Farmers vulnerable to market changes

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  • Northeast Texas Farmers Co-Op General Manager Brad Johnson addresses the crowd at the 2020 Spring Expo Thursday at the Hopkins County Regional Civic Center. He spoke on the state of the cooperative and the effects of COVID-19 on the agriculture markets. Staff photo by Taylor Nye
    Northeast Texas Farmers Co-Op General Manager Brad Johnson addresses the crowd at the 2020 Spring Expo Thursday at the Hopkins County Regional Civic Center. He spoke on the state of the cooperative and the effects of COVID-19 on the agriculture markets. Staff photo by Taylor Nye
  • Northeast Texas Farmers Co-Op Store Manager Donnie Peters addresses the crowd at the 2020 Spring Expo Thursday at the Hopkins County Regional Civic Center. Staff photo by Taylor Nye
    Northeast Texas Farmers Co-Op Store Manager Donnie Peters addresses the crowd at the 2020 Spring Expo Thursday at the Hopkins County Regional Civic Center. Staff photo by Taylor Nye
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Co-op: Strength of commodities will win out

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Members of the Northeast Texas Farmers Co-Op (NETFC) heard about the state of the business as well as the general manager’s perspective on the coronavirus outbreak at the 2020 Spring Expo, among other items of business.

After opening at 6:45 p.m. with a prayer, general manager Brad Johnson addressed the approximately 100 members in attendance.

“We consider our cooperative as a resource to our members, and hopefully we can provide you with the information that you need,” Johnson said. “We’re here to support you.”

According to Johnson, fiscal year 2019 has been a “slow year” for NETFC.

“Our feed volume has been down, but we’ve had a mild winter and we’ve had good grass and that comes to the benefit of our members,” Johnson said.

According to Johnson, the less members use the co-op for supplemental feeds, the better it is for their farms although this has been a downtown for the co-op.

“Your significant capital is in the structures of our two feed mills at Greenville and Sulphur Springs,” Johnson said. “Your investment is in those feed mills, and when our feed supply is down, those feed mills tend to be down a little bit.”

Similarly, Johnson said, bulk fertilizer sales were also down in fiscal year 2019 for the same reason. Wet springs and “untimely rains” meant less purchases on fertilizer, but Johnson ultimately felt this was to the benefit of members.

“When we get to our fiscal year-end, which is March 31, we’re going to show a loss this year,” Johnson said. “That’s okay. We’ve been on a two- or three-year good run and we’re okay with that.”

Johnson then addressed what he termed “the elephant in the room:” coronavirus, or COVID-19.

On March 11, officials cancelled the Houston Rodeo and Livestock Show, an event which draws hundreds of thousands of visitors according to Houston Mayor Sylvester Turner. The Texas Agricultural Cooperative Council cancelled its manager meeting on the morning of March 12.

“In the past 48 hours, as y’all have probably experienced, it’s a by-the-minute thing as information hits us with stuff we didn’t anticipate,” Johnson said.

Johnson discussed how world economies impact inventories of feed ingredients.

“We’re not crude oil here… we have grains. We have soybeans, we have corn gluten meal, we have retail products in our stores,” Johnson said.

Johnson recalled his time spent at the Chicago board of trade, including the 1988 “squeeze on soybeans.” Financial crises in 1993 and 2001 also affected agriculture, Johnson said.

“You can wrap all them [crises] up in 40 years to what we’re facing today and it’s unbelievable,” he said.

Some in the beef industry might be feeling pressure, as hotels, restaurants and conventions were rapidly canceling events, Johnson said.

“All these events, folks eat a lot of beef, so the demand is short-circuited,” Johnson said. Furthermore, Johnson said, those in agriculture feel dips in the market acutely.

“I’ve got to let you know: this thing may not be over,” he said. “The stock market is down and cattle are down… All of us are vulnerable, and all of us have our opinion. On Monday, my opinion was ‘All of this is a bunch of crud and it’s going away.’ Today, I had to start asking questions in Sulphur Springs and Greenville, Texas.”

The solution to the beef pricing crisis of the 1980s, Johnson said, was marketing strategies. The implementation of the “Beef: It’s What’s for Dinner” campaign as well as the 30-minute meal made beef more accessible for families with two working parents, he said. At that time, boxed beef also appeared as the industry standard for the meat packing, as opposed to hanging beef, Johnson stated. This moved the beef industry into hotel, buffet and fast food industries, greatly expanding the reach of beef.

“We’ve got a dip here. I don’t know how long the dip is going to be,” Johnson said.

According to Johnson, that which makes agriculturalists vulnerable to market fluctuations is exactly what makes them strong in the long run, economically speaking.

“In 1988 what I learned is that when there is world unrest, the market and people go back to basic needs,” he said. “People used to barter. What can you feed your family with? You’ve got soybeans or corn? They [traders] exit paper or stocks, and go to something they can hold or feel, which is corn or soybeans. We have to eat and we can barter.”

Ultimately, according to Johnson, “It’s really that simple when it gets to agricultural economics.”