President’s Full Address from Convention
PRESIDENT’S REPORT – 2009
Presented to the Annual Meeting
By Doug Maddox
What a difference a year makes. Last year at this time, we had $20/cwt milk price, high feed, fuel, and fertilizer prices, but generally, life was good. However, last fall the whole world went into an economic crisis, taking milk prices and many commodity prices with it, including our reserve fund. Our investments in our reserve fund and Foundation took a hit due to the crash in the stock market. However, we are fortunate to still have an adequate reserve fund balance. As the market adjusts, hopefully we will regain some of our losses. As the industry’s economic crisis hits our Association’s businesses and receivables, John Meyer and staff are working hard to cut costs and maintain maximum efficiency. Obviously, this is a tough year for everyone in the dairy business.
The Genetic Advancement Committee has had an exciting year, as genomics has become a commercial reality. Almost all of the bulls in A.I. are now genomic tested. Holstein breeders who sell bulls to A.I. are just now feeling the impact of a new generation of genetics. Hopefully, all of you had an opportunity to attend the panel discussion this morning. No one knows the full impact that genomics may have, but as we get more accurate information, obviously it will have a huge impact. In any other year, genomics would probably be the focus of our annual meeting. But, with these low milk prices, we’ve had other priorities.
The International Department continues to be key in the Holstein Association’s role in Holstein genetics around the world. Our Association sent a delegation to the World Holstein Conference in Ireland in October and this spring to the Holstein Conference of the Americas in Bogota, Colombia. Genomics is also a big topic of international concern as we coordinate the introduction of genomics into pedigrees. A coordinated effort by the world’s various herd book organizations is in progress. We continue to get requests from various countries and herd books for assistance in information technology. Ours truly is a global industry, and the world seems to get smaller every day.
When we were in Washington D.C. last February, it was interesting to attend the House Ag Committee hearings on animal identification. The House members of the committee were particularly blunt in their assessment of the need for traceability and mandatory identification. It looks like we finally have a chance at a national mandatory program. Both consumers and international markets demand it. With the FAIR database, when national identification does become a reality, the Holstein Association should be in a good position to provide that service. While much of our attention is on milk prices and genomics, we need to remember that identification is still our core business.
One of the areas I am most proud of is the increased commitment by the board of directors to our Junior programs, Holstein Foundation and especially, the Young Dairy Leaders Institute (YDLI). The future of our industry depends on strong leadership, and our goal is to help develop the very best and brightest leaders for our industry. So as we move forward, I hope you will join us as we continue to grow YDLI. Even more than ever, our industry is in need of leadership.
However, what’s on everyone’s mind in the dairy industry is our economic crisis! In addition to June being “Dairy Month”, June is also NBA playoff time. As I watched the NBA playoffs one thing was clear – the teams with the best teamwork are winning. For us dairymen, another thing is very clear. Our industry is in an economic crisis. Today, the dairy industry is reeling with possibly the lowest milk prices in history and with cost of production still at an extremely high level, many dairymen are losing $3 to $4 per cow per day. If the economic outlook does not change soon, a significant number of dairy farmers could go out of business. I know that generally these eventually are absorbed by larger, stronger dairy farmers. This attrition of dairy farm philosophy is historically how our industry has operated. Some will argue that this process is how capitalism works. However, the end result is the “last man standing” concept and “the strongest will survive”. Capitalism or not, the “last man standing” concept is not the American Way and is not in our members’ best interest. Those of you that adhere to the rules of the Ten Commandments need to remember that the 11th commandment for dairy farmers should be “Do not covet thy neighbors cows!”
We need an effective marketing plan and a program that affects real production and marketing change. Last January, the Legislative Affairs Committee recommended to the board of directors that, in an effort to stabilize the peaks and valleys of milk prices, Holstein Association USA, Inc. initiate a plan toward a national supply management program for milk in the U.S. As many of you know, we have developed the Dairy Price Stabilization Program. This program would establish a national production base for each dairy farmer. It will give the industry a program to control the supply of milk needed for the market. In essence, it is designed to control the surplus of one to three percent over production that sends our prices in a spiral downward. Hopefully, the Dairy Price Stabilization Program will accomplish this change. This is going to take industry-wide support and teamwork. This industry crisis makes our Association mission statement, “Provide leadership, information, and services to help members and dairy producers worldwide be successful,” even more relevant and appropriate at this time. I urge you to go to our website and sign on, and urge all who are interested to do the same.
How do we solve our problems? Let’s start with the same philosophy as a winning basketball team, teamwork! As dairy farmers, we can only cut expenses so much before we start to have a long-term effect on our herds. It’s time to rethink how we market our product. Economics 101 states that the basic law of economics is supply and demand. When supply exceeds demand, prices decline. When demand exceeds supply, prices increase. I’ll say it again – the dairy farmers in the U.S. need to “produce for the market” instead of trying to “market all we produce.” Until we realize that fact, we will be plagued with low and unstable milk price swings. It is in this vein that your Holstein Association USA board of directors has developed the Dairy Price Stabilization Program. While the basics of this program are simple, it changes the concept of how we produce for the market. If these low prices continue for much longer, our industry will be devastated to the point that it may never be the same. If our industry is to continue as we know it today, and if our family lifestyles are to continue as we know them, we need to work together. It is not just one milk marketing cooperative or one state association, but all dairymen coast to coast, north to south, and east to west. It’s going to take a huge effort and real teamwork if we are to win this battle. Using a sports analogy, if we are to be successful, we need a home run, a basket, a touchdown, and a goal all at once. That will require real “Teamwork!” What does teamwork mean? Since we have been here in Sacramento a lot of people have asked, “How can I help?” First, let me tell you that we need everyone who has an interest in our industry to help. Dairy farmers, bankers, feed companies, equipment companies, A.I., in fact everyone needs to step up to the plate. No one is going to do this for us. If we do not make it happen, it won’t happen! Let me give you some ideas of how to help.
1. Sign up your support on our website at www.holsteinusa.com/association/dairyprice.html
2. Get other dairymen to sign up.
3. Get your coops and allied industry to sign up.
4. Log in and comment on the Holstein World website.
5. Organize efforts with local and state dairy organizations to support the DPSP.
6. Call, write, and put pressure on your congressman. “This will take congressional action.”
When I ran for president in Tennessee two years ago, I said our industry is changing rapidly. Our industry needs leadership. I asked then and I ask now, “If not us, who?” “If the time is not now, then when?” I’m asking, I urge, and I plead, please help! You will get more information in the Dairy Price Stabilization Program on the report from the Legislative Affairs Committee and from Dr. Bob Cropp’s presentation this afternoon.
The last four years (two as Vice President and two as President) have flown by. I am more impressed than ever with the strength and dedication of the members of the Holstein Association. In addition, I can’t say enough about the excellent quality of our Association’s staff and John Meyer’s leadership. It is second to none. Lastly, I want to thank my fellow board members. Vice President Larry Tande, and all members of the board of directors are true professionals. They are the reason that your Association has been so successful and enjoys the immense respect of our national dairy industry.
Thank you for your trust and support you have given me. It has truly been a privilege to serve on your behalf.
Now we have work to do. Let’s roll up our sleeves, and let’s get the job done! The dairy world is depending on us!
