Dairy Practices Council Works For Mutual Benefit
(Continued from Pago A 1)
shooting microbial defects, as part
of product line sampling and hygi
cnce monitoring to postmilking
teat dips.
They offer a set of publications
for the farm, and a set for the dairy
plant, as well as a complete set of
die publications.
The DPC recently established
an Internet homepage with details
of its publications and the organi
zation. (Sec www.dairypc.org)
Trends In
Dairy Business
In addition to the many task
force meetings held during the
convention, some time was allot
ted for general session speakers.
Of particular interest, given the
topical nature of their subjects,
were talks given by Donald Berg,
vice president of milk procurement
and sales for Land O' Lakes
Cooperative Inc.; and Ken Becker,
executive director of the Northeast
Dairy Compact
In his presentation, Berg avoid
ed making direct statements about
what future plans were being con
sidered by the Land O’ Lakes
cooperative, instead highlighting a
variety of business aspects that
indicate continuing consolidation
of the industry and further
integration.
Assuming broad knowledge of
the merger-mania within the dairy
production and service sectors,
especially with cooperatives, that
has happened during the past five
years, Berg said that it doesn’t
appear it will slow down.
He said that recendy, he has
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been involved with a number of
producers meetings and has come
away with essentially two mes
sages from producers and
employees they want to be told
that the current fast pace uncertain
ty is just a point in time and things
will go back to normal; or they
believe that the industry hasn’t
seen anything yet and people ought
to run for cover.
In essence, Berg said that it
doesn’t appear as though the dairy
industry will ever go back to what
ever “normal’’ was; but at the same
time, more and more change with
in the industry is increasing fear of
things that won’t occur.
He noted that within the past
three years the vocabularly of peo
ple has changed dramatically,
reflecting the technological
changes and uses. He said to
expect the vocabularly to continue
to change.
He also said that a year ago, it
was the practice for Land O’ Lakes
and the dairy industry to work off
of 5-ycar plans.
He said it has since been discov
ered that, not only is nobody in the
dairy business using a 5-ycar plan,
but Land O* Lakes and others are
now using a “tolling 12-month
plan” for long range planning.
He described the industry as
“hypercompctitivc,” and said it is
expected to continue, being driven
by a series of related factors.
He said industry consolidation,
global competition, conversion to
new technology, and consumers
demanding increased value in pro
ducts, arc driving the system.
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growth and performance,’’ he said.
Berg’s description of his out
look for the industry was con
tinued consolidation. He talked
about several specific mergers and
products alignments that were
thought to be stabilizing actions
that have continued to change to be
more consolidated and specific.
He said the industry competi
tiveness and consolidation ha&
reached the point that there is only
room for a number one and number
two player in an industry, with no
market allowance for a number
three.
He said that global economics is
forcing new alliances and
consolidations.
He said that as United States
food companies saturate the
United States' market place they
have to seek markets in other
nations in order to grow.
At the same time, he said com
petition is growing for the United
States’ marketplace, as well
supported foreign food industry
businesses doing well in their
markets have been investing heav
ily into the United States’ market.
He said that while he was on a
recent trip to New Zealand he was
hupibled in that he had been proud
of Land O’ Lakes processing of 5
million pounds of milk per day at a
plant, until he stood in the lobby of
a plant in New Zealand that pro
cesses 20 million pounds of milk
per day.
“They (New Zealand) sec the
planet as their market. I came away
trying to comfort myself that New
Zealand was small and far away,”
he said.
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changes are changing Uie way peo
ple around the globe foresee com
ing common practices. Although
the future isn’t clear, Berg said
there is a vision that someday peo
ple will be able to see just about
everything they need and want to
see on television whether it is
carried by cable, telephone fiber
optics, or something else.
Agricultural businesses con
tinue to spend great amounts to
secure control over new technolo
gies. He cited Monsanto’s purch
ase of Roundup Ready genetics for
$1 billion.
He said his personal roots are in
the Midwest with 50- to 60-cow
milking herds.
Now, according to Berg, the
average new facility built there
have capacities for6oo cows, and a
lot are being built to hold and milk
1,000 cows.
He said that in California there
are no facilities being constructed
for fewer than 1,000 cows, and the
growth area is in facilities for
4,000 cows or more.
Not only is that a change in size
of facilities, but the real change is
in the people behind production.
Berg said they are different people
with different expectations and a
different sense of business.
“When you and I grew up the
industry was production driven,
now it is market driven,” Berg
said.
According to Berg, assumptions
of the past have changed.
“No economist predicted $5
butter,” he said, adding that con
sumption isn’t going down
because of the higher price, though
that has been the past assumption.
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Further he said that economists
didn’t predict $l.BO cheese (had
been $1.20 or less not too long
ago), and at the higher price “...we
can’t keep up with demand.”
He noted that September had a
record milk price to producers, and
that only stood until the record
milk price set in October.
At the same time, no one pre
dicted $1.30 bushels of No. 2 yel
low com.
“While we talk about $5 butter
with a smile, we talk about $1.30
com with concern," he said.
But he said the bottom line of
business that has been shown by
Walmart and others is, “Get it
right The right place, at the right
time, at the right cost."
He said he recently heard of a
Midwestern dairyman interested in
investing $5 million in a facility to
milk 2,500 cows, and he would do
it if he could get assurances for a
20-year market for the milk
produced.
According to Berg’s outlook,
the dairy industry can expect such
long-term contracts “not for 30
days, but for 10 years."
He also said that people are
looking at a different food chain
from the one known so well.
To sec the future, he said it is
necessary to start with the consum
er and then look back through the
system.
He said that it appears as though
markets ate going to continue to
drive the system by consolidating
consumers (Walmart is the fifth
leading food distributor in the
United States, and 97 percent of
From the left, Stanley Weeks receives a
Silver Eagle Award from DPC President
Robert Turner.
IC ■en, Gay loro amm.
Silver Eagle award from DPC President
Robert Turner.
(Turn to Pag* A3O)