Many times, in my president’s message, I have talked about the “Catch 22” farmers face in profitability. As we become more efficient and produce more per acre, we further grow the supply of our commodities in a market that has limited demand. This drives our prices lower and we are asked again to be more efficient by producing more to survive low prices.
Even when supply and demand are subjective, commodities are priced at levels that achieve farm profitability only if we produce more for less in a saturated market.
What other solutions exist that we, as farmers, can do to enhance our income? First, we can work to pass successful farm legislation that understands an abundant food supply is great for the economy and security of our nation. Second, we can work to make sure that markets are open and fair, and monopolistic or oligopolistic practices are not artificially rewarding specific players more than others. Third, we can integrate farmers up the food chain to gain diverse profit opportunities.
I encourage us to keep working on all of these solutions, but specifically on value-added concepts as a way to achieve market integration. The integration concept needs more attention as we have had some success but many failures in our efforts. The challenge is not in the concept of additional value-added projects or processing in the agriculture and food industry. It is in ownership of these entities. If farmers do not look for avenues of ownership, we will be limited to gains only in logistics and transportation.
Ownership in value-added ag translates into additional income for specific commodities. The cooperative model is an excellent tool for these projects and should be used as it provides both ownership and governance options. It does come with the responsibility of participating in policy setting of the cooperative.
Projects that are well researched, have business plans that are accurate and verified, and long term offtake agreements can have success.
We also should spend some time with our existing cooperative system. It is a system that is underutilized and underestimated for the benefit it provides farmers.
North Dakota Farmers Union is looking at a number of potential value-added projects. Soybeans, hemp, a distillery, food processing hubs, food delivery systems, renewable fuels, pet food, and meat processing, just to name a few.
I encourage all of you to look and listen for these integration opportunities, so you can make some determination if they will fit your operation. We must learn from past experiences to enhance our efforts moving forward. Farm income diversity is essential to weather the pricing challenges we face during times of low commodity prices.
— NDFU President Mark Watne