Cooperative - USDA partnership still strong after 75 years
By Patrick Duffey
USDA Rural Development
The 75-year partnership between the nation’s farmer-owned cooperatives and USDA was celebrated June 28 during a special ceremony at USDA headquarters in Washington, D.C., marking the anniversary of the Cooperative Marketing Act (CMA).The legislation launched USDA’s ongoing effort to promote the use of cooperatives through technical assistance, research, educational and information products and statistical services.
Agriculture Secretary Ann Veneman was joined by former secretary Earl Butz and other farm leaders to mark the historic anniversary and to underscore the importance of cooperatives in the nation’s rural economy.
“Our mission provides valuable tools in the food and agriculture industry’s toolbox to help it better compete in today’s changing food system,”
Veneman said. “Seventy-five years after its creation, Cooperative Services recognizes these changes, and our employees are playing a major role in helping to promote the opportunities that lie ahead in what promises to be a world of opportunity.”
The combination of globalization, new technology and changing consumer demands has created a “more tightly connected food chain with stronger linkages among producers, processors and retailers,” she said. This requires “new relationships and thinking.” Many producers, she continued, “are finding ways to participate in the changing market for food products while improving their bottom lines.”
Veneman cited Dakota Growers Pasta and U.S. Premium Beef as examples of producer-owned cooperatives which have been successful in finding new market opportunities for their members.
America’s “best deal”
For former Secretary Butz, now 92 years old, his return to the USDA courtyard where the ceremony was held triggered a flood of memories, including his first trip to Washington in 1930 as a delegate to the national 4-H convention.
“We lived in tents on the Mall, but the first evening it was raining so the service was held here,” he said.
It was in virtually the same spot as he stood that Butz said he first laid eyes on a lovely girl standing by the fountain who was to become his wife. “She passed away five or six years ago,” he said, “but I still have a warm spot in my heart for this place.”
Butz said his career had been a fascinating one, taking him “from the cornfield to the Cabinet.”
Butz said he was “fed-up with attacks on our food system,” by those who claim our food is unsafe or produced with cruelty. He prodded those present to do a better job of “telling the story” for U.S. agriculture. This should include hammering home the point that affordable food is the cornerstone of the nation’s affluence. The average U.S. consumer, Butz said, spends only 11 to 15 percent of his or her income on food, creating a vast amount of disposable income that can be spent in other ways that fuel the economy.
“Our cheap food supply is the best deal in America – it leaves 85 percent of our income for all else...And cooperatives are one of the reasons it is the best bargain.”
Butz recalled that his father managed the Noble County Farm Bureau Cooperative in Indiana at a time when a $100,000 sales volume year was cause “for a big party.” In those years, farmers typically raised only 25 or 30 pigs and three or four sows, he said.
“They would load a half dozen pigs into a horse-drawn wagon and haul them to a railhead for shipment to Buffalo, where the co-op would sell them.
“We’ve come a long way since then!”
Farm Bureau says USDA’s co-op role crucial
In the face of a rapid and dramatically changing agricultural industry, America’s farmers and ranchers consider involvement and assistance by USDA to be crucial, according to Richard Newpher, Washington office executive director of the American Farm Bureau Federation (AFBF). He stressed Farm Bureau’s long history of support for cooperative marketing and the successes brought about by the Cooperative Marketing Act.
“Farmers and ranchers have long known those cooperative efforts have paid them benefits that led to their success in American agriculture,” Newpher said.
Shortly after AFBF was formed in 1919, it established a cooperative marketing department and later assisted in creating the national enabling legislation (CMA), Newpher said. AFBF, now representing 5 million member families, saw the need for “a strong organization to help them deal with the 'marketing problem' of low prices, high handling costs and trade abuses."
Newpher said that need continues "as does the need for a strong progressive arm in USDA devoted to promoting and spreading the benefits cooperatives can provide."
Early in the 20th century, AFBF assisted county and state Farm Bureaus in developing and providing cooperative services to its members ¨C from shipping 4-H hogs to market by rail to organizing carload shipments of limestone and phosphate. "Agricultural producers worked together to help themselves while helping each other" where no local fertilizer dealer, farm supplier and market for livestock existed.
Early cooperative ventures purchased bulk fertilizers for distribution to purchasers in the counties. Trailblazers were Mississippi, Indiana, Ohio, Illinois and Missouri. Other states followed. Soon, petroleum products and other farm supplies and equipment were added to the inventories of cooperatives. Farm Bureau also organized marketing cooperatives for grain, poultry and livestock.
Not even in the early years did all farmers support nationwide cooperative plans, warning against "embracing this demon of commercial radicalism." But the 75-year history of successful cooperative efforts has "laid that demon to rest," Newpher said. "Still, the public perception of the need for cooperative marketing in agriculture ebbs and flows, especially when considering the need for public expenditures."
Producers look to the USDA for expertise and assistance in keeping farms alive and helping them thrive, Newpher stressed. "Benefits provided through implementation of the CMA will move agriculture once again along the path to prosperity. We look to the USDA to provide the governance benefits that enable us to be the most productive, effective and efficient farmers possible."
Stronger co-op marketing
alternative to subsidies"Although there are notable exceptions, farmers will never return to getting 45 percent to 47 percent of the consumer food dollar they saw in the 1940s and 1950s if they continue selling as they are today and earning only 20 percent of those dollars," said David Graves, president of the National Council of Farmer Cooperatives (NCFC).
The problem, he said, is that farmers are marketing only about 30 percent of what they produce through a cooperative. As a result, there is a lot to be accomplished in the future of these cooperatives.
"Cooperatives can help farmers earn more of the consumer food dollar and relieve Congress of having to assist producers with a yearly subsidy. The difference between federal assistance and marketing is a symptom of the income shortage farmers and ranchers are experiencing in this country today," he said.
In comparing marketing to assistance, Graves noted that the government has spent more than $30 billion on agricultural subsidies in recent years. "On the Hill today, there is growing anxiety that those dollars are not solving the problem and merely treating the symptoms of low income for the nation's farmers and ranchers," Graves said. "The dollars don't address the possibility of investment producers have in the marketplace in attempting to market their production.
"You can give farmers money that serves their needs for one production cycle," Graves noted, "but if you are able to help them market profitably, you do them a favor and provide assistance for their entire careers."
To address the situation, NCFC formed a task force to ask cooperative managers and farmer-owners to identify the major challenges these businesses face in helping farmers profitably market their production. They said cooperatives need better access to capital in both credit and investment forms (see related story, page 7).
Looking ahead, Graves said the farmers' future "would be better served in the marketplace if they could move closer to the consumer in terms of marketing their products and services and increasing their share of the consumer dollar spent on food and natural fibers." The problem, he said, is the tendency to look at the price of commodities but fail to understand what happens to the consumer.
Using a biscuit as an example, Graves said 50 to 60 years ago consumers would buy a sack of flour derived from farmgrown wheat at the supermarket and return home to make biscuits from scratch. By comparison, today's biscuits are purchased ready-made and often stuffed with a fried egg and sausage.
"There are a lot of goods and services within that chain of events from which farmers don't benefit," Graves said. "Farmers have no hope of returning to that 45 percent share if they continue selling at what they do today."[end]
