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Observations from the 8th Annual Farmer Cooperative Conference in Minneapolis by Craig Erickson of Bear Paw Development

I thought of Montana last week while at the 8th Annual Farmer Cooperative Conference in Minneapolis http://www.wisc.edu/uwcc/farmercoops05/index.html . The conference theme was Cooperatives in a Global Environment and each of the presenters shared information that was remarkably similar to what was discussed at the MEDA Conference http://www.matr.net/article-16142.html recently held in Whitefish. I thought I would share with you some of the more thought provoking comments.

From Terry Barr, Chief Economist National Council of Farmer Cooperatives

* The market in which you prepared to compete no longer exists! Now what?

* All segments of the global food, natural fiber and agriculture system are undergoing dramatic change and the pace of change is accelerating with global integration! Competition is intensifying and customers are increasingly demanding more services and product attributes.

* Global labor pool has increased by 1.5 billion and the Internet has redefined non-tradable services. Developed countries must now reassess the globalization tradeoffs (manufacturing vs. services) to redefine a labor retraining and deployment strategy. For example, the French are trying to hold on to a 35-hour workweek while workers in India are competing for 18 hour per day jobs.

* Price setters at the margin are in China, India, etc. Reality is pricing to the market rather than cost markup model! Internet has made price discovery an instantaneous global process.

From Elizabeth Hund, Managing Director & Head of the Western U.S. Region of RaboBank

* “The US farmer is no longer the low cost supplier of anything!”

* United State exports are losing ground to other nations because countries like the Netherlands are doing a better job of developing high value crops such as germ plasm, seed, etc.

From Dr. Bernard Y. Tao, Dept of Agriculture and Biological Engineering, Purdue University

* US economic growth depends on developing novel products and technologies

* The biological sciences are to be the next major technological driver for economic growth

* Immense social needs have created opportunities to re-link agriculture and industry through vertical integration and industrial partnerships

* Universities are developing the entrepreneurial human resources and technologies needed for this economic growth

* Success depends on infrastructure development and political vision/implementation

* Entrepreneurship and education are critical to developing new high value technologies/products that cannot be made elsewhere

* US schools educate the top international students who return to their homes to rev up national economies

In other words, the state/nation with the best education wins!

In my opinion, the best example of your slogan Russ, at least as it relates to Montana, was provided by Donald Schriver, Executive Vice-President, Dairy Farmers of America, Inc., which represents one-third of the nation’s milk production. The example used by Schriver is Fonterra http://www.fonterra.com/default.jsp

Fonterra is the leading multi-national dairy company, owned by 13,000 New Zealand dairy farmers. Fonterra is the world’s largest exporter of dairy products, exporting 95 percent of its production, despite being located in the south Pacific. What do you think New Zealand farmers would say to Montana farmers about be distance to market? They have focused on the ingredients business, which has made them the largest ingredients operation in the world, manufacturing and marketing more than 1,000 ingredient products to the international food industry. How did this company come to dominate the world dairy industry? According to Shriver, about 30 years ago, New Zealand decided that one of its key assets was the ability to produce a lot of high quality milk so they decided to become the smartest, most innovative dairy producers in the world. Since then they have focused their attention and resources on research and development of innovative products and services. Fonterra was created when two dairy cooperatives merged in 2001.

The conference was remarkable. It made me more aware of several important issues that I know are of interest to each of you and that is why I felt compelled to share some of what I learned with you.

People should understand that US food products are not inferior. On the contrary, they are consistently of the finest quality; however, your readers must know that one of the great challenges facing US exports is the strength of the dollar, especially against the Yuan, which the US claims is significantly undervalued.

Ironically, the Chinese are apparently going to being increasing the value of the Yuan.

http://business.timesonline.co.uk/article/0,,13132-1868139,00.html

Best regards,

Craig Erickson

Bear Paw Development

****

University of Wisconsin Center for Cooperatives http://www.wisc.edu/uwcc/index.html

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