Monday, October 25, 2004
Good afternoon, it’s great to be with you all here in Reno for the 88th annual meeting of NMPF. I also want to thank my predecessor, Tom Camerlo, for all his advice during the past year – and I also have to thank my wife, Mary, for the love and support she’s given me.
In my first year as the Chairman of NMPF, I’ve found the experience to be rewarding, challenging and enlightening. Although I’ve served on the Board of National Milk for a lot of years, being able to serve as chairman has broadened my perspective on the activities of our organization.
What I’d like to do this afternoon with my presentation is look back over the past year, and talk about the experiences – both high-profile and behind-the-scenes – that I’ve had.
So many things happen at NMPF that aren’t highly visible to those on the outside. So often, when we talk about the activities of National Milk, the focus is on legislative issues and economic policy: things like the Federal Order system, price support levels, and the MILC program. But it’s important to keep in mind that much of the energy expended by National Milk’s staff is on a broader range of issues. These issues all have economic ramifications, but it’s not nearly as narrowly focused as some might think.
Here’s just a partial list of the activities, some more evident than others, that NMPF has directly engaged in during the past 12 months:
Lobbying against the U.S.-Australia Free Trade Agreement. Probably no single policy initiative under consideration recently by our government posed as great a risk to the U.S. dairy producer community as the Free Trade Agreement with Australia. Recognizing the fact that this agreement was anything but free for our farmers, NMPF spent countless hours interacting with members of Congress, and asking farmers to contact their representatives, in an effort to prevent a deal that would have thrown open the U.S. market to unlimited quantities of Australian dairy products.
We even took out a full-page ad in the Washington Times, asking President Bush not to “trade away the farm” during negotiations with the Australians. Dairy issues were a high-profile, “front and center” controversy during those talks.
The net result was an agreement that keeps our most important safeguards – our over-quota tariffs – in place. There will be some additional imports coming in, but it’s just a drop in the bucket compared to the worst-case scenario we were faced with just a year ago, when the negotiations started. I’d like to thank all the members of NMPF who worked together to prevent the sky from falling in on us. We had a goal-line stand against the Aussies, and our defense held – because we were able to work together.
To continue that football analogy, here’s an example where we’ve been playing offense: efforts to reduce the flow of imported dairy proteins into the U.S. One of our biggest legislative priorities this year has been trying to pass legislation imposing tariffs on imports of Milk Protein Concentrate and casein. Thanks to the relentless work of NMPF and its members, we now have 199 sponsors of the House version of the MPC tariff bill, and 37 sponsors in the Senate. Nothing gets done on Capitol Hill without an enormous amount of effort and pressure, often behind the scenes – and even then, the outcome is not assured.
President Reagan once said, “I have wondered at times about what the Ten Commandments would have looked like if Moses had run them through the U.S. Congress.” Things just don’t happen overnight, but if you’re persistent, they do happen nonetheless. If Congress doesn’t pass the MPC tariff bill this year, we’ll be back at it again next year.
We are continuing to fight the dairy import issue in other ways, as well. First, we are still pushing the U.S. Customs Service to rethink its imprecise classification of what Milk Protein Concentrate really is. As we say in Texas, we may have been born at night, but not last night. Importers of skim milk powder, mostly from Europe, have been dressing up their product with a little bit of casein and whey, calling it MPC, and bringing it here without tariffs. That’s because the U.S. government won’t enforce a precise definition of the product that says only filtered milk qualifies as MPC. But our folks at National Milk continue to analyze imports labeled as Milk Protein Concentrate to prove that these products, despite the window dressing, are not really MPC. They shouldn’t be able to evade our tariffs by being passed off as something they’re not. The good news is that European imports labeled as MPC are down, way down, from years past.
NMPF also took the offensive in helping guide an investigation by the International Trade Commission into the whole issue of dairy protein imports, and how they affect the domestic market. We had a number of representatives from NMPF member organizations testify last fall before the ITC about the negative economic consequences of imported MPC and casein. Six months later, the ITC came out with a report that found that a significant amount of domestic milk solids is being displaced due to imports. Because of National Milk’s relationships on Capitol Hill, our people were among the first to receive the report.
There’s another long struggle concerning dairy imports that I am optimistic will score points for us at the end of the day, and that is the issue of dairy imports paying into the checkoff program. As we all know, American dairy farmers have to pay their 15 cents per hundredweight for the promotion checkoff. But dairy imports - whether they’re proteins like MPC and casein, butter, or cheese - can take advantage of our market without paying any checkoff assessment at all. We thought we had that issue solved when the 2002 Farm Bill contained a provision assessing the equivalent of 15 cents per hundredweight on dairy imports.
But the importers have worked within the USDA, our government agency, to impede the implementation of the import assessment. They’ve argued that because the 15 cent checkoff exempts farms in Hawaii and Alaska – all 20 of them – it might ruffle some feathers of our trading partners. We’re now trying to make certain the U.S. checkoff applies to every state and territory, so that it can also apply to all imports. So, you can see how far some people will go to derail something that has widespread support in this country and within our industry. The fight to collect the import assessment will continue into 2005, if that’s what it takes.
Even though the highest-profile issues lately on trade have been when we’ve played defense, we’ve scored some important victories behind the scenes on offense.
Working with the U.S. Dairy Export Council, NMPF has helped to open markets for U.S. dairy products whenever and wherever possible, from China to Central America. These efforts, along with the use of CWT’s Export Assistance program, have contributed to a more stable price scenario at home.
Let’s talk about another example of NMPF working hard behind the scenes: the response to the discovery of mad cow disease in the U.S., right before Christmas. Probably all of us can recall exactly where we were, when we heard about that cow in Moses Lake, Washington, last December 23rd.
We had staff working on Christmas Day, and the days before and after, to communicate the facts about what was going on in Washington state when that Holstein was found to have BSE. Again, thanks to the relationships that our staff has with key people at USDA and the FDA, we were able to ensure that the safety of dairy products was not called into question. We also have worked in the months since last December to help shape all the new regulations that have resulted from the BSE discovery. NMPF has been at the forefront of all of the industry groups working to ensure that the government doesn’t go overboard in how it deals with cattle producers – particularly dairy farmers.
In fact, I was pleased to represent National Milk when I testified before a field hearing in Houston held by the House Agriculture Committee this spring, on the topic of animal ID programs. The development of a national, mandatory animal ID system is probably going to be the biggest result of the mad cow discovery, and NMPF has been working to head up the Dairy Species working group that is developing a system that our farmers can live with.
That overall effort on the BSE crisis response was a joint campaign by NMPF and DMI, first developed several years ago, and it worked. You can learn more about it on Wednesday morning.
Another joint effort we’ll discuss more thoroughly Wednesday is the effort to ensure that there are better opportunities to serve milk in the nation’s schools through the School Lunch program. Here’s an illustration of where you have to be ready to play both offense and defense.
On offense, we scored some major points as Congress earlier this year passed the reauthorization of the Child Nutrition Act, which governs the school lunch program. The bill we successfully supported increases opportunities to serve a variety of milks, including flavored milks, in schools. In fact, schools are now required to serve at least two varieties of milk. The school lunch bill also contained a provision giving schools the authority to offer milk at anytime and anywhere on school premises or at school events. This means the soda companies can’t restrict access to only their products at school functions, which will give us more opportunity to compete with soft drinks. So, this is a major step in our continuing effort to get a better milk product to more school kids. And, along with DMI’s Action for Healthy Kids initiative, we should be able to insure that the children develop a lifelong habit of including dairy in their diets.
But we also had to play defense on this issue, when soy processors tried to grab a piece of the school lunch action by getting soy “beverages” classified as equivalent to real milk. Soy drinks are not equivalent, in taste, nutrition or cost, to the benefits that real milk offers. And we were able to prevent the soy lobby from carving out a place for their imitation product at the expense of the real thing.
Of course, one of the biggest accomplishments of 2004 has to be the renewal of Cooperatives Working Together for a second year. The operation of the program, the effort to get more coops involved, the setting of goals and the timing of programs – these were all learning experiences for all of us involved. While we may not have always agreed about the route to be taken, we have all agreed on the ultimate destination – better prices for dairy farmers. The oversight of CWT, just like the oversight of NMPF itself, shows the need to work as a team. Most people on teams want the same outcome. And we’ve proved that NMPF, with the success of the CWT committee, member and non-member coops alike, along with independent producers – we can all work toward a common goal, through CWT and achieve our ultimate goal.
And I think the biggest lesson for me in the past year is something that Yogi Berra once noted, namely, “you can observe a lot just by watching.” Well, you can also hear a lot just by listening.
I was reminded of that during a meeting we had last January with U.S. Trade Representative Bob Zoellick. I and a handful of other dairy leaders met with Ambassador Zoellick right before the crucial last phase of negotiations of the U.S.-Australia free trade agreement. We were there to plead our case that the U.S. government not give away the keys to the candy store to the Australians as part of the free trade deal. And Zoellick was there, not to tell us why he thought we were wrong, or what he was allegedly going to do for us, or not do for us – he just sat and listened. And at the end of our presentation, after hearing our concerns, he simply said, “I’ve heard your perspective; we’ll it in mind and do the best we can for you; and you’ll just have to see what kind of deal we end up with, and decide whether you can live with it, or not.” Ambassador Zoellick knows we are proponents of trade, as long as we’re provided with a fair deal and a level playing field.
I think Ambassador Zoellick provided a terrific illustration of how a person can provide leadership when there are lots of forces pulling and pushing you. You can’t ever make everybody happy, and trying to do so often only makes everybody unhappy. But I think you can earn their respect by listening first, and truly hearing what they have to say. That doesn’t mean you’ll always leave them smiling, but at least you’ll have respected their opinion and their point of view.
Finally, I have appreciated the support of the NMPF officers and board in the past year. I cannot say enough about how well we have worked together. I think people underestimate the unity and cohesive spirit that exists at NMPF, both with its members and within its staff. The staff I have come to appreciate more than ever before. They are few in number, 17, but their accomplishments are numerous indeed.
I’m reminded of the importance of having good people when I think about the book, “Good to Great,” by Jim Collins, which was published a few years back. Collins researched more than one thousand of the top companies in America, to find out what really set the great ones apart from the merely good.
Collins found that it boils down to hiring the right people to lead – not just good people, but the right people, with the right skills– and focusing their efforts on a common economic goal that they can do better than anyone. Great organizations have leaders known less for their egos, than their determination to get the job done. They’re led by plow horses, not show horses. Great organizations, just as importantly, identify their core values, those things they can do better than anyone else.
The focus on a common goal, and adherence to our core values, also characterizes National Milk. No other organization focuses on helping dairy farmers like this one does. Rather than getting distracted by less important agendas, NMPF is focused on those things that matter most to farmers.
At NMPF, our core values focus on providing cooperative members a few key elements:
1. A healthy domestic market to do business in, by working with Congress and government agencies;
2. Leadership training, in the form of the YC program, to assure that the U.S. dairy sector has capable, knowledgeable leaders in the future;
3. Diligent oversight of regulatory issues affecting dairy farmers, not only in the marketplace, but on the farm as well;
4. Continued oversight of world trade and bilateral U.S. trade agreements, to assure American dairy farmers a fair shake, a level playing field, and the best possible opportunities in this ever-changing market.
Producing winning results for co-ops and farmers on these diverse topics that I just mentioned, that’s what it’s all about: that’s the bottom line. Vince Lombardi once said, “If it doesn’t matter who wins or loses, why do they keep score?” I think we’ve chalked up some important wins in the past year, and I look forward to winning more in the months and years ahead.
Again, my thanks to the officers, the board and staff of National Milk and to the CWT committee for your support and the unity you’ve exhibited this year.
Thank you again for your attention and may God continue to bless us all.
