A22-Lancaster Farming, Saturday, April 26, 2003
Processors: Work Together
(Continued from Page A2l)
market, noted Barr.
The key will be the consumers.
Barr said consumers need to be
told to “stop watching CNN and
visit the malls a little more” to
help the U.S. economy to recover.
For most industries, the “over
investment” in technology caused
some of the downturn, and busi
nesses will be slow to bring peo
ple back. Salaries and benefits re
main the most expensive issues
for companies.
For 2004, Barr made the fol
lowing observations:
• The dollar will continue to
weaken.
• Interest rates will move
higher in 2004.
• Consumers are the drivers of
any economic recovery. But there
remains no pent-up demand for
autos, housing, DVDs, or TVs.
Lydia Yoder pulls a wagon with colostrum bottles at the
Neer Farm.
A lesson
well learned...
Lancaster
Farming’s
classified ads
get results!
• Energy prices should trend
lower since the advent of the
Iraqi War and its conclusion. The
quekion remains: who will com
mand the oil fields and where
will oil flow?
• Natural gas supplies have
not been found as readily as an
ticipated. That could mean prob
lems.
• There’s too much focus on
the overall U.S. economy, which
is straining world economic
growth.
Japan keeps “slipping in and
out of recession,” noted Barr,
which is slowing export markets.
Europe cares little about stimu
lating consumption and will not
run a budget deficit in order to
do so (like the U.S. does). The
next election in Europe isn’t until
2005.
Mexico, a strong trade partner,
is become self-sustaining with its
A custom sawmill, Peachey’s Wood Products, Reedsville, was a tour stop for the ag
credit conference attendees Tuesday afternoon.
own production. Growth in
China is being fueled simply by
its own exports. Asia is adjusting
to the SARS disease scare, and
Argentina and Brazil, noted Barr,
are “basket cases” with little po
tential for growth. And India is
not a big consumer for U.S. prod
ucts.
Barr remains optimistic on
wheat and pessimistic on soy
beans. For meats, he remains
strong on cattle and temperate on
hogs.
For the broiler industry, this
will be the first time output will
not increase. “I can’t remember
the last time the broiler industry
didn’t expand production,” he
said.
For dairy, in the near-term,
Barr noted he remains “pessimis
tic.” But with little grain invento
ry, he doesn’t understand why
grain prices aren’t stronger.
In overall grain trade, the U.S.
share, noted Barr, continues to
“go south” while the former Sovi
et Union continues to in
crease its exports,
Credit lenders should be
aware that, even with the
milk loss payments, overall
payments in the following
year will decrease because
most of the money avail-
able in the federal program
is available this year only.
One of the saving faces for
dairy producers is the milk in
come loss contract (MILC), a
“big influence in keeping milk in
production,” said Bob Yonkers
with the International Dairy
Foods Association. MILC pays a
significant $1.82 per CWT for
April. Government money is
keeping many dairies afloat this
way.
For dairy retailers, new prod
uct competition in the form of
calcium-fortified orange juice,
manufactured by soda compa
nies, will also work to squelch de
mand for dairy products. Yon
kers pointed to the Dr. Pepper
“Raging Cow” drink, with 60
percent milk, along with com
syrup and other flavorings that
can be produced at less cost. The
money savings can be used to
fuel product advertising and
promotion.
A ray of hope on the horizon:
school districts want more nutri-
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tious products for kids in cafete
rias, and officials are working on
ways to provide milk product
vending machines.
For producers, forward con
tracting helps protect price in the
long term. The Jan. 4,2002 Class
111 price was $10.42 CWT, a lot
better than most prices received
without a contract. “I don’t know
why some (producers) aren’t
doing at least a portion of their
milk in forward contracting,”
said Yonkers.
Using forward contacting is a
“risk management tool,” he said,
“not to enhance income, but for
other reasons.” *
Much of the money made by
processors is not so much
product, but on the “logistics and
information,” said Barr, of mov
ing product. Innovative strategies
come into play for processors de
spite the fact that retail dairy
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