ST. PAUL PIONEER PRESS / op-ed page / Tuesday, December 28, 1999 / Earl Pomeroy and Paul Hazen, Commentators
Farm communities across the United States are in an economic crisis. While providing immediate disaster assistance is critical to the survival of many farmers, it does absolutely nothing to prevent the need for similar assistance year after year. We need to invest in our family farms to improve the future of the agricultural economy.
It is time for our country to integrate producers into a farmer-owned food system. Agriculture Secretary Dan Glickman said it best at a recent White House breakfast celebrating October Cooperative Month: "We want the tomato farmers to own the ketchup factory."
For decades, the linchpin of economic opportunity and the great quality of life in rural America has been a strong system of cooperatives. From dairy and grain cooperatives, to fuel, electrical and telephone cooperatives, rural Americans joined forces to create the most cost-effective and beneficial system of services possible.
While cooperatives have been integral to the history of rural America, they represent much more than nostalgia for the old days. Cooperatives have a bright future.
As agriculture in this country becomes more concentrated and industrialized, farmers are losing control of their economic well being and are increasingly at the mercy of a small number of multinational corporations. This trend of extreme concentration already has taken hold of the chicken, beef and pork industries. Can the rest of agriculture be far behind?
To be successful in today's agriculture, farmers must own both the production and the value-added processing of the product that is marketed to the global market. We need to dramatically increase government programs that help farmers invest in the actual ownership of production and value-added processing, and marketing of food through cooperatives.
In 1933, the U.S. government provided nearly $200 million in seed money (more than $2.5 billion in 1999 dollars) to create the Farm Credit System, a network of farmer-owned cooperative financial institutions that has met the credit needs of farmers ever since. The seed money has long since been paid back to the federal government by the farmers.
Today, the United States needs a similar investment that would empower farmers to move up the food chain, from commodity production to value-added processing. There already are proven models that work to increase farmer income.
Farmers in North Dakota already have taken steps toward capturing more income through value-added processing. Indeed, co-op fever has swept the state. In 1993, 1,000 farmers created the Dakota Pasta Growers cooperative with the annual capacity for 120 million pounds of pasta. Six years later, the cooperative has grown to nearly four times its original size, making it the third-largest pasta manufacturer in North America. Through this and other successful cooperatives, member farmers have dramatically increased their incomes.
Traditional farmer-owned cooperatives like Land O'Lakes and CENEX Harvest States have achieved similar success. With the hog market in turmoil last year, Farmland Industries, one of our nation's largest cooperatives, made a decision affecting its 600,000 farmer owners. When the market price was $8 per hundredweight, Farmland decided to set a floor of $15 for the hogs they purchased. Farmland recognized that a floor price was not the total solution, but believed it helped change the downward course of hog prices.
The members of Farmland Industries were able to take this action because they own an integrated value-added processing food company, giving them independence from government support programs. Moving to more farmer ownership of the food system, farmers' reliance on government relief and capitulation to multinational corporations will decrease.
In the next Congress, we should fully implement the recent recommendations of the National Commission on Small Farms. Congress should fund the Rural Cooperative Development Grants programs, which provide critical technical assistance to farmer groups forming cooperatives. We should bring back the $100 million Cooperative Value-Added Program and make the $200 million USDA Business and Industry Loan Guarantee program more flexible for cooperatives. Also, we should create a national equity trust fund targeting producers who do not have the necessary equity left in their farms to borrow funds for investment in value-added cooperatives.
More value-added cooperatives in the 21st century will help our nation's family farmers both produce the tomatoes and own the ketchup factory.
Pomeroy is an at-large member of Congress from North Dakota. Hazen is president and CEO of the National Cooperative Business Association; he can reached at (202) 638-6222.:
