Release Date: July 2006
Word Version
Brother, Can You Spare A Dime?
Jerry Kozak
President/CEO
After he’d been voted out of office by the same British citizens that he led to victory in World War II, Prime Minister Winston Churchill observed with bittersweet insight that “democracy is the worst form of government except all those other forms that have been tried from time to time.” With three years of Cooperatives Working Together behind us, I think the same can be said about our farmer-led and farmer-funded self-help program, which is also a democracy, and which, despite its shortcomings, remains the best hope for farmers to help bring some strength and stability to dairy prices.
July marks the beginning of CWT’s fourth year. With the beginning of this new fiscal year, CWT’s members are also agreeing to an increase in the membership investment of ten cents, up from the previous nickel per hundredweight. What’s been interesting is that the reaction to the higher assessment runs both ways: some farmers think that an extra nickel is too rich for their taste, while others think that the assessment should be 20 or 25 cents per hundred. Since CWT is a voluntary program – it is essentially a democracy, in which people vote with their nickels and dimes whether to belong – the dime investment reflects the reality of those divergent views. Too high an assessment would reduce membership below a healthy level, while too modest an investment would leave many wanting more.
A bigger budget, funded with an even higher assessment, could do more, but at the likely expense of a loss of membership volume. The extra nickel will allow us to fund an even larger herd retirement in the next 18 months, along with paying for our ongoing export assistance program. Under the five cent assessment, we would not have had money in the remainder of the 2005-06 budget to pay for a fourth herd retirement round. And the majority of CWT’s members recognize that more is needed. To their credit, they are willing to pay for a more aggressive program.
One criticism that some voice about CWT is that even at a dime, the program can’t have a positive impact on producer prices. It’s funny how quickly people forget where prices were, however, when the program started. The June 2003 Class III price was $9.75, and Class III prices had been below $10 the preceding seven months. That punishing stretch hasn’t been repeated since the creation of CWT. Even though 2006 prices have been tough, they haven’t dipped below $10.83, and they should be back up over $11 in June and the remainder of this year.
We are currently performing a detailed impact analysis of CWT’s return on investment in the past. While the results are not yet in, I have yet to encounter anyone who can credibly argue that he or she thinks the market impact of CWT’s three herd retirements, and more than half a billion pound of product exports, has been zero. CWT cannot single-handedly smooth out the oscillations in a $27 billion market, but it can take the razor’s edge off of those gyrations, and prevent the collapse of prices that we experienced just three years ago.
And if that is still not sufficient in the minds of some? Then, as Churchill noted, what is a better alternative to be tried? Doing nothing? Wasting time waiting for yet another government program to be implemented that will turn the tide? Praying that some misfortune will befall someone else’s farm to the betterment of one’s own?
I said that CWT is a democracy, and it clearly is, but it is also a business, and must be run as such. No business of any size can place its faith in the vagaries of weather, or politics, or the luck of others, and hope to be successful. That applies to farms of all sizes as well. When the times call for a change in plans due to the realities of the marketplace, then it’s time to build a rationale for moving forward with a new plan. In CWT’s case, the program is still the same, but the budget will be expanded to make it more influential.
Winston Churchill also once noted that “the further back you can look, the farther forward you are likely to see.” Both the past three years of CWT’s existence, and the years and decades preceding it, are good indications of what the future holds in store for the program. The past three years demonstrate that good things can happen when people pool their resources. The past also reminds us that failing to capitalize on opportunities to help each other is ultimately a failure of leadership; something that, despite his other shortcomings from time to time, Churchill never lacked.
