of the Wisconsin state organization, serves on the Wisconsin board and represents Wisconsin National Farmers on the Federation of Co-ops.

“National Farmers is a great fi t for the bulk of the dairy producers in the state of Wisconsin,” he said. “There are a lot of 50-300 head herds in Wisconsin. National Farmers allows them the ability to go to market in a unifi ed fashion to market milk and livestock.”

Larry points out the benefi ts of National Farmers for operations nationally. With Maxi-mumMarketing, it allows us to be represented in the marketplace, as a large volume of milk, rather than going in alone,” he says. And that means leveraging a bet-ter price from buyers.

Larry sees the National Farmers benefi ts extend-ing into the risk manage-ment arena, as well. With National Farmers’ UltraOptions, producers don’t need a 200,000 lb. contract. National Farmers pools the options needs of many produc-ers to fulfi ll the obligation. “We have done con-

tracts with other farmers to get that 200,000. It allows us to stairstep our contracts.” They have guaranteed prices into 2009.

“It’s an insurance policy,” Larry says. “We’re locking in a cashfl ow milk price on a percentage of our production.”

First-rate service from their fi eld rep ranks high on their list of reasons to recommend Na-tional Farmers, as well. Steve Graczyk helped troubleshoot a problem with milking equip-

ment the manufacturer didn’t solve. “Steve came in and took a

couple of cracks at it. . . .he adjusted something. Problem solved,” Pete says. And that made milking time go much smoother.

The cull cow program, Cash Cow Plus, has proven to be a great asset to the Brickners. At their market-ing center, National Farmers staff sort their culls, which allows them to market to packers

with a better price for each

grade. “We’ve come out $200 ahead per cull cow better than going to sale barn,” Larry says.

Pete serves on the Ledgeview, Wis., market-ing center board. He explained with Cash Cow Plus, cows are marketed via grade and yield, and producers get paid the cow’s true market value.

When grading questions arise, National Farmers staff contact the packer, and sometimes fi nd a processor owes a producer more money, and the packer corrects the matter. “It’s a great oppor-tunity to be protected without leaving the farm,” Larry says.

Turn your culls into cash

“Think about how she may stand the stress before you ship her. If the cow needs time to get her strength back, keep her home till she can stand the trip.”

— Garry Crosby

Commodity & Unit Price Received 100 % Parity Parity Received In cents /lb. Cotton, per lb. 0.607 2.25 27 0.607

Wheat, per bu. Corn, per bu. Barley, per bu. Grain Sorghum, per cwt. Soybeans, per bu. Oats, per bu. Dry edible beans, per cwt.Milk (all), per cwt.Beef cattle (all), per cwt. Calves, per cwt.Hogs, per cwt.

8.80 13.10 67 14.65.12 8.25 62 9.144.76 9.01 53 9.919.18 14.70 62 9.1812.30 20.40 60 20.53.46 5.36 65 10.836.30 66.40 55 36.318.20 47.80 39 18.2 90.50 250.00 36 90.5 116.00 362.00 32 116.054.10 137.00 39 54.1

May farm prices received increases 5 points

6

Source: Agricultural Prices – National Agricultural Statistics Service, USDA

By Brad Rach

Agriculture Secretary proposes new rule to ban downer cattle from market

On May 20, Agriculture Secretary Ed Schafer announced a new USDA rule will be crafted to eliminate processer slaughter of ill or weakened cows.

“The 60-day enhanced surveillance period concluded on May 6 and while we are still analyzing those results, today I am announc-ing that USDA will begin working on a proposed rule to prohibit the slaughter of all disabled non-ambu-latory cattle, also know as ‘downer cattle,’” said Ag Secretary Ed Shafer. “In other words, I am call-ing for the end of the exceptions in the so-called ‘downer rule.’”

Scrutiny of downer slaughter rules was prompted by the 143 million pound beef recall in Febru-ary, at Westland/Hallmark Company, including 37 million pounds that had gone to school lunch and other public nutrition programs. No illnesses have been linked to the recalled meat. An investigation showed that a number of downer cows were pro-cessed in violation of USDA policy.

Schafer said the rule change was not being done for public health reasons, but would increase consumer confi dence by eliminating confusion about why some downed cows were being allowed into the food supply.

“FSIS will draft a proposed rule to remove the exception that allows certain injured cattle to

proceed to slaughter,” Schafer said. This action is expected to provide additional effi ciencies to food safety inspection by removing the step that requires the inspection workforce to determine when non-ambulatory cattle are safe to slaughter.

Cattle producers, transporters and slaughter establishments alike will be encouraged to enhance humane handling practices, as there will no longer be any market for cattle that are too weak to rise or walk on their own.

National Farmers Live-stock urges producers to be extremely careful about the animals they send to market. “Cows that leave your farm to go to packing plants many

times have to be loaded and unloaded twice, along with often substantial time on trucks or holding pens,” says Acting Livestock Director Garry Crosby.

“Think about how she may stand the stress before you ship her. If the cow needs time to get her strength back, keep her home till she can stand the trip.”

Crosby added that it’s important to work together to maintain the good reputation that the dairy and cattle industries deserve. “If we can help, or if you have questions, don’t hesitate to call one of our livestock representatives in your area,” Crosby says.

Today’s farming environment presents a num-ber of challenges. Mergers, consolidations and joint ventures are only a few things dairy producers face.

Tremendously high prices for energy con-tinue to drive input costs through the roof. These elements, when coupled together, eliminate com-petition, dry up markets and begin putting dairy producers in an unsavory position.

The question is, how do we combat these dif-fi cult and serious issues? It is a precarious question, but one we in NFO are equipped to answer. The answer became crystal clear at our annual All Staff Meeting where the theme was Mission Possible.

To make a Mission Possible, there needs to be a vision, an objective along with a plan of action. NFO has had a vision for 50-plus years of keeping family farmers on the land. NFO has an objec-tive to keep family farmers profi table by securing needed dollars from the marketplace. NFO’s plan of action to accomplish these goals has been the use of collective bargaining.

However, no mission can be a success without key components. The mission we are embarking upon will be successful because of you. You, the members and employees have proven over and over again that no challenge is too great.

You are the key component to making our Mis-sion Possible. You may be on the front lines diligently working to convince other dairy producers to become members, or you may be a support person that compiles and supplies necessary data that marks the progress of our mission, or you may be a leader charged with keeping everyone informed, positive and pulling in the same direction at the same time.

So remember, as an integral component in mak-ing our Mission Possible you must answer the chal-lenges we face by keeping collective bargaining in the forefront.

Producers today need National Farmers Organization’s MaximumMarketing services more than ever before. Dairy producers using NFO’s collective bargaining program can keep their family dairy farm strong, and keep their family dairy farm independent.

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The preliminary All Farm Products Index of Prices Received by Farmers in May, at 150 percent, based on 1990-92=100, increased 5 points (3.4 percent) from April. The Crop Index is up 4 points (2.4 percent) and the Livestock Index increased 5 points (3.9 percent). Producers received higher prices for hogs, cattle, onions, and broilers and lower prices for eggs, lettuce, wheat, and broccoli. In addition to prices, the overall index is also affected marketings of cantaloups, grapes, sweet corn, and wheat offset decreased marketings of cattle, milk, corn, and apples.

The preliminary All Farm Products Index is up 14 points (10 percent) from May 2007. The Food Com-

modities Index, at 147, increased 4 points (3.5 percent) from last month and increased 11 points (8.1 percent) from May 2007.

Prices Paid Index up 3 PointsThe May Index of Prices Paid for Commodities

and Services, Interest, Taxes, and Farm Wage Rates (PPITW) is 184 percent above the 1990-92 average. The index is up 3 points (1.7 percent) from April and 23 points (14 percent) above May 2007. Higher prices in May for diesel fuel, mixed fertilizers, feeder cattle, and potash & phosphate more than offset lower prices for feed concentrates, feed supplements, tractors, and feed grains.

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The unprecedented prices seen on the Chica-go Board of Trade (CBOT) and other commodity exchanges have caused enough concern that the Commodity Futures Trading Commission (CFTC) held an ag forum on April 22.

Several concerns were brought out at the forum, including farmers’ inabil-ity to forward contract in most parts of the country to price their grain at favorable levels.

Related dis-cussion included the lack of convergence in the market, and whether specula-tive and index funds should have position limits to reduce their infl uence on markets.

The Na-tional Farmers Grain Division submitted a letter to record its position on behalf of our farmer members. (You can read the entire story on page 8). But, you can review the keypoints in the ac-companying chart.

Many grain buyers are no longer willing or able to fund margin calls created by current price spikes, so farmers can’t forward contract beyond a limited delivery time. Farmers are at risk due to

7

By Linda Reineke

rising input costs, and their inability to lock in price in many areas.

The Senate is holding hearings regarding this dilemma. Many ag groups are sharing testimonies, including fund managers.

We encourage you to contact your senator and ask him or her to help provide a solution so farmers can lock in profi ts.

Some limited specula-tion is necessary to provide the liquid-ity to off -set trades. Limited may be the key word.

In other news impacting producers, the CFTC revealed May 30 it had expanded international surveillance information for crude oil trading. And, CFTC Acting Chairman Walt Lukken said increased transparency in trading is neccessary to prevent market abuse.

CFTC offi cials will focus on index trading and will review trading practices and routinely require more detailed information from traders.

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By Sarah Nelson

Deferred cattle contracts for Oct. ’08 through June ’09 have been buff eted by corn market volatil-ity. A feed cost premium is linked to those live cattle contracts, because it will take more money to feed corn to animals at $7 per bushel, compared to $4, for example.

Other price factors include growing uncertainty about the U.S. corn crop condition. Based on weather worries, I expect corn markets to remain volatile most of the summer, and that volatility will extend into cattle markets.

In addition to volatility, I have some concerns for closer up months— the August futures, as of May 29, were trading about $5 above June futures. And, October futures were trading about $5 above August futures levels. If it plays out that way, that means higher meat prices in supermarkets.

But, with a higher percentage of consumer income used to pay gasoline bills, there are fewer food dollars available. So, I think we’ll meet some consumer resistance. The supply and demand factor on the live cattle side will have to contend with a consumer price resistance factor for beef.

Meanwhile, meat prices will have to climb to allow for higher prices packers may have to pay pro-ducers. Producers may believe that with input levels at $7 for corn, cattle markets must move higher. But that may not happen if grocery stores can’t sell high-er-priced beef. So, things may have to be adjusted.

The other concern I have is that we don’t have particularly strong export markets currently. Al-though they are certainly better than they have been, there is not enough demand to pick up the slack from the eff ect of U.S. consumers not buying beef.

Having said that, the strong pork cutout has been a ray of sunshine, so much so that it may help support the beef trade. If pork is priced at more competitive levels than beef, it may bring back some consumers to the beef counter.

Situations such as consumer price resistance and crop conditions relate to market fundamentals. Still, because of the huge infl ux of the speculation in ag commodities, we aren’t trading on fundamentals alone anymore.

We’re trading on the trends and whims of index fund managers who don’t have the animals or grain to back up the trades.

Things aren’t what they used to be. Market fundamentals that we used to think of as negative, may not be interpreteted that way now. Market fun-damentals simply are not impacting prices as much anymore. At least for now.

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“Mr. Chairman, the Agriculture Committee has jurisdiction over both the USDA and the CFTC, and we feel the solutions to problems caused by excess vola-tility, lack of conver-gence and devastating margin calls can be found through more control on speculation, more transparency and tighter position limits.

— Gene Paul

And, these new market participants have a large impact on trading volume as shown in the chart.

“The CBOT was established to be the price discovery mechanism to off er farmers and end users price protection,” said Paul. With a mini-mum percentage of the trading on the CBOT from either farmers or end users, how can we be assured that commodity prices accurately refl ect

supply and demand? Paul underscores

that with so many grain processors not off eringcontracting opportunities for farmers to protect their prices, commod-ity funds have become a great performing asset for pension funds. Instead of it being a risk management and price discovery mechanism for agriculture.

“More transparency and posi-tion limits are tools that could help stabilize the market and help convergence,” he says. “We must ensure that all ‘hedgers’ truly hold a cash grain position.”

National Farmers position is to facilitate forward contracting for farmers during volatile markets, and the USDA should consider implementing a loan program for grain elevators and end users.

The eff ort could be administered by the Commodity Credit Corporation (CCC) and would be similar to the CCC farmer loan program.

When an end user purchases grain on a forward contract from a farmer, the purchase contract, signed by the elevator and the farm-

er, could serve as documentation to allow hedge accounts to be fi nanced by the CCC until the contract delivery period.

To minimize convergence is-sues and margin requirements, USDA could consider recom-mending the use of the National Index Futures, which are traded on the Minne-apolis Grain Ex-change. Accord-ing to a research

study by Sparks Commodities, Inc., there is a much greater correlation between cash prices

America’s grain producers continue to face reduced forward contracting opportunities, and limited price discovery.

On May 15, National Farmers’ Ag Policy Analyst, Gene Paul submitted testimony to the U.S. House Agriculture’s Subcommittee on General Farm Commodities and Risk Management about the current situation farmers face.

“As an organization that serves as a marketing agent for farmers, the dilemma that is created by not be-ing able to forward contract grain is very diffi cult,” Paul says in written comments to the committee.

Staggering in-creases in the prices of fertilizer, pesti-cides, diesel fuel, seed, land rents and other input costs for spring planting leave farmers at risk of lower priced com-modities next year, unless they are able to forward contract at a profi t.

“We believe the CBOT’s grain contracts are no longer accurately providing the price discovery mechanism that has been relied upon by farmers for many years,” Paul emphasizes. “The fundamen-tals of supply and demand are now being refl ected in the basis rather than in futures prices. This creates the convergence problem that was experi-enced earlier this year.”

The concern grows for crop years 2009 and 2010. If producers respond to higher Chicago Board of Trade grain prices by plant-ing record acreage, and subsequently prices move lower, they will have missed an opportunity to capture prices high enough to lock in their production costs and profi ts.

Paul points out in his written com-ments to the committee that Index Funds managers testifying at a Com-modity Futures Trading Commission (CFTC) Agriculture Forum in April seemed to ignore grain market funda-mentals in their review. Another witness notes that a commodity investment fund interest increase of 5 percent would reduce volatility for the fund.

Another witness comments that some managers see slowly increasing commodities as a percentage of a port-folio’s holdings a good asset strategy. These new market participants have no commercial interest in the underlying commodity, and add nothing positive to the impor-tant price discovery function of futures markets.

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Paul comments to House Ag Committee on futures price discovery

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refl ected by the National Index Futures for most of the Midwest grain producing areas than there is for the CBOT.

“The main concern is that farmers and end us-ers are able to use the CBOT for risk management

in volatile markets,” says Paul. When op-portunities exist to lock in production costs and profi t, the CBOT was supposed to be the tool for ag-riculture to utilize for that purpose.

“Mr. Chairman, the Agriculture Com-mittee has jurisdiction over both the USDA and the CFTC, and

we feel the solutions to problems caused by excess volatility, lack of convergence and devastating margin calls can be found through more control on speculation, more transparency and tighter posi-tion limits.”

“A strong agricultural economy is a necessary underpinning to the U.S. economy, and the CBOT is the tool to ensure our strength,” Paul concludes in the position paper.

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