Bullish On Dairy
Apr 07, 2013
CRI’s Doug Wilson is convinced U.S. agriculture—and that includes dairy—is poised for a prosperous future.
There’s no other way to put it: Doug Wilson is bullish on dairy.
Wilson is CEO of Cooperative Resources International (CRI), the holding company/cooperative of Genex and AgSource.
He has a 35-year tenure with the co-op, joining Genex’s predecessor, 21st Century Genetics, in 1978. He became its CEO in 1993, and CRI CEO in 2002. His roots in dairy go back even further, to his home farm in Iowa milking Guernseys. His leadership stripes were earned in Vietnam, where he was awarded the Bronze Star among other commendations for service and valor.
Wilson spoke at CRI’s 20th annual meeting late last month in Bloomington, Minn. In his report to members, Wilson doesn’t ignore the hurdles dairy farmers face with feed prices, globalization and price volatility.
And he readily points out that A.I. and services co-ops such as Genex and AgSource are not immune from these same challenges. Example: The U.S. embargo of products to Iran because of Iran’s nuclear fissionable materials program has meant Genex cannot sell semen there.
But Wilson is convinced U.S. agriculture—farmers and the businesses that supply them—is poised for a prosperous future. Global food demand, due to growing populations and rising incomes—will increase 70% over the next 40 years.
"The American farmer is no longer dependent on [domestic] per capita consumption of commodities. Your market and your guaranteed demand are global," he says. He ticks off these positives:
• Dairy exports exceeded $5 billion in 2012, with most months exporting 13% to 15% of production.
• Beef cow inventory is at its lowest since the 1950s, yet most predict a 3% increase in beef exports this year. The demand for ground beef continues to rise, with slaughter dairy cow prices expected to average $88 in 2013.
• Dairy replacement heifers are at their lowest levels since 2009, putting a cap on dairy cow numbers and run-away milk production.
• Corn inventory is at its lowest level since 1973, but U.S. farmers plan to plant up to 98 million acres this spring. With adequate rain, we could see $4/bu corn.
• The U.S. dollar value versus other world currencies will remain low, and may even decline slightly over the next decade. That will make U.S. exports more attractive globally.
And that leads Wilson to these conclusions:
1. "It is a great time to be in production agriculture. The next decade will likely be the best any have experienced.
2. "We are on the front end of attracting non-agricultural dollars into production agriculture. . . . This will be positive for us, if we are proactively involved.
3. "Responsible technology use and adoption will be a requirement, not a choice, to feed the world."
And he adds this important note: "The cooperative business model might be even more important today than post-Depression. The original reason cooperatives formed was for collective bidding and affordability of improved products and services. Today, the reason is controlling volatility, adopting technology and assisting with globalization."
Wilson is no starry-eyed optimist. He warns U.S. agriculture must be prepared for continued volatility due to globalization and because current ag commodity inventories are so weather dependent.
But he also says this: "Those who look for the victories in change and volatility will be winners."
I think he’s right.
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