Master Address by Gary Rohde Dairy Meeting a

one of the speakers at the 1981 national farmers organization dairy commodity meetings at the National Convention in Indianapolis Indiana was Gary rody Dean of the University of Wisconsin River Falls Wisconsin also former secretary of agriculture in Wisconsin who is now being introduced by a dairy director L Scott I got my own looks like I got my own cheerleading section or whatever I think do you want me to give her a little report on right now or or just introduce Gary okay no wow I wouldn't want to do that now and and get everybody diverted from what you want to say Gary so I think maybe we but I wanna I'd like to introduce our guest speaker and pardon me for using some notes here because he has quite a long list of accomplishments and presently dr. Odie who's going to be our speaker is the Dean of the College of Agriculture University of Wisconsin at River Falls just he just been to pass Secretary of Agriculture in the state of Wisconsin and I'd like to say that our organization have worked very closely with Gary's administration his people in the Department of Agriculture and had some differences of opinion at times but generally speaking we were pretty much in a chord and I think that he represented all farmers in the state of Wisconsin well as Secretary of Agriculture Gary's got a it's an educational background behind him he's got a BS Bachelor of Science the Science degree from a Wisconsin State University or River Falls with major majoring in agricultural education he's got an MS from University of wisconsin-madison and major in agricultural economics and a PhD from the University of wisconsin-madison major in agricultural economics he some of the things he's been selected as a member of outstanding educators of America from University of Wisconsin River Falls in 1970 it had been a recipient to the distinguished Teacher Award on the University of River Falls campus from 74 and 75 leader of trade missions during his tenure as Secretary of Agriculture to Japan representing 12 Midwestern states is chairman marketing and agricultural development and the committee form of a National Association of State Department's of Agriculture in night from 1978 to 1980 his representative from Wisconsin at Taiwan trade Investment Forum in 1979 is a president of the Midwest Association of State Department's of Agriculture 1980-81 though he does have a long list of accomplishments we hope that through his in his present position that we can continue cooperation with the University System in in agriculture and I look forward to a long and continuing association with the University and with dr. Odie so why don't we give dr. Rodya real welcome here as the guest speaker well thank you very much Steve and I feel very honored to have been invited to address you this this fine day here in Indianapolis there's less snow here than there is in northern Wisconsin I can assure you and it's kind of nice to come south is perhaps some of you from Wisconsin and other areas in the northern part of the United States would share that sort of that's short of sort of thing with me I very much appreciate the opportunity to come and to talk about the dairy industry to talk about agriculture it's my life it's been my lifeblood over the all my years born and raised on a farm I have a brother that's two youngers two years younger than I that's attempting to make ends meet on a dairy farm a typical kind of a dairy farm in central Wisconsin and we checked pretty closely with him and with many others who were in the dairy business in the state of Wisconsin I want to acknowledge the excellent working relationship for nearly 6 years that I had with the state national farm organization with Steve povitch John gasser Jim zig weed I see Ken Schmidt in fact a couple of these individuals with our Board of Agriculture in the state of Wisconsin served as at least part of my employer or my boss in the state of Wisconsin so I appreciate the opportunity of having developed a good close personal working relationship with the organization and with a number of people and Steve we had a kind of an agreement that every other year I would come to the state nfo Convention and Wisconsin and would be happy to spend 20 minutes or a half an hour speaking before the group but I would be there every year to talk with various members who were part of the state organization and very much appreciated the opportunity for that kind of a discussion that's so important for those of us who were in policymaking decisions and who still are involved in agricultural education or helping to form the agricultural issues and articulate them for the day's both today as well as in the future I think it would be useful before I launch into the dairy industry situation that I was asked to make some comments on to represent for you a little bit of my philosophy regarding agriculture and what I see is some very crucial and very important aspects of Agriculture that you and your organization have identified with but that I would like to lay in front of you and say that I very strongly believe in and that I've worked hard in the last six years to bring them before the people in the state of Wisconsin and to deal with them in a responsible manner and to point out and to come forth with some constructive kinds of programs and activities on behalf of agriculture that I think are so very important some of which we take for granted and some of which we lose in this fast-paced shuffle of ours on the farm in the city in state legislatures or wherever my roots from the standpoint of philosophy are embodied from an agricultural standpoint in number one the absolute importance of preserving a family farm operation of Agriculture an owner/operator system of agriculture that I fear we're losing faster than we ought to be and that I know your organization stands squarely behind that kind of a concept and as I've traveled the world I believe increasingly that that's what's made our agriculture great to a large degree is a work ethic is an element of security is an element of individual freedom that our farmers possess by being able to own and control and become somewhat individualistic as far as their farm operations are concerned an owner/operator system of agriculture I strongly believe that that's what's missing in other parts of the world as I travel the world and look at why food isn't being produced we're lacking a man land or people land relationship that is embodied in the citizens and the people of this country I think that's a very important objective to work hard for secondly I think increasingly the citizens of our state I hope as a result of my 100 talks a year around the state further believe in a land preservation ethic that we must preserve our land for agricultural purposes that we must put a higher emphasis on Soil and Water Conservation and in fact come forth and convince urban people that there is and there needs to be a very clear right to farm established and that land must be preserved in Wisconsin we have lost land at the rate at the rate over the last 25 years in agriculture so that if that were to continue a hundred years from now we wouldn't have any land in agriculture we can't continue to lose at that kind of a rate I believe a soil water and farmland preservation ethic is a second very important keystone from an agricultural standpoint a third one is market information marketing and market information market news Direct Marketing market orders bargaining attempts those kinds of marketing alternatives that are available are very important and I worked hard to make sure that information increasingly was available particularly to farmers to make decisions to make marketing decisions and to have that information and to have marketing alternatives and good marketing outlets that is important and that's much that has much to do with what you as an organization or obviously involved in and will continue to be involved in as we project ahead I guess a fourth thing would be market development selling and actually creating better markets for our products working on the aspect of demand making sure that if something isn't cheese it ought not to be labeled as cheese making sure that we have the kind of money is available for new product development and if 60 to 70% of the people in the world cannot consume milk because they can't assimilate it in their body we ought to be working on the research to make sure that those individuals with additives into that milk can use nature's most perfect food and we need to spend more dollars and we need to work on this so that we can develop the kind of markets for milk and that milk can be used and then finally been very much interested in the whole question of income policy for farmers yes a dairy price support program is occupied as much of my time in the last six years as any other single program and activity and I don't believe you pull the pins out of dairy farmers relative to dairy price support programs target prices and loan prices and various kinds of prices like this are important and I look at farmers and individuals who have gotten in in the last four or five years and those that are highly leveraged and those that have a cash flow problem and those that are paying 20% interest are having very very difficult times and it seems to me we need to be working with them and not put a large number of individuals through a very very serious economic wringer as I call it and what I see happening and in fact what I'm projecting I guess as we look into the next year or two those areas represent a philosophical base in a root of philosophy from whence I come in operating and conducting the activities of an agriculture department on behalf of ninety four thousand five farmers in the state of Wisconsin with 45,000 of those being dairy farmers with three billion dollars of the income of that four point seven billion dollars that farmers get in Wisconsin three billion of it coming as a result of the sale of milk and dairy products in the state of Wisconsin and the interest is fantastic from the standpoint of dairy the dairy industry dairy programs dairy marketing efforts and it should be and rightfully so when we look at the farmers and the businesses that have their lives staked and their investments in that kind of a in that kind of a farm activity and enterprise selection activity that we have now what's happening farmers are getting larger they are more they're fewer they're more highly specialized forty years ago we had a hundred ninety three thousand farms in the state of Wisconsin today we have ninety three thousand that's quite a drop when we look at the concept of the individual owner operators out there on the land I guess the other thing that I look at this past year and we go back to February and March and April I really think the dairy industry has maybe it's a question of timing but it has been singled out for a fairly massive reduction in income in fact the income that's going to be forgone by the dairy industry in the state of Wisconsin as a result of not having price adjustments in the year nineteen eighty under the dairy price support program will amount to six hundred million dollars for our forty five thousand farmers this year I guess I asked myself here we have a very productive sector of our economy they're very efficient they're hard-working and they're being asked to bear a very heavy load I think it disproportionately too heavy a load as we look at where we are this year relative to the farm bill and various government pieces of legislation in fact I will suggest that the fact that we're not getting an increase and with what's happening with other commodity prices that the drop in support prices are going to result in going to cause more production of milk and in the short run I see more production this year in the first part of 1982 as I gaze ahead in looking at what's happening as far as the dairy industry is concerned and I see a pretty high price in human in economic terms particularly from young farmers and particularly what's going to happen this winter as a result of the net income figures that I'm looking at and that I'm hearing from some of the dairy farmers in Wisconsin and I'm particularly concerned I guess as we relate this back to who is going to be our next generation of farmers as we look at the young people that need to come in that will be replacing the average age of the dairyman in Wisconsin which is 53 or 54 years old in the next 10 years and that we do have the difficulty and the problem and the challenge of hopefully targeting or saying yes our next generation of farmers ought to be owners and operators and they ought to be the individuals out there that are going to be producing rather than the absentee landlord rather than the amount of money or the large amount of money coming from the non farm sector that's likely to flow now given those observations in the dairy industry you and I know that the figures are not real Pleasant right now let me give you just a few quick ones in October of this year we are milking eighty thousand more cows than we were a year ago we're milking eleven thousand more in Wisconsin that's the first time that's happened for a number of years our milk production in October was up 3% from a year ago and it's seven percent up from two years ago in Wisconsin it 1% in 3% in fact Arizona California and various other states other than America's Dairyland are increasing milk production faster than Wisconsin have over the last couple of years looks like they will for the next year or two 31 of 33 states 31 of 33 states in October reported their October milk production greater than a year ago as we look at production figures and in fact October was the 30th consecutive month of greater production than the previous month USDA purchases 12.5 billion pounds of milk on an equivalent basis last year eight to nine percent so as we look at the concept of supply the amount of money that's involved there and as we look at the amount of milk that is produced we see that it is greater than what is being taken off the market at the present time now this creates a problem because milk prices have not gone up well the costs of production have and will continue to and as I look at the amount of milk and as I look at the things that are in place now this fall through this winter and into 82 it looks to me like milk production will continue at high levels through 1982 why do I say this I say it because I see low call call prices and the incentive is not there to call I say it because there are a record number of replacement heifers based upon the statistics I've just looked at to move into the milk line nationally and we've had a bumper crop of hay corn soybeans and feed and those prices are low to low and dairy farmers aren't about at this point to go into corn production or turkey production or for that matter just about anything because those prices are not very attractive so those production levels projecting into 1982 looked to me for those reasons like they're going to continue to be large now what about the cost of producing milk some interesting figures what's happened in 1978 USDA figure 10 dollars and 57 cents to produce a hundred pounds of milk 1979 twelve dollars and 21 cents USDA figures 1980 thirteen dollars and seven cents don't know what the 1981 figures are going to be but I know this then in looking at those past three years and looking at this year the cost of producing milk has been going up and will probably go up about a dollar a hundredweight that's what's happening there's been no increase in price this past year none projected this next year we're finding an increase of about a dollar a hundredweight the cost of producing milk that's going to create increasingly cost price-squeeze as far as the individual dairy farmer those forty five thousand dairy farms in Wisconsin the squeeze is going to increase it's going to tighten as we look ahead the other observation I make about the cost of producing milk is that it's kind of all over the map depending upon the debt load depending upon the price of land that's factored in who may have bought some land in the last five years whether you have the feed there what kind of condition your land was in a whole series of factors can bring about a cost of production as I asked individual farmers what's your cost of producing milk I get some figures that vary all over the lot going all the way from $7 a hundred weight up to eighteen or twenty dollars a hundred weight and I've asked that many times of many farmers so when we a say what it what is the average cost of producing milk it's very difficult and whose average there may not it may be difficult to find someone that's average given this and I've had a series of letters and individual farmers saying to me what should I do dairy farmers my advice to them right now and the short run is good careful sound management is awfully important let's not make the kind of expenditures in capital and equipment that you might normally want to make that's awfully important and we've had the biggest silo building boom in Wisconsin in the last five years of any five-year period that I've ever seen and that I don't know if that's true in other states but it's true in Wisconsin and we have had a fair amount of money put into storage facilities and storage units much of which can be well justified but those kinds of purchase need purchases need to be delayed as I talked to implement dealers that's precisely what farmers are doing they're not selling tractors and implements based upon the implement dealers that I've been talking to over the last six to eight months if farmers think they have it tough implement dealers tell me that it's even tougher and the bottom line for International Harvester probably suggest that if you've been following their stock price and what they're doing right now as far as a large manufacturer and I see allis-chalmers now closing a plant this week as well and laying off a couple thousand workers sound careful management I would say to an individual farmer don't increase your cows online do a better job with what you have and many farmers are doing that and it as a group we cannot continue to out produce what we can sell what we can move what we can handle and we have that difficulty at the present time and I would say third we need to get behind various kinds of selling efforts in trying to expand demand and yes bargaining efforts in contracting the kind of some of the kinds of things that I see your organization doing in others and I think doing quite well now to step back from the individual farmer what about the dairy industry in total what about the dairy industry from a policy standpoint as to what's going on and what are the kinds of things we need to hang tough with as far as the dairy industry is concerned and let me take two aspects of this let me start out by saying we've got the demand side and I have some interests there and I think you should have some interests there in doing more to create a demand for our product dairy and the many fine products that we produce I don't think we've built the kind of a demand for dairy products and milk that we can or that we should now let me give you some illustrations I observed for example the per capita consumption of cheese in Western Europe to be 35 to 40 pounds per capita the United States at 1716 California 25 26 27 got some opportunities there to build that demand beyond where it is I think there's some good opportunities to get behind and to do that kind of a thing I don't see for example a low-fat cheese now that's not an easy thing to do when you're dealing with a product that initially has about 50% fat but I don't see a low-fat cheese but yet we see low fat milk and we see some of these things that are moving with the nutrition conscious ever-increasing nutritious conscious public and that's what's happening and that's what's out there and we need to capitalize on that and I have said and will continue to say to the dairy industry wouldn't it be interesting wouldn't it be nice to talk in terms of that cow producing 600 pounds of protein rather than 700 pounds of butter fat in our diet conscious United States as we look at competing for that consumer food dollar wouldn't it be interesting to talk in those terms and in fact to go into the McDonald's and the Wendy's in those various places and to tell that story in exactly those terms the protein the milk the kind of nutrition that we have and that we're producing I think there's some opportunities to get behind various kinds of additional new product developments we haven't had the kind of new product development in the dairy industry that we need to help the farmers and the base producers expand that demand and then we're coming along with a very confusing thing and that is the imitation cheese and again it's a food product but I maintain and I will continue to maintain that if there isn't a butter fat or if there isn't a milk fat bass there just ain't cheese yet just to my way of thinking isn't cheese and I don't think that we ought to have an amalgamation of labeling in such a way so that we've simply have cheese and we're not sure whether it's the real stuff or its imitation or what we have and it's in the interest of the dairy industry and other livestock enterprises to keep that clear in the minds of consumers we need to get behind and push and promote school lunch and school melt programs we need to maintain those in helping to expand our demand and we ought not to let New Zealand make our decisions relative to the selling of our butter and our powder I think we ought to do that and I think we have some opportunities to do that and I spent two weeks in Venezuela Dominican Republic in Mexico on a trade mission with some businesses in February of this year and I saw some unbelievable food shortages I saw some great opportunities to sell powdered milk and I think within a very aggressive role as we look ahead in a hungry world with more purchasing power there now than was there two or three years ago with oil and gas revenues I think there's some opportunity to move some of those food products that's one side of the coin there's some demand opportunities that it seems to me farmers need to be pushing their processors on an international basis on a marketing and selling advertising basis new food products low-fat cheese labeling on behalf of this industry we've got too much at stake not to do those kinds of things then I get to the second to flip the coin the second part of this we can do some things there but that's not going to do it in and of itself there are certain limits so what do we do about the supply side what do we do about what's being produced as I said Wisconsin has not been quite as guilty as some other states in increasing milk production in the last two or three years in terms of the amounts well what are their possibilities we can drop the price and force farmers out but I have a little bit of a tough time with that and that always happens to some degree the poor managers go out and so on when we start knocking out some of the individuals who really ought to be our next generation of farmers I sort of asked the question what are they going to do and where are they going go and what are those opportunities going to be for those individuals and those families and that's a concern I think it's a concern to all of us well we can drop the price and force them out individual farmers and farm groups and farm organizations can say hey let's call some cows let's cut back on this production there can be some individual kinds of efforts and some of this has happened I think we probably need to have more of that through organizational kinds of efforts job owning and those sorts of things I guess another thing that's going to limit supply to some degree down the pike are some of the barriers that are being erected through the cost of money the cost of land and the simple inability to purchase a dairy unit in the next generation the cost of money the difficulty of cash flow it seems to me is going to have an impact on the supply of milk particularly as those costs don't keep up and aren't don't stay up with where they should be and then finally I guess there's then the option of supply management some kind of efforts to say hey this is how much we're going to produce 126 cranberry growers in Wisconsin do a fairly good job of this some of the fruit growers do a fairly good job of this is saying this is what it's going to be and this is going to be our price this is our target or we take what we have and we figure out how to establish some kind of a price but I see difficulties in farmers accepting it I don't see government espousing or doing that kind of a thing today and so I see some great difficulties when we look at the whole area of Supply Management I want to make another observation and there are some things that that need to be done from a supply standpoint but let me make another observation and I'd want you to think carefully about this and maybe you won't agree with me on this and this comes from I guess my reading and my travel in the world and what I see happening I wonder if 1980 may be some kind of a crossroads transition point in our world we're in the 50s and the 60s and the early part of the 70s we move from what I call in quotes a surplus syndrome for food to the eighteen to the 1980s in the 1990s where I see the opportunity of a scarcity syndrome for food in the world and in fact a great opportunity for those who may have a food reserve or who may who may be managing food production capabilities or who may be helping determine it or who may be involved in a breadbasket kind of approach and we're in the biggest breadbasket in the world right here the twelve Midwestern state area and this country I see signs of this as I look at Latin America as I look at the Middle East as I look at the Far East as I look at trade missions on a weekly basis going to China as I see the opening up of a billion people in mouths for that matter in the People's Republic of China and the movement within the world we may be we may be as we look down the road thinking in terms of a scarcity syndrome people and purchasing power and that purchasing power is developing and it's developing faster than most of us think and I've seen it and some of the areas that I've been in the past couple of years now let me conclude by saying what's the need for bargaining what's the need for organizing on behalf of farmers I think it's considerable it's probably greater now than it ever will be I see bargaining associations and bargaining attempts through various organizations such as yours cooperatives others doing things in three areas one the need to develop some political power the need to organize to work together to build coalitions for political input and political power what do you call it grip I see those buttons all over yeah that's what it is but that's important you're doing that and others are doing that on behalf of food and agriculture and that is important it's an important role to play I have a feeling for that after being badgered around by lobbyists and organizations as an agriculture secretary in the state of Wisconsin and I have a little feel for that as a result of being fairly close to USDA policies over the past five to six years and being involved in working with in helping to respond and react to various kinds of things that policy advisors and with the Council of Economic Advisers in the White House and USDA grapple with on a week-to-week in a month-to-month basis so yes there's a need there's an opportunity and it's an important one secondly I see a need for organization bargaining on behalf of producers to handle and to deal with and to provide services in the marketplace grading testing of milk movement of milk many of the kinds of services in the marketplace that need to be performed and done by someone and frankly I think farmers and farmer groups ought to be doing that for themselves more and more and more marketing efforts marketing outreach kinds of programs and then third additional discussion on the whole question of what about the amount that we produce and the amount we market are we interested in some kind of a supply determination that I as an individual are going to say to this organization okay we'll go along with that and we see certain kinds of things like that my prediction will be that if farmers get few enough eventually that'll be fairly easy to do the interesting question will be will it be possible to do effectively with the large number of producers with a lot of differences of opinion and rather individualistic goals and objectives and ideas that you and I know very well exist in the hearts and the minds of farmers in our great country those are some of the opportunities those are some of the areas those are a few thoughts those are a few comments those are a few ideas and let me again express my appreciation to nfo to its National Board to the state operation to those from Wisconsin for a super super working relationship that we've had in my reign of nearly six years as agriculture secretary and it's just been a month and a half that I left that position and assumed a position is Dean of a college of agriculture in a major school in Wisconsin training young future agricultural leaders I hope to help shape their attitudes and their outlooks and their optimism for food and agriculture in this country in the state of Wisconsin and I would want to indicate and strongly underline my optimism for agriculture and for the dairy industry in the state of Wisconsin in particular and I stand ready to help and to assist and to lead and to provide information in any way I can as we project in the decade of the 80s and the 90s thank you very much