NFO-118 (AV10618): Double Standard for Agriculture

good evening ladies and gentlemen welcome to US farm report I'm dick Woollenhouse from Watonwan County Minnesota tonight we have as our special guest mr. Erhard Pfingsten vice president of the National Farmers Organization mr. Pfingsten farms about 500 acres near Sergeant Bluff Iowa mr. Pfingsten recently i've heard you mention that we have a double standards in agriculture today as opposed to industry would you mind commenting on this a little bit no not at all in fact every time I hear them it bugs me plenty the two standards that you're talking about they tell us that business and industry have to make a profit so that they can expand and employ more people and I think that's hundred percent correct but what gets me is that in agriculture we're told that we have to do the very opposite we're told that we have to eliminate people from agriculture and then expand so that then we can make money and I'd like to repeat that dick because I think this is very important that the people realize the double standard business and industry has to make a profit so that they can expand and employ more people but agriculture has to eliminate people so that then they can expand and after having done those two supposedly make money I think this is two complete opposites of great really it finally gets down to what we're always being told is that somehow or other we have to make a profit without getting a price this is indeed unique mr. Pfingsten I think that our program is very unique in one way it's particular comes to my mind and that is we are probably the only farm organization that has a method of fully utilizing world food production or the United States food production and feeding the world of hungry people would you like to make a few comments on this situation yes we do have the capacity at any rate to feed our own people and probably produce beyond those needs and actually the way we're doing it now we're depriving other nations of the world food by retiring our own resources here and have become dependent on other nations to supply what we're not producing here now I think probably the most glaring of these and this would reflect itself on the entire farm commodity situation is in meat now there has not been one single year not one since 1952 that the American farmer has produced enough meat to feed this nation in '52 we started importing and each year increased the amount that we imported and then in 1963 we got up to where we were importing 11 percent of all of the meat consumed in the United States and that's the year when the farmers of this nation or the meat producers livestock producers lost two and a half billion dollars now this last year we are up to somewhere between 15 and 20 percent of all meat consumed was imported or came from other nations now what we've done we've destroyed our own producers by eliminating farmers who were producing livestock and have dependent on the imports to make up the difference now to show you how the utilization of our production would help even in this country we retired at the very height of our government programs 11% of the productive acres now had we produced going back to 1963 for example that 11 percent more meat that was needed in this nation it would have required 11 percent more grain and 11 percent more roughage 11 percent more of each now we could not possibly have done that even if we had brought every single idle acre back into production we could not have produced the meat that this nation need in the methods or manner that we're farming today we would have very decidedly have had to intensify our method of producing in order to supply that yet in our failure to supply it we deprived the rest of the world of this production that we're getting in here Argentina for example has a too two days a week by law now that the people can't eat meat trying to stretch the supply and yet at the same time we are importing from that nation now this isn't coming in here priced competitively either it comes in much higher price than what our farmers are getting here in 1963 I prepared that the data for the testifying to the tariff Commission on the import so those are the figures of course that I'm best acquainted with well in that particular year the lowest priced meat that was coming into this nation was cow meat on the west coast and it was there it was 41 cents a pound and on the East Coast a straight 42 and 43 cents a pound and this is the same kind of meat that the farmers were selling in the Midwest here right on the hoof cow meat at ten cents a pound live or even if you want to figure it there's a dressed weight and took away let's say fifty percent of that weight to dress out it would been still sold here by the American farmers for 20 cents a pound now this is a commodity in which we have never produced enough for the for the last 15 years to feed our people and we're not getting a price there either this seems quite strange that we here in the United States do have productive capacity that we could use in other words we we probably could plant pumpkins and all kinds of different vegetables and that sort of thing and and we have literally millions of people throughout the world starving yet we have not yet developed a system whereby we can produce fully and still keep from destroying our own domestic prices now we do have a way of getting out of this mess once we have the farmers organized to the point where where they can sell under a master contact structure and do industry-wide bargaining isn't it true yes once you're operating under our contract which for the listeners benefit I think we should describe our program is to get a full fair price for all the production that's needed here in the United States a price based on our cost of production to sell our production on contract at least a year ahead and then produce for that contract now at the same time our program includes that we do the whole job of marketing as I pointed out full fair price for all that's produced here and then channel the rest if there is any extra into secondary markets in other words use our resources the way God intended them to be used to feed hungry people rather than to pilot up here actually at times even pay more than it's worth make the producers here miserable with it and the people in the rest of the world that are hungry even more miserable even if we quit or produced enough so that we produced enough for our own people and quit taking it away from the rest of the world should decidedly help alleviate hunger to some extent in the rest of the world this is refreshing for me and I'm sure for the rest of the television audience to know that we do have the methods and the way to tie down any kind of surplus situation that would develop in the future yes we have that right in our programs first of all the surplus disposal program is in there whereby we can eliminate our surface of surpluses if we produce more but it is our our responsibility also as farmers and think to produce what this nation needs and for that reason we have in our master contracts and these are contracts that are already signed by processors in all commodities contracts that going to effect just as soon as a far enough farmers wake up join our organization to fill these contracts we have the price incentive there which lets us the organization or the producers put a high incentive price on whatever weight is needed now first of all let me explain the surplus disposal and see the effect of it we've had a lot of heard a lot of noise about surplus and overproduction in corn well throughout the period that we've had the feed grain program there's been no loop reduction in corn in fact through the life of the feed grain program we have at mmm in no year produced enough even to feed our own nation we've had into the reserves but for 11 years straight ahead of the feed grain program we produced more than was needed and it was an average overproduction for those 11 years of 3% 30- yes- 3% a little bit less than 3% but in that period of time we lost way over 33% of our price now had we been operating under the NFO contracts eliminating this surplus year by year or at least see to it that it couldn't be used to depress our prices even if we had given away given away now I'm saying dick 3 percent of our production and had maintained the other 30% of our price we would be I've been receiving throughout this period a much higher price than we're receiving even now in a tight supply period by eliminating that now that's the price incentive I think is also very important in this regulating the supply and this ameet for example surplus don't develop overnight they you see them coming a long time ahead and I'd like to use for example the period 1955-56 in the 54 period we were getting pretty much around 27.50 our hogs but in 1955-56 in that winter our home price dropped down to ten and a half dollars a hundred in other words we lost way over half of our price and we were told that the reason for it was that we had produced too much 6% in fact was the exact figure given now we could see that coming this didn't happen overnight now had we been operating on any NFO program at that time and had used the price incentive we could have placed a price incentive let's say on 200-pound hogs high enough that a 200-pound hog would have brought more than a 235 pound hog and 235 pounds was the average weight that they were marketed at at that year in other words it would have brought an and a reduction of 35 pounds per hug now let's do a little figuring and see what the percentage of reduction would mean in that area on the basis of 200 pound hog each 2 pounds would be a 1 percent of the total supply so to arrive at the percentage difference divide the 35 by by 2 and it would give you 17 and a half percent difference in supply now take the 6 percent surplus that they said that we had in that period take that off of that 17 1/2 percent of what you were when you have had you'd have had an a shortage a shortage of 11 and a half percent with exactly the same number of hogs now this same thing could be used also in dairy production I did hear man say one time this goes back a number of years ago in the main milk producing area when the farmers were getting about $3 a hundred for their milk if you guys get the price that you're talking about 6.5 cents tomorrow everybody go and start milking well of course the first question rises is what are they going milk yes didn't take the farmers long to explain that to him but you don't milk the fenceposts it's got to come from cows now it takes three years to develop a cow from the inception of the calf till you have it in production or very nearly three years so you would see any surplus arising there too now we could use the same incentive plan here that I talked about this is already in the contract signed by processors well we could put an incentive price on dairy heifer calves for instance a high enough that had taken into market turn them into hamburger well hamburgers don't give any milk either now or three years from now so all of these are things that you can do as an organized group but there's absolutely nothing that you can do as an individual well really we could say mr. Pfingsten that that once the master contract is activated these contracts actually solved the problem that exists within that industry don't they as far as promoting the product the when it needs promoting or as far as exposing our services in other words the contract creates the price and then you uses the price once it's been created to solve the rest of the problems that may exist yes even to the extent of promoting the product see as is provided right in all of the contracts dairy grain and meat that 1/2 of 1% has to be used to promote that particular product that that contract represents in other words you can give them the kind of advertising that really sells the product and not just sells a brand and I think very often we're getting hurt with brand advertising where well let's say I'm tobacco for instance you'll see ads that make you think that if you smoke any other kind of cigarette but that one you're really going to get it well it doesn't sell tobacco it makes I think it actually questions people or makes their raise a question in people's mind about the tobacco itself and I'm not upholding tobacco but you have it in dairy in my home area there's a processor there that has been advertising how they vacuum their milk and so forth he leaves the impression though he never says it that there's no other brand that's even fit to drink that you're drinking filth if you go that way and in my way of saying that doesn't doesn't promote the use of milk his brand only he's selling the rest of the milk down river in relation to that sometimes you see commercials read commercials where where they say that there's animal fat in this a particular type of shortening just as if that were a bad thing altogether yes now this is it's not what they say but it's the applied how they said destruction of the product well in your opinion really what good does it do for a group of farmers in a small area or a group of farmers just in one particular commodity to have a system whereby they promote that one commodity is there any long range of beneficial effect from doing that type of thing no no I think to get nowhere no you're really covering two areas there first of all the local and then the single commodity this problem is not a single commodity problem in agriculture it's all commodities are involved and in addition to that it is cannot be solved in a local area because it's on a national basis so it's going to take an organization that deals in all commodity and first of all is able to deal nationwide the reason we're in the price hole that we're in is because our marketing present marketing system is completely outdated we're selling now to national corporations our buyers are national in scope they're able to bypass any area any individual or any market and actually Pit one against the other and make them cut each other's throat so supply and demand cannot work to set a fair price in that way because the bargaining power is so much different for to give few examples to show how big this is the chain stores are now handling eighty five percent of all the meat consumed in the United States and about five chains are handling about half of all the meat that's retailed that's what I should have said instead of consumed the meat that's retailed and here you have a position see where five buyers can establish the price on all of it now in milk according to dr. Jacobson of the University of Ohio is a marketing specialist 70% of all dairy production goes through basically four big users so these are national in scope they can let you set they can let me set they can let Perry is set they can make us cut each other's throat or make areas so it has to be an organization that is national in scope so that they can meet national buying power with national selling power then supply and demand would have a chance to operate when both sides that are equal but certainly you and I as an individual are no match for a national buyer now getting onto the local area or the single commodity area I think it takes an organization also that deals in all commodity so that you're not using one group against the other to cut each other's throat and let's use an example for that when we had the ninety support formula in our farm programs this was pretty much succeeding and giving us 100 percent of fair price for our production in fact we we averaged over a hundred percent of parity throughout the period that we had the 90 percent formula in there well as cattle prices dipped the cattle feeders and then the milk price in the northeastern part of the nation dipped at the same time they got together with several other groups and more or less decided that their problem wasn't their own price that their problem was that they were paying too much for for a feed so they reasoned if they could bring the feed price down you see that this would solve their problem and so through lobbying through Forsett followed that they collected they managed to destroy the 90% formula in the farm program and gave us the sliding scale I think few of us had realized how fast we were gonna slide under that thing in our hard we were going hit when we slid to the bottom but this is what substituted then till we got the feeding producers into trouble well a year ago this winter with a fat cattle problem still being there the price is going still lower a feeders group in Iowa call their members together ask them to put their hand on their heart and raise their other hand and take an oath that they were never ever going to pay any more than 14 cents for calves again so here you see the group rather than solving their own problem was again now moving to have the feed green boys down on their prayer bones so now we're gonna work on the people that produce the calves and just take it out on them so I think it takes an organization that deals in all commodities and brings them all up in relative balance for the reason I just related and then also to keep from shifting out of one commodity and together if you brought the price of one commodity up did nothing with the rest and I think there'd be a gradual shift to that commodity everybody trying to make it there and they'd probably destroy it to under the helter-skelter marketing system that we're used to and I'm always kind of happy and surprised that they pay us anything at all but I think that what they like to do is pay us just enough so that they get another chance to do it to us again next year but the way yes this is pretty common and I think it's obvious and evident especially in the meat marketing when you when your price goes down and it looks like it's discouraging to the producers went well and not only looks is when they're losing their shirt then right off quickly they start giving you the intentions of the farmers for next year this was so obvious to be in nineteen fifty five and fifty six when our hogs went down to ten and a half in October and September of that year they were telling us where we were going to be doing in March and April that next year in other words my intentions were already being put out for next year and I hadn't even given them the flock yet didn't even know what I gonna be in business one came but my intentions were being broadcast but the production would be down see so that I'd be encouraged to produce on your market they're doing it continuously hogs it's obvious on this when they get into a shorter supply than they're putting a higher price on 240 260 pound hogs encouraged the producer to feed him out to heavier weights and buy time he gets him there while then obviously enough anymore they don't want 240 260 pounds then they want right hogs see them they drop it down and take us either way and in reality dick they have been controlling us on the production just that way throughout the years and this is really where we got the idea from to include it in our contracts to regulate the supply industry controls all the incentives really don't they sure I really it wouldn't really do us very much good if we'd produce twenty percent less of let's say beef next year so long as the retail part of our industry sets the price but price on that beef they'll just raise the retail price enough duration it enough more that that at 80 percent of the supply will will last there'll always be meat there to buy but they'll just be less people who can afford to buy it but you and I aren't gonna get my own you don't work on the retail end but they'll still dictate the price to to you and me as cheap as they can possibly get it and why not because don't you and I grew up to them and ask them what they want to give us why are we surprised when they tell us I think you're real nice about I agree with you I'm surprised you're given us maybe we ought to write them all a letter of thanks we're not ripping us any harder than they have been we should send him a card only is interesting there's another thing that we've been reading in the news at least the farm news of right and that is some organized resistance to buying new machinery and equipment on the part of farmers and what what's your comment on this situation well I think it has some advantage from this standpoint if nothing else at least they are getting the farmers to realize that they have a problem and perhaps in the remote manner getting them to do something about it but ask for the refusing to buy that that'll solve the problem I don't think so for two reasons number one they're hitting the wrong group when we don't buy machinery it isn't our machinery dealer or implement dealers that have been driving our prices down so that group can't do anything about the situation and we're not really striking up the group that is holding our price down so this is number one but number two I think it can very well aggravate the situation in the long run I happen to be testifying to the government cost Price Squeeze Committee when the president of one of our maitreya implement companies was testifying to and I thought he did probably one of the best jobs in testifying on the cost situation that I had ever heard or that anybody gave at that particular time he was very well informed he gave the figures of how much the farmers costs had increased in the various fields and of course at that time they had been taking a drop in price steadily and continuously for over ten or twelve years and he did point out that the cost of equipment was almost twice as high as when this downward trend started and of course the point that he was making was that the farmers were going to have to get themselves a price just exactly the way that other industry does a price based on their cost of production and the man was literally crucified by the committee on the statements that he made because since he had recognized the fact that the farmers were being hurt by cost then they asked him why didn't he as an implement producer not lower the price of machinery and the first thing he pointed out to him was but perhaps they were forgetting who he was that he was not the president of a farm organization but the president of an implement company so he said it is his responsibility to turn a profit for his stockholders this is the only thing that he's in position he was four and that's correct so he said when the number of units drop units of production my costs remain the same the investment and so forth and then if I'm going to turn a profit to the stockholders the only way I can do it is raise the price per unit increase this and this is exactly what has been happening so really I think it works in Reverse here and I'd like to go just a little bit further with it the entire country is getting hurt by the farmers problem because every time the farmer gets shortchanged one dollar it short changes the entire economy seven dollars now I was speaking one time in 1964 this was in Atlantic Iowa where the editor of the newspaper handed me a clipping of one of these ten years ago today 20 years ago today and 50 years ago today and the item in the ten years ago today was that some farmer in the Atlantic Iowan he mentioned his name had received or had topped the Omaha market with $27.50 in 1954 and this was a general price throughout that time of course keep in mind that also during that period of time all other prices were up there pretty fair shape we were getting I suppose about1.60 corn two and a quarter per week 285 for soybeans and so forth so we looked it up to see just what impact that had on how much farmers bought and of course the first thing that a farmer thinks about what he's talking about the things he buys usually a tractor so we look this up in the farm statistics and we compared 1954 with 1963 which was the last complete year we had in the figures and in 1954 when the farmers were getting a fair price for their production the tractor manufacturers of this name sold 353,000 farm tractors and yet in 63 at the lower prices they had sold a hundred and seventy two thousand so this was a hundred and eighty-one thousand less tractors that those they produced because the farmers weren't getting paid and this the dealers over the country didn't sell them the working men nationwide didn't make these ceased so it hurts the whole industry so I believe the approach of stopping to buying isn't going to solve the situation no it's you got to hit the people who are driving your prices down those are the guys that you got to get just like General Motors does they subset their price they supply their dealers if the dealer refuses to pay the price he's no longer a dealer he don't get any cars this is what we got to do well I'm very certain that according to the progress that we've been making recently and the overall feeling in agriculture farmers are willing to accept the NFO plan for collective bargaining we just have maybe about a minute left would you like to make a closing remark or two mr. Pfingsten well I think this is the only thing that's going to reverse the trend at the farmers that themselves do it because it isn't gonna be the people who have to pay the price they're going to see that the price goes up if the jobs going to be done it's going to be done through farmers and they're going to do it the same method that every industry has in this nation has used for the 200 years that this nation was in existence it's the only thing that has ever worked for any other group it is the only thing that has not been tried by farmers thank you very much mr. Pfingsten for being on our program this evening I trust that this program has been thought-provoking and a stimulus for action on the part of you the viewer tune in next week for us farm report thank you