Importance of producer-marketer relationship showcased at

August/September 2007
A publication of the National Farmers Organization
N exus
Marketing
Delivering comprehensive ag solutions
www.nfo.org
◆
e-mail: [email protected]
◆
800-247-2110
Importance of producer-marketer
relationship showcased at conference
In this Edition
◆ Rural Voices
Farmer
opinions matter
3
◆ Food Safety
Coalition for a
Prosperous America
3
◆ Riskwatcher Riniker
Diversified
formula pays
5
◆ Retirement Planning
Make it
happen today
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.
Affordable Health Insurance
877.899.5325
As consumers increasingly
attempt to eat healthier, and
major food companies ramp-up
their presence in the organic industry, growers are relying more
often on cooperative marketers
to represent them. A NForganics
negotiator highlighted the importance of the producer-marketer
relationship in mid-July at an
Organic Farmers Agency for Relationship Marketing (OFARM)
conference in Ames, Iowa.
“An organic buyer’s objective is to drive down the prices
they pay for their inputs, and still
receive the quality and service
necessary to move their inputs
to the processing floor,” said National Farmers Ag Policy Analyst
Gene Paul, a conference moderator. “And as those buyers grow in size,
they will play one cooperative group
against another, and individual pro-
ducers against themselves to achieve
holz. “I know that it was certainly less
the lowest price possible.”
than 1 percent, but it cost me a $5
Concern for growers and their
per bushel penalty.”
ability to extract good
About six months later,
prices and contract
when Fernholz was attendterms has been around
ing an OFARM meeting,
since organics began
one of the marketers told
enjoying the upswing in
him he had paid a pretty
consumer demand. And
high tuition rate to learn
stories about producers
from his experience. The
being taken advantage
marketer told him about
of are well documented.
the electronic eyes that kick
Carmen Fernholz, an
corn out of the soybeans,
organic producer at
and the buyer had obviously
the conference gave an
used that corn himself, on
example that hit pretty
top of his $5 per bushel
close to home.
source savings. “So that was
“Back in 1996, I
the penalty I paid by not
NForganics’ LuAnn
had soybeans that I sold
being a part of a marketing
Robinson presents at
a July organic conference group,” Fernholz said.
myself, and once the
buyer received the first
LuAnn Robinson, a marload, he called and said they couldn’t
keter for National Farmers NForgantake the second load, because there
ics, explained the organization began
— Continued on page 3
was some corn mixed in,” said Fern-
95 percent organic
ruling allows 38 nonorganic ingredients
Precision planting, precision marketing play off each other for profit
As USDA considers allowing
some 38 non-organic ingredients into
food and beverage products promoted as 95 percent organic, at least one
consumer group, as well as National
Farmers, have voiced concern about
the rule.
“It’s either organic, or it’s not,”
said National Farmers Ag Policy Analyst Gene Paul. “Therefore, if it isn’t
100 percent organic, why confuse
consumers?” Paul urges producers
and consumers to use the 60-day
USDA comment period, which began
June 21, and voice their concerns
about the proposal.
Many types of manufactured
organic food ingredients could be
affected by the interim rule, such as
flavorings, colorings and spices in organic cereal, fish, sausages, and milk.
The proposed rule would allow
up to 5 percent of a particular food
product to contain some 38 non-organic ingredients, and still be allowed
in the organic category. Some 19 food
colorings, two starches, fish oil and
Want to know the truth about enjoygotten with National Farmers’ Grain Maring a real cash influx in your grain operaketing Plus, that could mean $32,000.
tion? The dollars are in the details.
And in Wening’s case, he said he
Just ask Brent Wening, Jasper, Ind.,
was cheating himself to the tune of $48
a proponent of precision planting – and
per acre. But by tweaking his planter, he’s
precision marback – good as
keting. When
new, better than
it comes to
ever. The dollars
grain groware in the details
ers, including
of precision plantWening, they
ing, and precision
improve their
grain marketing.
crop stands
Now a dealer
and farm refor the Precision
ceipts “by payPlanting company
ing attention to
(www.precisionfine details,” he
planting.com), he
said.
got into that work
Just
to improve his
Brent and Joan Wening take
this March, he
own crop stands with
a brief break from their farm chores.
was featured in
diagnostic tools the
Indiana Prairie Farmer, because one fine
company uses to test equipment. Now
detail he attended to was planter maintehe’s sharing his knowledge and training
nance, which he learned can mean six to
with other producers. “The stand in corn
eight bushels per acre, based on better
has to be there for profitability,” he said.
corn stands.
Smart farmer.
Apply the math to your operation. If
Grain Marketing Plus
a producer is raising over 1,000 acres of
“Brent is a very knowledgeable percorn, and is getting the $4 corn Wening’s
Continued on page 2
Continued on page 4
management and the national board to ap-
NFO Officers and
Board of Directors
President — Paul Olson, WI
Vice President — Ron Mattos, CA
Treasurer — Michael Miller, IA
Secretary — Dave Reed, IA
Board Members
Ron Mattos – Hanford, CA
Frank Endres – Corning, CA
David Lusk – Arbon, ID
Ron Schultz – Stewardson, IL
Jerry Maxheimer – Mt. Pulaski, IL
Bernard Rudecki – Walkerton, IN
Gilbert Kleaving – Tell City, IN
Norbert Hackman – Fort Atkinson, IA
Paul Riniker – Greeley, IA
Harold Walker – Mayetta, KS
Carl Wahlmeier – Jennings, KS
Aubin Mattingly – Rineyville, KY
Glen Field – Auburn, ME
Wayne Prichard – Burlington, MI
Mark Rohr – Bluffton, MN
Richard Shilling – Fort Ripley, MN
Joseph Neaton – Watertown, MN
Ken Schlottach – Owensville, MO
Mark Manford – Holden, MO
Wayne Forder – Highwood, MT
Norman Stokebrand – DeWitt, NE
Carroll Wade – Jasper, NY
Daniel Casler – Little Falls, NY
Calvin Shockman – La Moure, ND
William Goettemoeller – Versailles, OH
Chester Stoll – Marshallville, OH
Dennis Hadley – Silverton, OR
Kaleb Wolfe – Centre Hall, PA
James Brown – Dell Rapids, SD
Arlen Hanson – Columbia, SD
Raymond Tardif – St. Albans, VT
Garry Crosby – Shell Lake, WI
Donald Hamm – Fredonia, WI
Stanley LaCrosse – Kewaunee, WI
National Farmers est. 1955
Collective Bargaining
for Agriculture
THE REPORTER
The Voice of family farmers
and ranchers
The NFO Reporter is published six times
a year by National Farmers
Organization, 528 Billy Sunday Road
Ames, Iowa 50010-2000
(515)292-2000
e-mail: [email protected]
Internet: http://nfo.org
Non-profit 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.
President’sMessage
By Paul Olson
The overwhelming success of our procurement
team marketing approach has prompted senior management and the national board to approve a new
growth plan.
Development of the new growth plan involved a
great deal of thought and discussion. The goal of this
new plan is to de-centralize the operations of our commodity divisions, and provide more ownership and decision-making responsibility to leadership and key staff
members within those regions.
With the region-based structure, current staff resources will be better utilized,
and a regional manager will be selected within each geographic territory. We do not
plan to hire additional staff.
Our staff will cross-train on the programs in all three major commodity divisions, much as they did when National Farmers had a field services department.
Each geographic area will have its own regional budgets, involving livestock, grain
and dairy.
There are no regions that are the same, because of differing regional business
circumstances, as well as other factors, therefore we must give them the flexibility
to do what is best in their respective geographic territories.
The all-commodity concept must be maintained, so each region will accept the
responsibility to not only grow, but also to balance the budget within that region.
I cannot recall a time in the organization’s history when your national divisional heads have worked so closely with one
another. We as farmers and your organization certainly cannot afford even one barrier
The goal of this new
between commodity divisions.
plan is to de-centralOur motto must be “All for one and one
ize the operations
for all.” There is no milk, meat or grain in the
of our commodity
home office town of Ames, Iowa. It is in the
divisions, and procountryside from Maine to California, and
vide more ownership
North Dakota to Texas…just waiting for Naand decision-maktional Farmers MaximumMarketing programs
ing responsibility to
to put a price on it, based on cost of producleadership and key
tion plus a reasonable profit.
This new regionalized plan will take a
staff members within
lot of hard work and dedication, and we can
those regions.
succeed with some help from members themselves. Let me reach back in National Farmers
history a bit and remind you of something Oren Lee Staley wrote in his President’s
Message in 1960.
Every member must be an active member, and every member must do his part and make
NFO the most important part of his farming operation. Farmers do not have to accept the
prices they are receiving today, when they make up their mind to do something about it.
Remember that one, two or three people in a county cannot do all the jobs that are necessary to make a successful organization. It is your responsibility to take your destiny in hand and
say, ‘I have produced this commodity, it is mine until I sell it, and I cannot sell it until I get a
price to cover operating expenses and stay in business. This is logical, this is fair and this is just.’
Without question, much has changed since 1960, but when you take a look at
it another way, some may ask if it really has changed all that much. Take a look at
a parity scale and you will find that production agriculture has lost a tremendous
amount of ground. We have also lost far too many farmers and ranchers over the
years for that very reason.
Change is ongoing. A good example of that is the evolving local and regional
structure due to a changing farm population and other factors. We must constantly
develop new ways to promote program activity and publicize those programs to
generate new production.
There are many details yet to be firmed-up in our new regional plan, but we
anticipate it will be in place for fiscal 2008, which starts Oct. 1.
Our intent is for the new structure to be built from the ground up by each region, and this is where all members can assist us. Stay tuned for further updates and
remember, we are the new National Farmers with MaximumMarketing programs
helping farmers and ranchers regardless of where they live or what they produce.
And along with that, it remains our responsibility to not only achieve cost of
production plus a reasonable profit, but also to maintain it.
2
August 20 deadline
set for comments on
organic ingredients
—Continued from page 1
chili pepper would fall under USDA’S
95 percent organic rule.
All-natural advocates say the
proposal would mislead consumers
about what foods truly are organic.
Organics have been a fast growth
track in the U.S. in the last five years,
doubling in sales to nearly $17 billion
in 2006.
The 38 minor ingredients contained in the interim final rule are
non-organic, agricultural ingredients
that may be considered for use in an
organic processed product. A minor
ingredient cannot comprise more
than five percent of an organic product. But, before an organic handling
operation can consider using a nonorganic, agricultural minor ingredient, they must first attempt to secure
the organic form of the ingredient
and then confirm it is unavailable.
Enforcement of earlier organic
rules has reportedly been less than
robust. The USDA relies on certifying agents for organic rule enforcement, but lacks standardized guidelines.
Christensen, former Marketing Center Manager, passes
Jack Christensen, 67, of rural
Battle Lake, Minn., died July 22, at
Tri-County Hospital in Wadena.
His career began with National
Farmers by promoting the organization on the highways and farm roads
of Minnesota and North Dakota,
recruiting members and telling the
NFO story. He also managed the
National Farmers Marketing Center
near Elizabeth until June of 2007.
He was a lifetime member of
National Farmers Organization, as
well as a member of National Farmers Union.
His wife, Grace, and he became
organic farmers and served as members of the Organic Crop Improvement Association International. He
also belonged to the Lake Region
Thresherman’s Association and the
Central Minnesota Draft Horse Association.
His hobbies included attending antique equipment shows and
Farmall tractor displays.
He is survived by his wife,
Grace; three children, six grandchildren, one great grandchild, 5 brothers and two sisters.
Coalition for a Prosperous America emphasizes
food labeling importance, urges import reform
The Coalition for a Prosperfrom. Country of Origin Labeling (COOL), is
ous America (CPA) beamed a
on the radarscreens of most consumers. A recent
laser of illumination on domestic
survey suggests a majority of consumers are more
food safety at a news conference
concerned than they were two years ago about food
in Ames, Iowa, June 21.
safety.
“Our present food inspection
According to USA Today, nearly half of Amerisystem for imports
can consumers make
in being overwhelmed by the massive
an effort to purchase
volume of imports and is failing to
U.S. food products,
protect the health and safety of U.S.
but are often unsure
consumers,” said Fred Stokes, presiwhere their choices
dent of the coalition.
were produced.
He provided a glimpse of the
“The Coalition
problem by displaying printouts of
for a Prosperous
U.S. Food and Drug Administration
America (CPA) is
(FDA) import refusals from China
working for a new
and Mexico for the past 12 months.
and positive U.S.
He noted the 340 pages of retrade policy that
jected food and pharmaceutical proddelivers prosperucts gives consumers pause to wonder
ity and security to
CPA President Fred Stokes pictured against
exactly how safe their food really is.
America, its citizens,
a backdrop of 340 pages of recalled products.
It’s estimated only 1.5 percent of all
farms, factories and
imports are inspected.
working people,” said Stokes. We are a coalition
July’s announcement of botulism found in hot
of manufacturing, agricultural, worker, consumer
dog chili sauce is fueling growing concern on the
and citizen interests working together to re-build
part of consumers about where their food comes
America.
Fernholz, NForganics’ Robinson speak about
keys to marketing relationship at conference
—Continued from page 1
ers have a good solid price, or a strong indication of
marketing organic grains about six years ago. Bewhat price level it should be, they call Fernholz.
cause producers were converting to organic producFernholz appreciates the fact that his marketer
tion and didn’t understand where the markets were,
is connected to the OFARM network and underor who they should talk with to sell, they began callstands ever-changing market conditions around
ing for help. “When we first started marketing, 90
the country because they talk to buyers every day.
days would go by and producers still were not get“I know I’m getting a price that has real validity,
ting paid by the buyers,” Robinson said. “We fight
and the other benefit is that I simply don’t have to
for the last dime the buyer owes that producer; they
worry about it…I can just farm.”
really count on us for that.”
Fernholz noted that a marketer
She said once a producer undercan also help in finding a home for
stands the importance of having his
special grain…whether it’s a partial
own marketer, they commit their grain
load, or one that presents unusual
to that individual in order to secure
challenges.
the best prices and terms possible for
“Whether it’s transportation
their specific product. “After the sale
or price…its all that information a
is made, the marketer does all the
marketer can put together from a
paperwork, and coordinates freight
wide area that keeps his producer on
scheduling to move the grain, for the
the same page as all the other growproducer, so they don’t have to worry
ers, so they aren’t underselling each
about it.”
other,” said Paul. He emphasized that
After delivery, the data comes
because of a marketer’s experience
back into the marketers’ office, so
and organic industry knowledge, a
invoices can be sent to the buyer,
producer can visit with a marketer
and freight bills can be taken care of.
about next year’s crop, and underThe tail end is just as important as
stand what the market might need
the front end of the deal, because the
before his crop goes into the ground.
Carmen Fernholz talks
marketer ensures producers actually
“I totally appreciate it. What
about organic marketing
receive payment.
allows
me to sleep at night is that I
at the Ames, Iowa
“As a producer, it’s so nice for me
know that I’m not getting ripped off,
conference in July.
to call up my marketer and tell her
I absolutely know that,” said Fernhow many bushels of corn, soybeans or hay I have
holz. “What my marketer is doing for me is going to
to sell, so she can put it on the inventory sheet and
be better than, or at least equal to, anything else out
go to work on it,” Fernholz said. When the marketthere…and that let’s me sleep at night.”
3
Cashdollar, D.C. analyst, urges
producers to voice opinions to
Congress about farm, rural issues
Congress is deep into the process of re-writing the 2007
Farm Bill, which will control how the federal government
supports and interacts with agricultural producers across the
nation.
The U.S. House of Representatives has passed their
version of a bill, and the Senate Ag Committe Chairman, Tom
Harkin, D-Iowa, has announced his priorities.
The process is long, complex and sometimes confusing,
but in the end it will govern how billions of dollars are spent
over the next five years. And impact in hundreds of ways how
producers go about their day-to-day farming activities.
No other single law has more impact on many producers
business and farming operation. So, Congress needs to hear
from you about what should be in the bill, and what should not
be in it.
Each of them actually are interested in what producers in
their states and districts think. Only a few decades ago many of
the members of the House and Senate, especially those on the
agricultural committees, were actual farmers--that is no longer
the case--and the political clout of farmers is diminished, but
still well respected.
This circumstance, however, makes the personal input
from actual producers even more vital and important. Farmers are strongly represented in this process by professional
advocates who are employed by groups and associations of real
farmers.
They work for groups like the Farm Bureau, Farmers
Union, family farm organizations, dozens of commodity specific organizations representing producers of cotton and rice,
wheat and corn, milk, vegetables, cranberries, apples, cattle,
hogs and sheep. Of course, at the same time processors, shippers, machinery and chemical dealers, lenders and crop insurance companies, environmentalists and animal rights advocates
are all professionally represented.
Since taxpayer dollars are being spent, all the groups and
many others have legitimate rights to be heard on legislation
which will directly impact National Farmers members’ pocket
books everyday for the next five years. That is why it is so
important for you to be heard.
Your elected officials are generally open to hearing from
all the professional representatives, but well understand the
system. They much prefer to hear from you—actual voters from
back home. In the scheme of things a face-to-face meeting with
the senator or representative is the most valuable. A meeting
with their staff at home or in Washington is next.
A phone conversation is the second most useful, followed
by an e-mail. Regular mail is useful, but often the time delay
diminishes its value. Especially since the anthrax incident
several years ago on Capitol Hill regular mail inspections slow
it down significantly.
The Reporter frequently carries articles about National
Farmers’ positions regarding farm bill issues and these could
be used to guide your comments. However, by the time actual
votes are being taken the issues take on a more complicated
format and come in new combinations--that is why it is important our members join the NFO ALERT e-mail list so you
can be notified in a timely fashion about upcoming votes and
issues.
The ALERT will explain the pending situation and ask
for you to contact your elected officials on a specific vote.
The list is open to all National Farmers members, and if you
would like to join, please send a request to [email protected]
or [email protected]. It is important for you to be
involved because you are the voice of the people.
Wening’s winning operation depends on Grain Marketing Plus
adviser Scales to navigate profits from uncertain grain markets
—Continued from page 1
son when it comes to farming,” said Sue Scales, Wening’s
Grain Marketing Plus representative. And in terms of
marketing, she noted his approach and attitude. “He uses
his head. He doesn’t let greed take over. That’s why he’s
such a successful farmer.”
“You pool grain, markets rise, find a level a little
higher, pull together a bid for a buyer, and usually hit a
short-term high price,” said Wening, explaining the Grain
Marketing Plus strategy. He notes that perhaps he doesn’t
get the highest price in a market year, “but you cannot lose
money when you lock in profit.” He takes marketing seriously, each week posting a multi-year pricing comparison
paper in his barn for everyone involved in the operation to
see.
And that everyone is family. Wening’s the fifth generation – yes, fifth – on his family’s farm, where he and his
wife, Joan, sons, Byron, 19, and Tyler, 16, live and work.
Brent’s father, Edward, mother, Ioma, and one hired hand
share responsibilities in the family farm business. “Everybody helps together,” Wening said. It’s truly a family
operation.
And their operation’s corn crop is being marketed
through Grain Marketing Plus multi-year hedge-to-arrive
right now. In the corn crop, Wening plants exclusively
commercial yellow corn with YieldGuard Plus which covers
above- and below-ground pests, a proactive move for his
farm location, which has corn borers.
“And its market is on my side,” he said. “I’m on paper
for $4 for the ’08 crop and Sue is watching the price levels
for the next opportunity for me. The $4 corn is a treat to
use – so we’re not letting go of that.” So, Wening is satisfied with his crop sales receipts, and would recommend
Grain Marketing Plus to other producers.
While it’s obvious he tracks the markets because of
the pricing paper he posts, he appreciates that Scales
watches the markets at times he can’t. Like when he’s on
the tractor in the field, in the hog facility, and so on. “My
cell phone is my biggest money maker,” he added. “From
the 11-12 timeframe, when the markets are active, I can
answer the phone and ok sales.”
And he also notes another approach of Scales’. She’s
an advocate for watching grain basis, with it ideally at 0 or
+1 for the Ohio River Valley, where Wening is located.
“I watch the board very closely,” Scales said. “If we
have a weak board, and there is demand for the grain, to
get the grain out of the farms’ ownership to the elevators’,
the elevators have to bid up for the grain by increasing
their basis.
“Also, I have the grain elevators either fax or e-mail
their bid sheet to me daily. If the board of trade is trading
crazy, I check during the trading session more often and
check basis,” Scales added. “I also get barge freight daily
and what grain is worth delivered to the Gulf. The thing
that runs through my mind is multi-year cash sales, for the
purpose of having a cashflow.”
Wening pulled his membership card out of his wallet, and it shows him as a member since December 1997.
Ten years of satisfaction with Grain Marketing Plus and
National Farmers.
Soybean, wheat production ideas
Wening’s grain operation is about 87 percent corn
and beans, and about 13 percent wheat. Also a seed dealer,
he sees that genetics can make a difference in stand and
yield, and in the markets. “We had planted exclusively
non-gmo crops, then went to Roundup Ready beans
them, and future generations. Working with the soil
because the market swung in favor of Roundup Ready. The
conservation office, they have completed five, and are
selling point of it is that it has a perfect span in the field,”
working on a sixth, waterway to control surface runoff.
he said. He also advised soyNow the water coming out of
bean producersto pay special
the established waterways is
attention to their drills.
clear, so the progress is obviAnd for the second year,
ous. And erosion is almost
they have used a soybean
controlled with no-till.
variety with an insecticide on
Being an experimenter,
the bean – called Cruiser.
Wening is trying a new
There are three to four weeks
process as part of the manure
of activity where it wards off
management plan. Above a
insects. “I think we raised
creek line, they started sowour bean yield doing that,”
ing annual rye behind the
he said.
combine. It grows down deep
The Wenings also grow
– 40 inches to 50 inches
soft red winter wheat, which
– and picks up the old potash
Brent Wening takes care to focus on
is made into crackers. They
and phosphorus. It serves as
every detail in his Jasper, Ind., operation.
raise high management proa holding tank for the nutrients
duction wheat, where the producer split applies nitrogen
for the next crop, which, of course, is rotated. He tried
during the winter in two applications, about a week apart.
this method with 300 acres this year, and is examining
The wheat can’t pull the nitrogen in at one time, and the
to see how well it works in his situation. “Even if I don’t
method gives more return on the financial investment in
get a yield bounce, I get the erosion control benefits,” he
the chemical. Then he follows back with pesticides, and
said. Again county agents, or Extension crop specialists,
fungicides. “It all results in a yield boost. It protects the
and seed companies can help producers with this.
growing point of the wheat,” Wening explained.
The Wenings pay attention to the details, capitalThey saw yields of 78 bushels per acre average in
ize on income diversity, champion bioenergy and cook
2005, and 82 bushels per acre average in ’06. (They
up their hobbies. They raise and contract out big round
experienced a yield downturn in ’07 because of freeze at
bales, rent their remodeled and antique-decorated hayloft
Easter.) Extension crop specialists may be able to help
party barn, advocate for and use biodiesel, and for a
producers who want to pursue this method.
hobby, make their own sausage from their hogs. Next, it’s
real pork bologna, Wening said.
Land stewardship
That’s all farming-forward thinking for this Indiana
The Wenings know clean water and clean soil profits
farm family.
Remember the national convention in Milwaukee, Wisconsin Jan. 14-17
� � � � � � � � �� � � � � � �
� � � � � � � � � � � � � � � � � � � �
�����������
Date Convention Location Meeting Venue
Aug. 6
Aug. 18
Aug. 23
Sept. 8
Sept. 23
Oct. 10
Oct. 12
Oct. 13
Dec. 1
Dec. 8
4
Lisbon Town, Kty.
Montgomery, Ind.
Corunna, Mich.
Jefferson City, Mo.
Waterville, Maine
Mifflenburg, Penn.
Berlin, Vt.
Madison, N.Y.
Manitowoc, Wis.
Effingham, Ill.
Featured Speaker
Hardin Co. Ext. Office
Announced Later
Gasthof Village
Larry Mitchell
Gigi’s
Ron Mattos
Rickman Center
Paul Olson
Weathervane Restaurant Announced later
Carriage Corner
Ron Mattos
Hilltop Inn
Ron Mattos
Quacks Diner
Ron Mattos
Holiday Inn
Announced later
Keller Convention Ctr.
Announced later
Contact
Aubin Mattingly
Ben Rudecki
Wayne Prichard
Ken Schlottach
Ruth Lyman
Glenn Swartz
Sherm Bogie
Carroll Wade
Don Hamm
Ron Schultz
Riniker realizes diversification, National Farmers risk
mangement enable well-rounded Iowa farm life, profit
Risk management keeps money flowing through Iowa
farmer Paul Riniker’s feed bunkers. Actually, he banks the
profits, but in the family operation, the Rinikers capitalize
on financial and production strategies to slash risk, assure
income and enjoy farming at the end of the day.
With 1,200 cattle on feed, a 50-head dairy operation, marketing 1,400 hogs per year, and a 480-acre grain
operation supporting the livestock, the Rinikers’ operation
serves as a roadside billboard for ag diversification.
“I’m a firm believer in spreading out risk,” Paul said.
“We diversify to survive
the low-price times in
“If I’m telling a farmer
other commodities.”
about marketing with
In the cattle
Milk Profits Plus, I
operation, the Rinikers
would tell him about
market 70 percent,
UltraOptions and
or about 950 head of
forward contracting.
Holstein steers per
year, through Nexus
And I’d tell him, in no
Marketing, using forother entity, co-op
ward contracting or
or whatever, does he
hedging to nail down
have a voice where
the prices they need
he’s heard on the
to succeed. Additionoperation of it, like on
ally, he purchases
our National Farmers
the feeders through
farmer boards.”
another National Farm— Paul Riniker
ers MaximumMarketing
program, FeederConnect, with Pat Lampert,
beef program manager, handling the details. The Rinikers’
Holsteins happen to come from Ohio.
“We’ve sold a number of (hard-fed Holstein) April
2008 contracts at over $92 per cwt., Holstein, hard-fed
(corn-fed),” he said. “We’re very, very satisfied.”
Riniker is growing his operation based on Nexus. “We
expanded from 75 head in 2000, to over 1,200 head in July
2007. You must know what I think of Nexus now.”
Riniker explained the measurable features and
benefits for his operation. “Using forward contracting
for delivery gives you a lot of peace of mind. The cost of
production gives you a benchmark, and you price above
that.” You can do much, much better compared to the cash
market, he pointed out.
“Nexus is very up-to-date at all times on cattle prices,
and the average farmer has a million other things to do. If
they can’t go to the house to check DTN or take any time
to look at their Blackberry, Nexus can keep them updated,”
he added.
Risk Management Consultant Sarah Nelson can
inform producers about contract highs, for example, he
explained. “Times
of peaks. Length
of lows. Sarah can
tell you when it’s
better to hedge
and when it’s
better to forward
contract. With the
cattle, we have
peace of mind in
knowing they’re
marketed,” he
added. If hedging
is a good tactic at that time, Nelson adds that into the
marketing mix.
For the other 30 percent of the Rinikers’ Holsteins,
plus 250 head of colored, they market their livestock
through the Livestock Marketing Center in Farley, Iowa,
with Willy McDonald at bat in marketing those. If
Their approach pays off, because in July the dairy
hedges are in place, McDonald and Nelson work with
averaged 189,000 somatic cell count, and 4,000 for the
Riniker to coordinate delivery.
bacteria count. Riniker appreciates Milk Profits Plus Field
But there’s more to the story. Before the cattle
Representative Nancy Collins because she helps the dairy
can even be marketed, they’re raised to be quality beef.
achieve goals, with communication, support and the solid
Gerald Riniker, Paul’s brother, helps with that, caring for
information she shares.
the cattle on their mother’s farm.
Riniker’s goals are all about the bottom line, which
Riniker looks to total mixed rations –TMR – for fulNational Farmers MaximumMarketing programs enhance.
filling the cattle nutrition needs. Earlage, ground corn,
“If I’m telling a farmer about marketing with Milk Profits
haylage, dried
Plus, I would tell him about
distillUltraOptions and forward
ers and
contracting. And I’d tell him,
soluables,
in no other entity, co-op or
trace minwhatever, does he have a
erals and
voice where he’s heard on
vitamins
the operation of it, like on
come in
our National Farmers farmer
a premix.
boards.”
That asRiniker serves as chairsures that
man of the national dairy
the cattle
committee. He also serves
get their
on the Farley Dairy Board,
protein
which has been the case
National Farmers board member Paul Riniker
and energy
almost since the 1984 beginstands with his Holsteins on his operation in central Iowa.
source.
ning of his dairy operation.
One
Riniker advocates using
distinction in the feeding program is that he likes to
MaximumMarketing’s UltraOptions. For example, for 15
put the haylage at about five percent fiber because
cents per cwt., he protected $15 milk with UltraOptions.
they feed the cattle so much grain. This is differThe price ended up going even higher, and he obviously
ent than for dairy cows, which get about 50 to 60
chose to take that price, but he had protected $15 milk.
percent haylage.
“That’s what is really nice about options.”
Animal health matters. So they vaccinate cattle with
Now he’s forward contracted for milk in the $20
two different shots that cover a range of illnesses includrange, with UltraFutures and the help of Wayne Moore,
ing about 12 respiratory illnesses, IBR (infectious bovine
dairy futures coordinator. “That’s up there right at record
rhinotracheitis), BVDs, black leg, and VRD.
highs,” he said.
And Riniker wanted to share marketing tips and
The farm enterprise also includes a 1,400 finish per
opportunities other producyear segregated early weaning hog
ers can take advantage of, and
operation. In a SEW operation, pigs are
consider as they make livestock
weaned at about 10 lbs., before 21 days
buying decisions. “We have
of age, to avoid diseases contracted
hard-fed Holstein contracts
from the sow.
with Packerland capitalizing on
Paul and Janet have three livHolsteins that dress out like
ing children, Steve, 29, who works in
colored beef. With IBP, conManchester, and helps with haying,
tracts are available for nicely
Michelle, 28, who served in Iraq two
colored Holsteins.”
years ago, and is now serving at the
With Agri-Processors in
armory in Moline, Ill., Susan, 25, lives
Postville, Iowa, Riniker notes
in North Liberty and teaches in Iowa
that on colored cattle, they
City. The Rinikers’ youngest daughter,
will pay more for native-born
Teresa, is deceased. The family extends
cattle. Producers in northeast Iowa should talk to Willy
to another generation with Hanna, age 6, and Grant, 3.
McDonald, area representative, to get help with
Diversification takes on many agricultural faces. The
that. For other regionally-specific marketing reRinikers also own and operate a custom silage bagging
wards, producers should talk to their local livestock
business, with 11 machines on over 100 farms in a sevenrepresentatives and marketing center staff or call
county range. Their employee, Ron Hutchinson, helps with
800.247.2110.
bagging and machinery maintenance.
In the 50-head, grass-based dairy, they market
That’s
BgH-free milk, rotationally grazing the herd. Bob
a fitting exRiniker, Paul’s cousin, handles the milking chores.
ample of one
“I get in on that, too. I’m the part-time help,” he
Iowa family,
joked. Paul’s wife, Janet, helps where needed, too.
pursuing the
(She also handles the financial records and acquires
agricultural
equipment parts.)
rewards of
Everyone involved in the dairy works hard to
hard work,
assure they deliver quality milk to America’s tables.
smart busiAnd the nature of a grass-based dairy helps assure they
ness and
do that, because the cows stay clean. Moreover, in the
trusted
winter they make sure the cows have a heavy bed, for the
partners.
same reason.
5
By Sarah Nelson
As a rule, we see increased market-ready cattle
supplies each June and July. And this year was no
exception. The market felt the effect of the additional supply and soft post-Memorial Day demand.
Supplies were seasonally larger and were also
affected by higher-priced corn this year. Indeed,
corn prices, for those who didn’t contract their
grain, have dictated the marketing of the cattle
more than the cattle’s readiness. Rather than feed
$4 corn and put more days on the cattle to achieve
a better grade or yield, producers and feedlots
alike simply marketed their animals for economic
reasons.
The effect of weather on the corn market and
corn’s effect on cattle is still making things more
volatile than normal. The corn market has moved
lower when many areas of the Midwest saw rains
at critical times around pollination. The corn crop
is currently rated good to excellent in many areas.
Supplies and weekly slaughter rates seem to
have peaked for the summer, and the market has
been trying to stabilize since July 4. July has seen
the futures market rally with December reaching a
new lifetime high on July 24, and April achieving
a new lifetime high on July 12. Cutout and cash
prices have not gained ground as quickly as the
futures, so basis has been abnormally wide.
Weather, corn markets, consumer demand and
availability of market-ready cattle are all market
factors over the course of the next several weeks.
The futures market seems to have found surer
footing recently. I anticipate the cash market and
cutout will make gains as we head towards fall, and
I expect smaller supplies and seasonally increased
demand.
A few interesting days will be had between
now and then, to be sure. Keep up with the markets in order to take advantage of pricing opportunities, or call me for the latest marketing advice.
Californian recognized for dedication to
National Farmers, marketing programs
A National Farmers Membership Appreciation Award was
presented to a longtime member
in California last month.
Dale Albaugh, Aden, Calif.,
accepted the award in July on behalf of his family from National
Board Director Frank Endres
representing the California state
board.
Albaugh joined the organization in 1968, when National
Farmers began recruiting members in the western U.S.
He began marketing cattle
Dale Albaugh family accepts National Farmers Member
Appreciation Award from California’s Frank Endres (second from right).
when that livestock program was
offered, and today Albaugh continues supporting the organization’s marketing
efforts. He ships cull cows to a National Farmers
marketing center about 150 miles away in the
southern part of the state.
Provided by the Institute for Rural America
Albaugh’s decision is significant, considering his local auction yard is a mere 40 miles from
their ranch. The award
recognizes 39 years of
MaximumMarketing services deliver profits to
unwavering support to
National Farmers and
America’s dairy, grain and livestock producers.
its members.
Read the latest scrolling
ag news at www.nfo.org
July farm prices received increases 3 points
The preliminary All Farm Products Index of Prices
Received by Farmers in July, at 142 percent, based on
1990-92=100, increased 3 points (2.2 percent) from
June. The Crop Index is up 2 points (1.4 percent) and
the Livestock Index increased 3 points (2.2 percent).
Producers received higher commodity prices for
milk, eggs, wheat, and snap beans. Lower prices were
received for corn, broilers, hogs, and cantaloups. The
overall index is also affected by the seasonal change
based on a 3-year average mix of commodities producers sell.
Increased average marketings of grapes, wheat,
hay, and tomatoes offset decreased marketings of milk,
cantaloups, and potatoes.
Commodity & Unit
Cotton, per lb.
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.
Tickets Just $5 each, or 6 for $25
Price Received
0.468
5.37
3.23
3.37
5.55
7.92
2.50
25.10
21.70
90.30
125.00
52.60
The preliminary All Farm Products Index is up 25
points (21 percent) from July 2006. The Food Commodities Index, at 144, increased 4 points (2.9 percent)
from last month and increased 25 points(21 percent)
from July 2006.
Prices Paid Index Unchanged
The July Index of Prices Paid for Commodities and Services, Interest, Taxes, and Farm Wage
Rates (PPITW) is 158 percent of the 1990-92 average.
The index is unchanged from June but 9 points (6.0
percent) above July 2006. Lower prices in July for feed
grains, feeder pigs, LP gas, and gasoline offset higher
prices for feeder cattle, complete feeds, milk cows, and
nitrogen fertilizers.
100 % Parity Parity Received In cents /lb.
2.06
23
0.468
10.90
49
8.95
8.09
40
5.76
7.63
44
7.02
13.80
40
5.5
17.90
44
13.2
4.53
55
7.81
57.30
44
25.1
40.50
55
21.7
214.00
42
90.3
308.00
41
125.0
Na
Na
52.6
Source: Agricultural Prices – National Agricultural Statistics Service, USDA
6
By Linda Reineke
By Brad Rach
Growing profits in the field takes growing good
precipitation in Tennessee and Alabama).
crops out there. So, for many producers, rains that
Two things strike me about this report. First of
fell during corn tasseling in much of the Corn Belt
all, acres had not all been certified when the report
mean their ultimate yields have been saved, but as
came out on June 29, so how did the USDA arrive
of late July, other areas remained critically dry.
at these increases? Secondly, with the extra marginal
The July 12, 2007, USDA Supply and Deacres, poor emergence in some areas, and significant
mand Report estimated that the 92.9 million acres
corn on corn acres, how are we going to achieve a
of corn planted this year will achieve a national
better national average yield than last year?
average yield of 151.3 bushels per acre, giving us
And in terms of risk management
a 12.84 billion bushel crop this fall.
opportunities, futures prices
Last year, we planted 78.3 million
have been slipping and further
acres and averaged 149.1 bushels per
basis widening occurred
Mid-August through
acre.
the week of July 9. This is
mid-September
The changes in acreage vary
a rather historical tendency
futures prices
significantly across the states. In corn
without weather scares. Long
will establish the
for example, acreage increases in key
speculative positions are
insurance average
states were Iowa with 13 percent,
leaving the futures markets
for winter wheat.
Illinois at 16.5 percent, Minnesota,
in large numbers as of late
Remember that
11.9 percent, Indiana with 20.5
July, driving prices lower. For
National Farmers
percent, Nebraska, 12.3 percent, and
producers, decent futures
is an agent
Wisconsin at 17.9 percent. These
prices in months ahead are
numbers are below the 20.9 percent
available to make sales, despite
affiliate for Crop 1
acreage increase reported for the U.S.
the losses we have experienced.
Insurance (www.
Other important producing
What is the marketing
crop1insurance.
regions increased their corn acreage,
strategy
right now? The
com).
such as Missouri’s increase of 29
common theory is that the
percent, Ohio’s increase of 28
CBOT could fall as far as
percent and South Dakota swelling
$2.80, another 50 cents
by 39 percent. But either their yield potential
down from current levels. Call us at 800.247.2110
is lower than other Corn Belt States (in the
regarding risk management strategies, such as put
case of Missouri), or these states are currently
options to protect prices on grain you don’t forward
experiencing poor growing conditions due to
contract, or call options if you have production
adverse weather events (in the case of Ohio and
concerns on sold grain or want to protect feed
South Dakota).
prices.
The most notable changes in corn acreage
Mid-August through mid-September futures
can be found in the Southern states. For example,
prices will establish the insurance average for winter
Texas, Tennessee and Alabama increased their
wheat. Remember that National Farmers is an agent
corn acreage by 29 percent, 57.3 percent and 72
affiliate for Crop 1 Insurance (www.crop1insurance.
percent, respectively.
com).
Nevertheless, these are less productive acres
Oct. 1 is the final date to enroll for coverage.
(in terms of expected yields) that have also been
Call them if you are interested at 1-866-765affected by adverse weather this season (such
0552 ext. 3544 and identify yourself as a National
as excessive precipitation in Texas and lack of
Farmers member.
Affordable Health Insurance
Need lower cost health
insurance for you or your family?
We’ve teamed with Holmes Murphy to bring you choices...to help you
find a well-known insurance company that can protect you and your
family against high medical bills at a reasonable cost.
For a free, no obligation quote call today!
First-Rate Farm Financing
Lock in low monthly payments
with our 25-year amortization feature.
Our 10-year ARM offers a
low fixed rate for the first decade,
and adjusts annually thereafter.
877.899.5325
I am motivated to write about a commentary
aired on the MaximumMarketing dairy line in
mid-July. It was recorded by Dairy Division Pacific
Regional Director, Dave Inman.
In it, he spoke about the need for dairy producers to plan for and create the future. With today’s
relatively high milk prices, the action by dairymen,
themselves will affect future milk prices paid to them.
It was just 18 months ago that less than a 4
percent oversupply of true market usage that caused
all dairy producers to lose a staggering dollar amount.
In fact, Inman notes that last year dairy producers lost
more than 30 percent of their milk’s value on 100 percent of their production by not marketing together.
He continues and points out that most dairymen
and women are working to achieve a price level that
will help them pay back what they, by not marketing
together, lost over the past 18 months. And he stresses producers should also be aware of the industry’s
survival mechanism urging them to hold on to cows.
Because of current higher price levels, dairymen
are culling less aggressively, feeding more energy and
using more rBST in order to take advantage of relatively high milk prices. This is the very action that will
send producers down the road many swore they would
never travel down again.
Then Inman illustrated his point by providing
a math quiz. He asked listeners to take a pencil and
paper and multiply 96 percent of their total pounds of
production in 2006, by their latest milk check.
He had producers list this figure on the left side
of the paper, and to the right note the word organized.
Then, he asked farmers to list their 2006 gross milk
check income under the first figure, and spell out the
word unorganized to the right of that last figure.
He then asked producers to compute the difference. Inman pointed out that number is the same
amount producers will lose in 2008, if they market
alone; therefore creating no immediate action to cause
an organized reaction.
The top-tier price is what you could be getting
for most of your milk, if you produce for the organized market.
And, it is fortunate indeed that National Farmers
works on your behalf to keep prices in the relativelyhigh category. While the folks here cannot always
guarantee the highest price, it most certainly always
will be a fair one.
Inman urged producers to take the next step,
and speak with their fellow dairy producers about
how producers who market as a group can do better.
Because as a group, producers act as one voice and
help secure higher prices through a two tier pricing
program.
And, nearing the end of his presentation, he
reminds producers of the following:
•
•
•
•
800.824.4448
National Farmers has a plan to get all producers
the organized milk price
Milk price history repeats itself
Sexed semen technology heifers will begin calving
in greater numbers near the end of this year
It is always better to cull cows than to cull dairymen
Producers need to take action today that will create a reaction of profitable and organized milk prices
tomorrow.
May not be available in all areas.
Minimum credit standards and loan amounts apply.
7
A publication of the National Farmers Organization August/September 2007
Producer retirement planning helps farm families
Hilton Milwaukee City Center
509 West Wisconsin Ave.
Milwaukee, WI. 53203
414.271.7250
Room rates – $80 single - double,
plus state and local taxes.
Deadline date to receive this
room rate is December 21, 2007
� � � � � � � � �� � � � � � �
� � � � � � � � � � � � � � � � � � � �
�����������
Arrival date: _________________ Time: ______ Departure date: _____________
Name: ______________________________ Share with:________________________
Address: _______________________________________________________________
City: ______________________________________ State: _______ Zip: _________
Telephone: (
) _________________________ No. of people: ________________
Room type requested: ( ) 1 person ( ) 2 people ( ) 3 people ( ) 4 people
( ) Smoking ( ) Non-Smoking
Credit Card for guarantee: ( )AmEx ( )Visa ( )MC ( )Discover
Card Number ___________________ Guarantee signature __________________
Expiration Date ________________ Cancellation Policy: 48 hrs prior to arrival
Check in time: 3:00 p.m. Check out time: 11:00 A.M.
1 nightʼs deposit with check or credit card is required.
Call 414-271-7250 and ask for the National Farmers group rate.
To FAX your reservations: 414.271.1039
Convention ʼ08 Jan. 14-17, Milwaukee, Wisconsin
8
528 Billy Sunday Road
P.O. Box 2508
Ames, IA 50010
Make your Convention ʼ08 Hotel reservation
Non-Profit
U.S. POSTAGE PAID
PRINCETON, MN
PERMIT NO. 18
ees, and if they have to be included in the plan.”
• SEP – money is added pre-tax by the busiFarmers’ seasonal variation in income and the
ness, current limit 25 percent of income to a
need for flexible, simple financial retirement plans
maximum of $45,000 contribution
bring Roth IRAs, traditional IRAs and Simplified
(But producers need to know, Securian
Employee Pension Plans (SEPs) to the top of the
MidAmerica does not give tax advice, so they need
list of options.
to consult their tax advisers.)
“With all three of these,”
Which retirement plan should
Homan said, “the paperwork is
be used can be determined by
First of all, a farmer
fairly simple. There’s no fee to
whether the farm is a sole propriwants to build up
start them, and they are easy
etorship or a corporation. If it is a
his operation, but
to terminate.” And in these
corporation, the farmer does not pay
situations, the type of plan a
after that he should
self-employment tax on contribuproducer uses may change from
look at setting up a
tions. That’s an advantage under the
year to year, depending on the
retirement plan.
SEP.
tax, income or employee situaQualified retirement plans,
tion. Also with all three, these
such as profit sharing and 401K, are
can be set up at the end of the
not widely used. Homan noted few producers use
year, when farmers know their tax situation better.
this strategy. Two considerations for this include
• Roth IRA - contributions go in after taxes,
consistently high income – well over $100,000 per
stay in, and are untaxed when they come out, maxiyear and knowing that would continue for years.
mum 2007 contribution $4,000, unless you’re over
They must also wish to aggressively save for retire50, then $5,000
ment.
• Traditional IRA - money is added pre-tax, and
Ready to roll down the retirement plangrows tax-deferred, but is taxable when it comes
ning route? Call 888.nfo.agri or e-mail don.
out, maximum 2007 contribution $4,000, unless
[email protected].
you’re over 50, then $5,000
National Farmers
Whether a producer wants to roam the continental U.S. in a fully-loaded motor coach or enjoy
a quiet country life when it’s time to quit farming,
solid retirement plans must be in place.
Why does it matter so much, especially when
many farmers are sitting on many thousands of dollars in land assets? Total return on rented farmland
is good, but cashflow is inflexible and can be low, in
the three to four percent range, said Don Homan of
Securian MidAmerica.
“Look at the pool of money you as a family farm
or partnership generate,” Homan suggested. “Determine how you want to use that. Do you want to
put it all into equipment? A retirement plan helps to
diversify assets. After the farm crisis of the 1980s,
producers have shown more interest in retirement
plans. They don’t want all the assets wrapped up in
the farm enterprise.”
A number of considerations and viewpoints
come into play with retirement planning. First of all,
a farmer wants to build up his operation, but after
that he should look at setting up a retirement plan.
“So,” Homan said, “First, we recommend assets
off the farm to spread them out. Second, we look at
potential long- and short-term tax advantages. And
third, we consider whether the farmer has employ-