06/29/2008
By Gary Truitt
Every commodity checkoff meeting, I have ever attended has been about one thing: building demand. Beef, pork, corn, soybean, dairy, veal, cotton, turnips, whatever, the goal of producer funded and controlled programs has always been about increasing the price of the commodity by improving demand. But what happens if you succeed? What happens when the price of your product goes higher than you, or anyone else in the industry, could have imagined. What happens when, almost overnight, all your demand dreams come true? That is just what has happened to corn and soybean producers. Corn and soybean prices have hit new record high price levels while floods have devastated millions of acres of cropland in the Midwest. Even a Purdue Ag economist said the price of corn is too high. Against this background, the last thing you want to be talking about is increasing demand.
This was the dilemma faced by the United Soybean Board as they met last week in Indianapolis. The farmer directors, who set the direction for how the soybean checkoff funds will be used, spent a lot of time discussing the other side of the equation: demand. This was quite a change for an organization that has one of the best track records for developing new uses and markets for soybeans.
From aquaculture in China, to foam seats in new Ford cars, to low transfat cooking oils, the soybean checkoff has invested producer’s dollars in ways that have created countless new markets and significantly more demand. The soybean checkoff has a goal of generating 3.5 billion bushels of demand by the year 2010. Should that goal be achieved, without a corresponding increase in production, the industry would have a serious problem. That is why the USB has allocated over 12 million dollars in the area of supply. This is the second largest expenditure in the current checkoff budget.
The efforts to increase production will focus in two areas: increasing yield and presenting yield loss caused by insects and diseases. Biotechnology will play a large role in both these areas. Thus, overcoming objections to GMO soybeans will be key to increasing production.
At present, US soybean farmers are being held hostage for foreign governments who may or may not accept GMO soybeans. There may come a time, and very soon, when US producers will have to use whatever technology is available to produce as much as they can to meet the demands of the marketplace.
There are some who will say, “With $15 soybeans, who needs a checkoff?” As agriculture enters into a new era where it will be asked to produce more food, fiber, and fuel than ever, the need for a producer-controlled checkoff is as great as ever. Supply and demand are just opposite ends of the same equation. The same kind of creativity and fortitude that created our demand will be needed to develop the corresponding supply.
Read more commentaries by Gary Truitt at www.hatchat.net
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