800.824.4448

First-Rate Farm Financing

◆ Partners In Profi t

Ohio’s Laneview Cattle Company 3

◆ ILITs

Irrevocable LifeInsurance Trust 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.

Washington Monitor

Petersons’ patience, marketing attitude create profi table operation

April/May 2008 A publication of the National Farmers Organization

www.nfo.org ◆ e-mail: nfo@nfo.org ◆ 800-247-2110

In this Edition

◆

Farm bill progress, meat predictions 4

Organization urges scrutiny of proposed JBS livestock deal

Regional directors say new structure returns member control, bolsters service

◆ New Directors

Six join the national board 6

Continued on page 3

Continued on page 5

They market 200-lb. to 400-lb. Hol-stein feeder calves through National Farmers, most sold throughout Minne-sota or Iowa. But, their calves end up anywhere from South Dakota to Ohio, to.

As members head to the fi eld and spring begins in earnest, the editor of the Reporter sat down with National Farmers’ six re-gional directors to listen to their thoughts about how the new regional structure system is performing for members and staff alike.

National Farmers rolled out its new regional structure Oct. 1 to mem-bers, emphasizing increased producer service, stream-lined costs and improved organizational productivity.

Field representatives from all three marketing divisions have been operat-ing under the new region-alization plan for nearly six months.

How did the idea of a regional structure get start-ed, and why is it important

to members?

Ron Statz, Midwest Region-al Director

The regional structure planning started at least two years ago in an at-tempt to put more control into the hands of producing mem-bers. And, along with that more accountabil-ity. It coincides with some of the eff orts at bylaw changes that started to take place at the same time.

I think it’s important to mem-bers, because it gives them more control, and at the same time, more

responsibility for the success and continuation of programs in their area. Terry Nelson, Upper Midwest Regional Director

Producers have a lot closer ac-cess to people. If they have problems or questions or opinions, they’ve got their fi eld-man talking to them. Because that service rep handles all three commodi-ties, if they have a problem

on a livestock check, for example, they don’t have to call Ames, Iowa

Ron Statz, Midwest Regional Director, and Terry Nelson, Upper Midwest Regional Director, comment on new national structure.

Ron Statz, Midwest Regional Director, Ron Statz, Midwest Regional Director, Ron Statz, Midwest Regional Director,

N EXUS MARKETING

800.824.4448800.824.4448

First-Rate Farm Financing

The proposed acquisition of National Beef Packing Company and Smithfi eld Foods’ beef operations by Brazil’s JBS SA further reduces already slim market-ing options for producers, and should be scrutinized by the Justice Department, said a National Farmers leader.

“National Farmers Organization members believe this announcement steps up the consolidation march in the live-stock industry that makes it more diffi cult for independent producers to have access to an open and competitive market,” said National Farmers Ag Policy Analyst Gene Paul.

If approved, there would be only two other major beef players, Cargill Meat Solutions and Tyson Foods.

If the deals are approved, the Sao Paulo-based meat company will be the largest beef producer in the world, hold-ing about 32 percent U.S. market share and 10 percent of the world market. JBS projects it will rack up annual revenue of $21.55 billion, doubling its current yearly take with the acquisition.

Currently, the U.S. beef industry is

Steve and Debbie Peterson love their work.

And their work and lives are centered around cattle, particularly custom raising calves, on the Peterson operation, Owen, Wis.

“You gotta love what you’re doing. It shows in the qual-ity,” Steve said. “Calves take a lot of patience.” And the Petersons have patience after 24 years in the business.

The core of their business is grain-fed calves, Steve said. “And that’s the part of our op-eration National Farmers helps with the most.”

They sell 200-lb. to 400-lb. Holstein feeder calves through National Farmers, most placed throughout Minnesota or Iowa. But, their calves end up anywhere from South Dakota to Ohio, to. They also raise veal calves.

They buy most of the calves sold through the Curtiss, Wis., National Farmers

Marketing Center, and some through the center near Brandon, in southern Wiscon-sin.

“There are 2,000 calves at any given time that we own, that are coming and go-ing,” Steve said.

On their home farm, they keep 350 bottle-feeder calves in their barn. But that’s a lot of calves for one person to bottle feed, so they train them to drink out of buckets. Debbie handles that batch, and spends about 1 1/2 hour per 100 calves per day. “Some days she spends a lot of time in the barn,” he said. “She loves what she’s

doing.”Frank Pries, Curtiss Livestock Market-

ing Center manager, speaks with fi rst-hand knowledge of the Petersons farm practices. He has known them for about 25 years. They moved into the Curtiss, Wis., area at

Q

Continued on page 2

A

As spring approached, farmers across rural America began making plans for this year’s growing season. Al-though we have seen farm prices reach levels that none of us would have expected, our input costs have gone through the roof, as well.

This makes our National Farmers Organization ever so important in our farm operations, enabling us to main-tain a balance in costs versus income that is profi table.

A reminder to all of us: National Farmers Organiza-tion must be the force that gives farmers a profi t; collec-

tive bargaining must become a priority in the minds of our leaders and member-ship. We must truly utilize collective bargaining principles to the fullest extent possible to meet the challenges farmers face today, as well as tomorrow.

I am initiating a new project that will further inform and educate produc-ers and consumers about the benefi ts our programs provide. I call it, Project Collective Bargaining, because I believe bargaining is one of the most powerful tools in a producer’s marketing tool-box. I’ve summarized keypoints of the project below.

1. Assemble a group of people knowledgeable about collective bargain-ing to work and develop programs that can be used to illustrate the real market-ing power collective bargaining brings.

2. Seek project funds from county and state treasuries, specifi cally from NFO inactive county treasuries.

3. Develop print and audio visual programs about collective bargaining, dis-seminated in DVD and CD formats to train our staff and young leaders about the benefi ts of bargaining.

We can also create educational programs illustrating how NFO commodity programs and collective bargaining can be incorporated into a producer’s market-ing plan, making it deliver maximum benefi ts. Of course, that would be used to assist in procuring new members and enrolling their production.

Our Project Collective Bargaining can also be used to promote Marketing- Agency-in-Common-relationships, benefi cial in pricing and stabilizing commod-ity prices nationwide.

And fi nally, I believe the programs can be used as an educational outreach eff ort to high school and college students, as well as consumer groups. Inform-ing both segments that a healthy agriculture brings in a safe and abundant food supply for this nation.

I am sure when the project group members are established, other ideas will be brought forward to make this program very useful in reaching our goals.

May our light become a beacon of hope.

Vice President’sMessageBy Ron Mattos

President — Paul Olson, WI Vice President — Ron Mattos, CATreasurer — Michael Miller, IASecretary — Dave Reed, IABoard Members Frank Endres – Corning, CADavid Lusk – Arbon, IDRon Schultz – Stewardson, ILJerry Maxheimer – Mt. Pulaski, ILBernard Rudecki – Walkerton, INGilbert Kleaving – Tell City, INRhonda Bakken – Decorah, IAPaul Riniker – Greeley, IAHarold Walker – Mayetta, KSCarl Wahlmeier – Jennings, KSAubin Mattingly – Rineyville, KYGeorge Field – Auburn, MEWayne Prichard – Burlington, MIGordon Turner – Hemlock, MIMark Rohr – Bluffton, MNRichard Shilling – Fort Ripley, MNJoseph Neaton – Watertown, MNKen Schlottach – Owensville, MOMark Manford – Holden, MOWayne Forder – Highwood, MTNorman Stokebrand – DeWitt, NECarroll Wade – Jasper, NYDaniel Casler – Little Falls, NYCalvin Shockman – La Moure, NDPat Lampert – New Bremen, OHChester Stoll – Marshallville, OHDennis Hadley – Silverton, ORKaleb Wolfe – Centre Hall, PAJeff Rose – Sochranton, PAJames Brown – Dell Rapids, SDArlen Hanson – Columbia, SDRaymond Tardif – St. Albans, VTGarry Crosby – Shell Lake, WIDonald Hamm – Fredonia, WIDon Mielke – Menasha, WI

THE REPORTER

NFO Offi cers and Board of Directors

The Voice of family farmers and ranchers

The NFO Reporter is published six times a year by National FarmersOrganization, 528 Billy Sunday RoadAmes, Iowa 50010-2000(515)292-2000 e-mail: nfo@nfo.orgInternet: http://nfo.orgNon-profi t 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.

National Farmers est. 1955Collective Bargaining

for Agriculture

2

We can also create educational programs illustrating how NFO commodity programs and collective bargain-ing can be incorpo-rated into a producers marketing plan, mak-ing it deliver maximum benefi ts.

attempting to cope with a slowdown of beef exports, excess processing capacity and a sputtering U.S. economy.

DTN’s Livestock Analyst John Harrington reported he believes the deal could limit selling options for cattle feeders. Because there will only be three major packers instead of fi ve once the sale is complete.

Senator Chuck Grassley, R-Iowa, warned that further consolidation would reduce market options for producers.

Senator Tom Harkin, D-Iowa, chairman of the Senate Ag Committee on Agri-culture, Nutrition and Forestry, said he is urging the U.S. Department of Justice to assess the impact on producers and consumers.

OCM, the Organization for Com-petitive Markets, called for blockage of the acquisition, and urged Congress to adopt the Livestock Title in the Farm Bill, including a prohibition of packer livestock feeding, as well as another bill strengthening antitrust laws.

OCM calls for JBS acquisition blockage

The Senate on March 14 approved a bipartisan amendment introduced by U.S. Senators Bob Casey, D-Penn., Dick Durbin, D-Ill., Sherrod Brown, D-Ohio, and Chuck Grassley, R-Iowa, to the 2009 budget that would create a reserve fund. The provision would allow for legislation that enhances the protection and safety of the nation’s food supply, the senators said.

The passage is timely, because, on March 22, the FDA issued a warning against cantaloupe imported from Honduran grower and packer Agropecuaria Montelibano, because it appears to be associated with a Salmonella Litchfi eld outbreak.

The agency is holding cantaloupe imports from the company, as the fruit has been linked to 50 illnesses in 16 states, and Canada. And in the last year, the U.S. has experienced recalls of peanut butter tainted with salmonella, and spinach contaminated with E coli, to name two incidents.

“In light of the countless number of recalls from our nation’s food supply, our food safety is an issue we can’t wait any longer to address,” said Casey. “This amendment will help create a reserve fund to allow Congress to take action to help make our food safer.”

These funds would provide for Congressional legislation that, among other purposes, would:

• Expand FDA and USDA food inspection fi eld forces

• Create risk-based approaches to inspection of food supply

• Develop necessary infrastructure – including information technology systems – to ensure a coordinated approach to enhance the protection and safety of the food supply

• Improve scientifi c capacity by establishing science-based training programs and investing in improved surveillance and testing technologies

• Enhance FDA’s recall authority • Expand foodborne illness

awareness and education programs

—Continued from page 1

AG NewsExtra

Past national director, grain staffer passes

Illinois’ Kenneth Williamson, Ottawa, Ill., passed away March 24.

A life-long farmer and former National Farmers national board member, he worked in the Grain Division and served the organiza-tion for more than 25 years. His wife, Norma, passed away in 2003.

He is survived by a daughter, Jody Woods of Ottawa, two sons, Rick Williamson of Oak Park and Tom Williamson of Ottawa.

He eliminates the risk. When a profi t opportunity arises in a marketing situ-ation, Steve says, ‘I know I can make money on these, I can make a profi t. I’ll take it.’” — Steve Peterson

Jeff Puthoff and Andy Schafer understand the positive points of partnership. Friends since high school, they part-ner 50-50 in their Ohio cattle operation, Laneview Cattle Company. And they team up with Nexus Marketing when it comes to forward contracting their Holsteins.

The partners know what they want from Nexus Market-ing. “We strictly use forward contracting,” Puthoff said.

“We know what our fi nal end price will be. We can back in our costs,” he added. Puthoff point-ed out that Nexus offers many different products and the staff have extensive knowledge and experience in the cattle business. Through Nexus, producers use options, hedging and cash sales, in addition to forward contracting.

“Jeff Rose, Sarah Nelson and Pat Lampert [Nexus risk management professionals] provide excellent service,” he said. “They get back to us right away when we have ques-tions, and give us the information we need.”

Plus, Nexus is competitive in the charges compared to others providing the same services, Puthoff added.

In Ohio, special information about Holsteins is key, be-cause many operations in the Buckeye state are based on raising Holstein steers. “One thing Sarah does a nice job of is letting us know about basis on Holsteins, and time to secure basis contracts. The e-mails, and newsletters inform us to make an educated decision in the market,” he said.

Laneview Cattle Company is nestled onto the fl at land-scape of west central Ohio, near Ft. Loramie. They fi nish about 600 head of Holstein steers each year, and raise about 200 head to 300 - 400 lbs.

Most of those involved in the operation grew up in the dairy business. So that gives them an advantage when it comes to understanding the cows and calves. “That’s helped us a lot to get the calves raised up to cattle weight,” Puthoff said.

“One thing we strive for is, in confi nement, to maintain the proper ventilation in the barns. . . . They need proper ventilation to prevent health problems.”

The partners stay in close contact with custom feeders to assure they’re following good management practices in their own operation, rely on the knowledge of their feed sales contact and carefully follow vaccination and implant programs.

“These young men are an excellent example to others in the community,” Nelson said. “They are role models for many other young farmers, because they aren’t afraid of working hard in order to achieve goals on their farms.”

The partners follow a clear division of responsibility, as well. Puthoff owns the barns and handles the day-to-day management and cattle care. Schafer mixes all the rations and focuses on the accounting details.

“It seems these two excel because of their cooperation and teamwork. I see in them a desire to make this partner-ship sustainable well into the future,” said Nelson.

3

Petersons appreciate National Farmers advice, prices in market top one-third

Ohio farm partners prefer Nexus, cite weekly eNote advisory, other benefi ts

—Continued from page 1

N

the same time, the Pries family from southern Minnesota, and Petersons from Southern Wisconsin. They live about four miles apart.

“They are very professional with their cattle,” Pries said. “They’re good caretakers.”

Independent growersThey have calves on 10 different farms, using indepen-

dent growers. It’s a method for custom calf growing they have relied on for the last 15 years.

“We keep all our growers independent,” he said. “A lot of them are younger. We swing by each farm weekly to see how they’re following the program.

“We remember starting out and wanting and need-ing support,” he said. Selecting which producers to work with is no small task. About one-tenth of the individuals who approach the Petersons to raise calves with them meet their standards.

Steve credits Debbie for being a good judge of character. She sees and determines which growers will partner with them for a length of time that justifi es the Petersons’ commitment and investment.

They value those who stay and provide quality animals. “I tell the grow-ers, ‘You don’t work for me; you work for yourselves.’”

Different customers of Petersons have different weight desires. To provide consistency to buyers, they set it up with one calf grower to one feedlot.

Peterson reminds the growers of an important fact, and remembers it himself in raising calves, and in fi nishing

cattle. “‘Your reputation goes with every load of cattle. Treat people like you want to be treated,’” he said.

Family operationSteve and Debbie have three children. Trisha, 24, was

very involved in the operation. Brittney, 15, enjoys helping outside. “She’s good at sorting,” Steve said. “She’s quite a helper and runs the Bobcat. She loves the calf business.”

Logan is eight, going on nine in April. “He’ll be dad’s helper in another year. Right now, he mows the lawn and does little jobs.”

In addition to calf care on the home place, and working with Steve to fi nd promising growers to partner with, Debbie handles the accounting. She reserves afternoons for that

work, tracking medicine costs, feed bills, fi guring out which growers need to be paid what amount, and overall deciphering the costs and income.

The Petersons don’t get caught up in waiting for a better price, and end up missing out on profi table sales. “They’re good with their records, know what’s profi table, and know when to take a profi t,” Pries said. “…. He elimi-nates the risk. When a profi t opportuni-ty arises in a marketing situation, Steve says, ‘I know I can make money on these, I can make a profi t. I’ll take it.’”

Steve shared one of their family’s secrets for doing well. “It helps when you love what you’re doing,” he said. “I can’t imagine doing a job every day just for the paycheck … money comes and money goes if you love your work or if you don’t. But it’s best if the money comes from something you love doing.”

“We market the majority of fi nished cattle through National Farmers,” Peterson said. They market fat steers through the organization as well, and Peterson said they’re always in the “top 1/3 of prices.”

“They know what we have for open cattle in the neighborhood,” Steve said. “Frank calls when prices are moving up or down. I listen now. When I haven’t listened, it has cost me.”

On March 3, Peterson sold fat cattle – then the market dipped. “I’m glad I did that,” he emphasized. “We won again.”

“And sometimes Frank says, ‘Wait a couple of weeks. It ain’t going to hurt nothing.”

With their fi nished cattle they capitalize on National Farmers affi liate - Nexus Marketing- for-ward contracting, aiming at marketing 50 percent of the cattle they fi nish. Sarah Nelson, Nexus Market-ing risk management consultant, “has pulled us some real nice contracts.”

Peterson says they are pleased with the contract

pricing. As for corn costs chasing them out of cattle production, “We don’t cut and run, just because corn went up,” he emphasized. “When everybody is running away from something is when you stay in it. High corn prices are our highest income level.”

In fact, he reviewed his tax returns from the 1990s. When corn was high, he discovered, he made the most money.

He foresees good things for the cattle industry overall. “But something could go wrong, mad cow, FMD. Unforeseen things can affect marketing. We lock in the forward contracts. We still need price protec-tion, just in case we’re wrong.”

“In our 20-year history lesson, we see a 90 per-cent possibility of it being very good, but, you need to buy things correctly, cover yourselves the best you can, and go forward.”

“You need to do price protection. Lock up corn. You need price protection on fi nished cattle,” he em-phasized. “There’s too much money involved to be on the open market.”

Andy Schafer (l) and Jeff Puthoff Andy Schafer (l) and Jeff Puthoff

Futures. Options. Profi t.We’re all about it. Nexus Marketing 877.207.1051

Petersons use Nexus for fi nished cattle marketing

4

Farmers share of consumer retail food dollar averaged just 20 cents last year

What’s in the food dollar for you anyway? About 20 cents.

So, what’s the recipe for a good loaf of whole wheat bread? Start with your favorite brand of whole wheat fl our and bread fl our. Remember the packag-ing, advertising, and transportation…

When producers want to know what their share of the retail food dollar is, a look at all the products and costs that happen beyond the farm gate must be considered. Food processing and marketing costs have grown by 180 percent in the last 30 years.

On average, producers receive 20 cents of each

consumer food dollar, including visits to restaurants. The other 80 cents goes to marketing-related activities, transportation, and labor costs of manufacturers, whole-salers, retailers, and eating establishments.

Today, Americans spend 9.9 percent of their dispos-able income on food. Disposable income is the remain-der of income available for spending and saving after taxes are removed.

Still, farmers have watched as their share of that retail food dollar has fallen over the last several decades. In the early 1970s, food producers enjoyed nearly a 44 percent retail share. And, in the 1990s it came in at

Farmer’s share derived from USDA, NASS ”Agricultural Prices,” 2007.Retail based on Safeway (SE) brand except where noted.

Bacon1 Pound

Retail: $3.29Farmer: $0.40

Did you know that farmers and ranchers receive only 20 cents of every food dollar thatconsumers spend on food at home and away from home?

According to USDA, off farm costs including marketing, processing, wholesaling, distribution andretailing account for 80 cents of every food dollar spent in the United States.

Farmer's Share of Retail Food Dollar

Retail: $7.99Farmer: $0.89

Top Sirloin Steak1 Pound

Retail: $2.69Farmer: $0.20

Bread1 Pound

Retail: $1.89Farmer: $0.32

Retail: $5.05Farmer: $0.15

Cereal18 Ounce Box

Retail: $5.49Farmer: $2.05

Cheddar Cheese1 Pound

Retail: $3.09Farmer: $1.12

Eggs1 Dozen

Retail: $2.49Farmer: $0.98

Flour5 Pounds

Retail: $4.29Farmer: $0.40

Boneless HamPrice per Pound

Lettuce1 Head (2 Pounds)

Retail: $1.99Farmer: $0.36

Milk1 Gallon, Fat Free

Retail: $3.50Farmer: $1.74

Potato ChipsLay's Classic, 13.5 oz.

Retail: $3.49Farmer: $0.07

Fresh PotatoesRusset, 10 Pounds

Retail: $3.29Farmer: $0.68

www.NFU.org

Fresh Carrots2 Pounds

Feb. 1, 2008

Beer6-Pack Miller Lite Cans

Retail: $5.05Farmer: $0.11

Farmer’s share derived from USDA, NASS ”Agricultural Prices,” 2007.Retail based on Safeway (SE) brand except where noted.

Bacon1 Pound

Retail: $3.29Farmer: $0.40

Did you know that farmers and ranchers receive only 20 cents of every food dollar thatconsumers spend on food at home and away from home?

According to USDA, off farm costs including marketing, processing, wholesaling, distribution andretailing account for 80 cents of every food dollar spent in the United States.

Farmer's Share of Retail Food Dollar

Retail: $7.99Farmer: $0.89

Top Sirloin Steak1 Pound

Retail: $2.69Farmer: $0.20

Bread1 Pound

Retail: $1.89Farmer: $0.32

Retail: $5.05Farmer: $0.15

Cereal18 Ounce Box

Retail: $5.49Farmer: $2.05

Cheddar Cheese1 Pound

Retail: $3.09Farmer: $1.12

Eggs1 Dozen

Retail: $2.49Farmer: $0.98

Flour5 Pounds

Retail: $4.29Farmer: $0.40

Boneless HamPrice per Pound

Lettuce1 Head (2 Pounds)

Retail: $1.99Farmer: $0.36

Milk1 Gallon, Fat Free

Retail: $3.50Farmer: $1.74

Potato ChipsLay's Classic, 13.5 oz.

Retail: $3.49Farmer: $0.07

Fresh PotatoesRusset, 10 Pounds

Retail: $3.29Farmer: $0.68

www.NFU.org

Fresh Carrots2 Pounds

Feb. 1, 2008

Beer6-Pack Miller Lite Cans

Retail: $5.05Farmer: $0.11

Farmers Share of Retail Food Dollar

Farm Bill written on Congress’ spring agenda

April 18 is jetting toward Congress, as that day marks the last day of the short-term exten-sion on the new farm bill.

Senator Tom Harkin, D-Iowa, Agriculture Com-

mittee chairman, said progress continues, but much work lies ahead, including securing funding. The extension protects farm and nutrition programs so they continue until Congress fi nalizes new legisla-tion.

“This in no way eases pressure from the confer-ence to come to an agreement regarding funding for the bill,” said U.S. Senator Saxby Chambliss, R-Ga., ranking member of the senate agriculture commit-tee. “We can get this done and fi nishing the farm bill will be our number one priority in the coming weeks.”

Chambliss on March 21 spoke on the Senate fl oor urging his colleagues to oppose an amendment off ered by U.S. Senator Chuck Grassley, R-Iowa, that would shift funds out of agriculture in the proposed budget resolution for fi scal years 2008 through 2012. Chambliss said now is not the time to under-fund agriculture, when Congress is working on farm bill reauthorization.

The government estimates the programs will cost about $280 billion over the next fi ve years, and about $600 billion over the next 10 years. And funding methods specifi cally for farm subsidies, food stamps, and other ag and nutrition programs, re-mains undetermined, the Associated Press reported.Pork predictions

USDA’s Economic Research Service predicted fi rst-quarter 2008 pork production at 5.96 billion pounds, 10.5 percent above the same period last year, the March 19 Livestock, Dairy and Poultry Outlook report indicated.

First-quarter prices for live equivalent 51-52 percent live hogs are expected to range between $40 and $41 per hundredweight (cwt). Those prices show a 12 percent decrease from 2007 levels, the Outlook report shows. USDA predicts slower beef export growth

America’s beef exports grew by 25 percent in 2007, but USDA predicted an eight percent expan-sion in 2008 in the March 19 Livestock, Dairy and Poultry Outlook report. USDA predicted beef exports showing the least growth since 2003, the time of BSE concerns with U.S. beef.

In November and December, exports grew 15 percent “despite the weak dollar – which makes U.S. beef more competitive on the world market. Concerns over a global economic slowdown could be aff ecting the demand for the high-value beef cuts.” USDA’s Economic Research Service predicted in the Outlook report.

Washington Monitor

Harold Walker, West Regional Director

ducers who have never shipped grain with us before now, who are starting to. I know of four of them right off the top of my head. A livestock producer that was not shipping grain is now contracting with us.

The same thing with cows, there are a lot of dairy producers that, as we talk to them at our dairy dinners about using livestock marketing programs and the benefi ts of doing that for the organization and the region...they started marketing their cattle. We’re now getting new shippers all the time. Harold Walker

We’ve established a goal to have a minimum of 50 local membership units for our six-state area. We took state maps and compared them to current membership rolls and assigned a number of paid up members per county. Then we looked at where the current members are, and formed the local member-ship units from that data.

We have lofty goals but we feel we can attain them. We’re getting the job done out here with our directors, and our state leaders and some commis-sion folks. I’ve got an enthusiastic and hard- working group who are willing to spend some time, and that’s what it takes.

Terry NelsonWe’ve got one local

marketing unit now that’s just about complete. It’s one for grain in Ottertail and Wadena counties (Minnesota)...it involves producers that are group-ing grain together in one LMU. That looks like it will put quite a few bushels through the organization.

The regional structure was a very positive move for the organization, and it

has made the national directors a lot more involved with daily operations on a local level. They also get a chance to get into problems that present themselves in our daily work...and by them being our advisory committee, they help solve those issues and they are able to take ideas and concerns forward to the national board.

And the board members can help the other re-gions who have the same issues. We are benefi tting nationally by these directors working hand-in-hand for the operation of the regional structure.

Dave InmanWhen I look ahead

in the next two years, I’d also like to see an organic feed program on the West Coast, particularly in Or-egon, southern Washing-ton and Idaho. And try to tap into the organic grain and feed sources to help maintain the production. So in short, I’d like to see more sales, more market and product development,

and more members.

Ron Statz, Midwest Regional Director

giving out to our long-term members in the region.Gary Schmiesing

I’d like to say the leadership among the mem-bers that have stepped forward is just tremendous...it’s greater than I could have hoped for, and these leaders that are stepping forward are creating their

local marketing units. In Michigan, we’ve got, I believe four local member-ship units being developed there. In Indiana, they may create as many as four new local membership units there, which, then will cre-ate the basic structure to grow from.Terry Nelson

With the structure now regionally focused, staff are working harder to make their region as suc-

cessful as possible, and members are more willing to put their production in the other commodities with National Farmers to help make their region more profi table. And, actually make pay prices higher in all commodities, because the more production shipped through that region, the lower their costs.

How does the structure function in your area?Ron Statz

We still have dedicated dairy, grain and livestock staff , just as we

did prior to the development of the re-gions. But, now the staff all work on mul-tiple commodities. Their main target is their own commodity, but they’re always looking for new leads and the ability to help procure those other commodities.

In our region, we have more dairy staff than anything else, so that dairy staff has seen the value of adding pro-

duction in livestock and grain, because it helps our overall bottom line. And we have started an intense program to make sure our staff realizes that.

On the eastern side of Wisconsin, my dairy division manager has gotten closely involved with livestock operations. He has had some of his staff work at the marketing centers, tagging and weigh-ing cattle. He’s gone out on the road procuring cattle.

He’s stopped in at large non-member dairy produc-ing farms and has found a lot of willingness from those producers to try our cull cow program (Cash Cow Plus). He has pulled in several hundred cull cows from people who have not shipped with us in the past. Terry Nelson

There have been a num-ber of success stories, some of

the ones that come to mind...I have some dairy pro-

5

Reps promote related marketing programs more now (the national home offi ce) to get that handled. Dave Kaseno, Northeast Regional Director

The new regional structure is a huge item and all the other things that come as a result from that are very important...members being more aware of income and costs.

It brings the manage-ment decisions closer to the members and it makes them more aware of what their regional division’s income and costs are. And what the costs are of oper-

ating their local dairy and livestock units.Gary Schmiesing, Great Lakes Gulf Regional Director

It brings grass roots structure back to the local membership and local members’ input is better heard and acted upon. They feel more comfortable getting other neighbors, friends and family involved with that structure, knowing they can have a direct impact on the process that’s going on. Harold Walker, West Regional Director

Bargaining and working together is what National Farmers has always been about, and this Local Marketing Unit (LMU) reinforces that. When my parents and others started organizing in the late 1950s, there was a farmer every 80 to 160 acres in northeast Kansas. A big farmer at that time farmed 600 acres in northwest Kan-sas. But now, a big producer out in the western part of the state farms 12,000 acres.

I think it’s a basic human need to work together. And today’s producers, in some cases recognize the need more than perhaps even their fathers did 50 years ago. Dave Inman, Pacifi c Regional Director

We’ve been able to consider regional advantages and disadvantages and discuss those items with members themselves locally. Someone in Vermont may be looking at a particular thing as a value, but dairying in Califorrnia is diff erent, it may appear as a liability. For instance, the premiums and competi-tion can be vastly diff erent from one region to the next. Ron Statz

We have told our producers that this is an op-portunity for them...along with the control it gives them the responsibility to review the programs that were developed by their grandfathers and fathers, which were felt to be important at the time. And, now it’s their choice if they want to see those pro-grams continue.

So, is the need people saw 50 years ago for negotiated prices still there? Is it as great today as it was then? If it is, then in my opinion these pro-grams, or a version of these programs, will be sup-ported by membership. But that is the key. If you don’t use it, you lose it. And that’s the message we’re

Dave Inman, Pacifi c Regional Director

Gary Schmiesing, Great Lakes Gulf Regional Director

Terry Nelson, Upper Midwest Regional Director

—Continued from page 1

QA

Dave Kaseno, Northeast Regional Director

Commodity & Unit Price Received 100 % Parity Parity Received In cents /lb. Cotton, per lb. 0.614 2.15 29 0.614

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.

11.70 12.50 94 19.54.83 7.89 61 8.624.75 8.61 55 9.898.72 14.10 62 8.7211.90 19.50 61 19.83.38 5.13 66 10.032.20 63.40 51 32.218.30 45.60 42 18.3 88.70 239.00 37 88.7 120.00 346.00 35 120.041.20 131.00 31 41.2

March farm prices received increases 3 points

6

Source: Agricultural Prices – National Agricultural Statistics Service, USDA

By Sarah Nelson

Coff ee shops and watering holes in livestock country buzzed with talk of the unexpected news. The proposed acquisition of National Beef Packing Company and Smithfi eld Foods’ beef operations by Brazil’s JBS SA.

As livestock producers question what it will mean for the industry, let’s take a minute to review the JBS history, today’s operations and why the deal is on the table.

The company got their start in Brazil in 1953. The original plant processed just fi ve head per day. In the late 1960s and early 1970s, they purchased two more plants, increasing their capacity to 500 head per day.

They only began to expand outside of Brazil in 2005. But, over the past 15 years they’ve made 30 acquisitions. If the deal is approved, JBS will boast an 80,000 head per day capacity with Smithfi eld and National plants.

They’ll hold a 35 percent of slaughter capac-ity in the U.S., and a 30 percent market share. And, worldwide, they will control 10 percent of the beef market.

Global sales are estimated to be $21.5 billion, from operations in Brazil, Argentina, Australia, Italy and the U.S.Why now?

The value of the U.S. dollar, when compared to the Brazilian real helped fuel the deal. In 2002, Brazil’s real exchanged about a quarter of a U.S. dollar. Today, however, it’s doubled in value to 57.8 cents. So, it made sense an acquisition at this time would represent a good value for JBS. Additionally, U.S. packers have been struggling to attain profi ts since 2004, making their value decline.

Meanwhile, world demand for beef is on the increase, and JBS wants to position itself globally to take advantage of growing demand. What’s in the future?

Producers are trying to understand what impact this may have on the industry, as well as on their own operations. Here is some information to consider:

• Completion is expected to take four - eight months

• There will still be an estimated 15 percent over-capacity for slaughter

• Statements made by JBS indicate that they will not close plants or reduce shifts at any of the plants

• After their acquisition of Swift, JBS added a shift at the Greeley plant

• Profi tability will be reached by increasing ef-fi ciency

• 60 percent of Five Rivers (Smithfi elds’ cattle feeding company) cattle already go to JBS Swift plants – little impact is anticipated in cattle market-ings.

When you consider all the factors that can impact your marketing in these changing times, you may want to talk to one of our marketing representatives to keep you on top. Call National Farmers Livestock to see how you can take advantage of opportunities today. 800-247-2110.

George Field Sr.Auburn, Maine

Conventional farm fea-tures 90 head of dairy

cattle.

Jeff RoseCochranton, Penn.

Operation features 80 head bred cow herd.

Patrick LampertNew Bremen, Ohio

Operation features 500 head of cattle yearly.

Rhonda BakkenDecorah, Iowa

Certifi ed organic farm features 100 head of

dairy cattle.

Donald MielkeMenasha, Wis.

Conventional farm fea-tures 60 dairy cows.

Gordon TurnerHemlock, Mich.

Operation features 20 heifers and 30 feeders.

New National Farmers board members represent conventional, organic production

Patrick LampertGordon Turner

The preliminary All Farm Products Index of Prices Received by Farmers in March, at 150 percent, based on 1990-92=100, increased 3 points (2.0 percent) from February. The Crop Index is up 8 points (4.9 percent) but the Livestock Index was unchanged. Producers received higher commodity prices for wheat, corn, let-tuce, and eggs and lower prices for milk, snap beans, strawberries, and hogs. In addition to prices, the overall index is affected by the seasonal change based on a 3-year average mix of commodities producers sell.

Increased monthly marketings of strawberries, soybeans, milk, and broilers offset decreased marketings of cattle, corn, cotton, and oranges.

The preliminary All Farm Products Index is up 17

points (13 percent) from March 2007. The Food Com-modities Index, at 149, increased 3 points (2.1 percent) from last month and increased 15 points (11 percent) from March 2007.

Prices Paid Index up 3 Points The March Index of Prices Paid for Commodities

and Services, Interest, Taxes, and Farm Wage Rates (PPITW) is 176 percent of the 1990-92 average. The index is up 3 points (1.7 percent) from February and 17 points (11 percent) above March 2007. Higher prices in March for diesel fuel, nitrogen fertilizers, complete feeds, and feed supplements more than offset lower prices for potash & phosphate materials, feeder cattle, trucks, and autos.

This is a time of unprecedented prices for organic grains. In 2007, demand for organic foods, especially eggs, milk and organic cereal helped propel organic grain markets to historic levels.

Market conditions off er great opportunities to negotiate excellent prices for your remaining 2007 crops, as well as your 2008, 2009 and 2010 crops.

We applaud NForganics producers. Your loyalty and support have made National Farmers’ organic grain program a successful and profi table marketing method.

Dr. Richard Levins, professor emeritus at the University of Minnesota, has said producers should not apologize for receiving these

Spring is one of the best times of the year to inventory your unsold 2007 organic grain that has not been previ-ously listed for sale through NForganics. And, don’t forget to inventory your plant-ing intentions for 2008.

By Linda Reineke

7

By Wayne Moore

historic prices. I agree, but I would also remind growers about consumer and buyer price resistance. At a certain price level, demand can and will go down. So, being a consistent, reliable supplier with sustainable prices to buyers, is a good approach.

Spring is one of the best times of the year to inventory your unsold 2007 organic grain that has not been previously listed for sale through

NForganics. And, don’t forget to inventory your planting intentions for 2008.

Take a moment to celebrate current price levels, and then seize the opportunity to be a contractable and reliable supplier to organic buyers.

Our organic shippers believe the services we provide are valuable to them. Which means we earn their business. And, we want to earn your business this year, and well in to the future.

Call me, 800.306.3913 and see what NForganics can do for you.

Pick a dollar amount between $15 and $20, and you might zero in on USDA’s latest estimate for 2008 milk prices, Class III and All Milk.

The numbers came out March 11, at $16.45/cwt. for the Class III price average, and $17.60/cwt. for the All-Milk prediction.

A year ago, USDA announced its estimated 2007 Class III price average at $14.40/cwt., and $15.35/cwt. for the All-Milk. Turns out though, the prices were $18.04/cwt., and $19.13/cwt., respectively.

Back to ’08. Where will actual prices be at year-end? In today’s volatile milk pricing world, it may seem that you can play the lottery more successfully than dairy experts can predict the average milk price.

Who would have predicted $5.50/bu. Corn, $13/bu. Soybeans and $110/barrel crude oil in March 2007? The Dairy Division has always said there was nothing wrong with milk prices that $5/bu. Corn wouldn’t solve. That, of course, was based on the condition that all commodities would rise with the feed prices. Dairy producers have kept ahead of the curve, but barely.

Livestock producers have suff ered. Dairy producers may be aff ected, too, if things do not change. With feed costs above $13/cwt., and cost of production above $20/cwt., in most states, we’re seeing that $20/cwt. milk isn’t what it used to be.

With $20/cwt. in production costs, a $17.60/cwt. All-Milk Price just doesn’t work.

Cooperatives Working Together (CWT) has done a good job implementing a supply manage-ment program, and there will probably be a herd reduction program in the near future. Unfortu-

nately, there are 112,000 more cows than this time last year, a lot of heifers freshening and the Cana-dian border is open to imports.

In addition, the European Union just raised their milk production quota by 2 percent. With an increased culling rate, the CWT herd reduction program and increased exports, milk prices might reach 2007 levels. But, that is putting your future in the hands of the dairy industry. Their major con-cern, of course, is their profi t margin and not yours.

Ag product exports contributed to the Ameri-can economy this year. Dairy exports alone created a dairy trade surplus of $181 million for the past year. Certainly, farmers supported the economy.

Dairy producers themselves can help raise milk prices back to production cost levels. Consider in-creasing your culling rate. Of course, moving those cows through the National Farmers’ Cash Cow Plus program will allow those cows to be marketed to your advantage.

The second thing producers should realize is there are a lot of strong, independent producers just like you who would gain from marketing help from National Farmers Organization.

The third point for producers to understand is National Farmers Organization has always focused on helping producers profi t.

Talk to your neighbors, and tell them how National Farmers has helped in your operation. Ask them to join NFO and market their commodities through the programs we off er. We can help them remain strong and independent.

We are the only all-commodity Capper-Vol-stead cooperative, so why not be part of an organi-zation that gives you the whole team – all day, every day.

The week of March 17, I watched a freefall in the commodity markets. It happened at the same time as the Commodity Futures Trading Commis-sion (CFTC) announced it would hold a meeting in April to explore some of the issues raised about the role of speculators in agricultural markets.

In the past when I complained about the eff ects speculators can have on the market, I’ve always been told that we must have them for trad-ing off sets, providing liquidity in the marketplace. That is true.

Farmers and elevators selling grain on the board to protect their price must have someone buying to off set their position. This year, specula-tive buyers have provided us with opportunities in the grain markets we’ve never experienced before. It has been very unusual, in light of funda-mental factors in the supply and demand picture, but this time they were taking the market in a direction everyone welcomed.

Now these incredible prices have placed a margin call burden on so many buyers, that they have discontinued purchasing into future crop years. The week of March 17, some companies were only buying for delivery in the next 60 days, at the top of the market. This puts farmers in the position of not being able to forward contract for favorable futures prices in 2009 and 2010 crop years, and, for a brief time, even for 2008.

This is much of what caused the CFTC to schedule the April meeting, as many farm orga-nizations are concerned about farmers not being able to sell at favorable levels. That would allow them to cover high input costs without risking high margin calls themselves.Weather worries

Rain makes grain...that is, if it gets planted. Concern now rises from Southern and Eastern areas of the Cornbelt, about delayed planting. In some years, corn would already be coming up.

But this year, nobody has been able to turn a wheel, and wheat is under water in many areas. Along with that, the market reaction has been volatile.

You would think that until farmers get a good streak of planting weather, there would be support under this market. I would too, but this unusual market cycle presents me with opportu-nities daily to study factors that are aff ecting the market and change my opinion, if warranted.

In light of the questions these issues raise, call me or any of your National Farmers Grain Representatives, to fi nd out how to lock in prices and protect your high input costs. 800.869.1599.

Read the latest scrolling ag news at www.nfo.org

Provided by the Institute for Rural America

By Tim Ennis

Life insurance is one common way to help pay estate taxes, but did you know that the death ben-efi t is counted as part of your estate, unless you take deliberate steps to ensure it does not enter into the estate tax calculation?

Tax liability could come down to who owns your life insurance

A publication of the National Farmers Organization

Nat

iona

l Fa

rmer

s52

8 Bi

lly S

unda

y Ro

ad

P.O

. Box

250

8Am

es, I

A 50

010

Non

-Pro

fi tU

.S. P

OST

AG

E PA

IDPR

INC

ETO

N, M

NPE

RM

IT N

O. 1

8

8

April/May 2008

Don Homan, Securian MidAmerica Advisers, Inc.

Life insurance is one common way to help pay estate taxes, but did you know that the death benefit is counted as part of your estate, unless you take deliberate steps to ensure it does not enter into the estate tax calculation?

One way to keep the life insurance out of your estate is to set up an irre-vocable life insurance trust (ILIT).

Farmers are an easy target for the federal tax. They are often worth enough that their estates could be sub-ject to the death levy, but they may not be so well off that they have access to the tools used by the highly wealthy to help shield their assets.

In 2008, all estate assets that remain after exercising the $2 million exemption are subject to a 45 percent tax rate. In 2009, the exemption jumps to $3.5 million, but the tax rate remains at 45 percent. The estate tax is scheduled to be repealed in 2010, but unless Congress passes further legislation, the federal estate tax will be back in full in

2011.A properly structured irrevocable life insur-

ance trust (ILIT) can be used to purchase and hold a life insurance policy outside of your estate. Because the policy is owned by the trust, the proceeds are not considered part of your personal estate and thus are not used to calcu-late estate taxes.

The trust is irrevocable once it is in place. The funding is done by an-nual gift from you. Your beneficiaries can use the policy proceeds to pay ongoing farm expenses, help settle estate taxes, buy the farm, or just divide assets in an equitable manner

The cost and availability of life insurance depend on factors such as

age, health, and the type and amount of insur-ance purchased. As with most financial deci-sions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. If a policy is surrendered prematurely, there may be sur-

render charges and income tax implications. Before implementing a strategy involving

life insurance, it would be wise to make sure that you are insurable.

If you are con-cerned about estate taxes, an ILIT might be the way to go. You should consult an estate plan-ning attor-ney to dis-cuss setting up a trust. Call Farm Financial

Services and visit with Rene Niese. He can visit with you, and help you evaluate your options. 800.824.4448.

ORDER YOUR FARM SIGN TODAY!

Just $40 plus $20 shipping and handling.

There is a 30” long by 5” tall space for you to paint or letter your family’s farm name.Call National Farmers for

more information.

320.352.2218

SHOW YOUR NATIONAL FARMERS

PRIDE!

We’ve teamed with Holmes Murphy to bring you choices...to help you fi nd 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!

Affordable Health Insurance

877.899.5325