Noting Clear Signs of Positive Momentum for Alabama Ag

by Alvin Benn

After decades of growing despair over the future of farming in the state, better times are at hand, according to the President of Alabama Farmers Cooperative (AFC).

Tommy Paulk focused his presidential address, in part, on farmers who have refused to surrender to economic turmoil that has created concern throughout the state for years.

All this was after a year with modest earnings and patronage paid back to AFC members, but one in which he said there were clear signs of "positive momentum."

"These are good times for American agriculture and these are good times for our cooperative system," said Paulk, who announced he will be retiring as AFC president as of August 1. "The lean times that we have all weathered for decades now have tempered us and made us stronger."

Paulk’s speech highlights a significant 75th anniversary year within AFC. A diamond is used to illustrate "75" just as gold signifies "50" and silver for "25."

"These are good times for American agriculture and these are good times for our cooperative system"

He may not have mentioned that significance during his speech, but he brought big smiles to the big crowd at Montgomery’s Renaissance Hotel as he painted a much brighter picture for the future.

Paulk said austerity programs initiated several years ago as a result of lingering hard times "have prepared us for prosperity."

Before anyone in the audience got the wrong impression that better days are here to stay, he made it clear a "host of dangers lurk, globally, nationally and regionally."

Paulk said "unfinished work" remains from the AFC austerity program because "we have local Co-ops that must be restructured, merged or closed and we have the ongoing challenge of increasing our efficiency at the corporate level."

As AFC continues its climb toward system-wide financial strength, Paulk said it is important for everyone to "redirect their efforts in a manner appropriate to new circumstances in which we find ourselves."

By that, he meant confronting "new attacks on our market share by others who suddenly see opportunity where they once steered clear.

"We will see competitors who will yield to temptation and cut corners on ethics and prudence, and we could be tempted to do the same in the name of ‘being competitive,’" said Paulk, who did not mention specific names.

Hundreds of AFC members and relatives spent two days at the Capital City where they listened to speeches, applauded those who received awards and had a chance to renew old acquaintances from around the state.

As he has done in recent years, Dr. Terry Barr of CoBank outlined economic events and trends in national and global agriculture. In addition to his remarks, members also were brought up-to-date with reports on sales and contribution margins.

Rising Grain Prices Fuel Sales Growth

One of the most significant reports involved grain which saw a gain of $26 million in 2011 over 2010. Total sales for 2011 amounted to $150,609,009 as compared to $124,772,149.

John Gamble, AFC’s Grain Division vice president, said the worldwide population explosion means there will be an increased need for grain-derived food products.

"The price of grain went up dramatically because of the world situation," Gamble said during a break at the annual meeting on February 16. "As the world population continues to expand and grow, grain prices will remain firm in the future."

Gamble noted cotton prices have been dropping and farmers have been shifting more of their land into grain instead of something that has been synonymous with Alabama for well over 150 years.

"Ethanol is now a big player in the world market and that means more of our corn crop goes into making that fuel source," Gamble said. "Soybean prices continue to be good and growing along with it is wheat acreage to help feed hungry people around the world."

Dan Groscost, AFC’s chief financial officer, noted that grain played a major role in the organization’s large increase in revenue for the past year.

AFC’s sales for fiscal year 2011 were $450 million compared to $401 million for fiscal 2010 – an increase emanating primarily from the Grain Division and higher grain prices for 2011.

In his annual report, Groscost said Bonnie Plants, Inc., was budgeted to make $20.7 million for the past fiscal year, but ended at $11.9 million instead.

"We gratefully accept the responsibility of being good stewards of your equity in this cooperative and we recognize we must earn that right every day."

"Again, weather was the primary culprit with much of the country experiencing adverse to violent weather conditions during the primary sales months of April and May," Groscost reported.

He added the earnings decrease "was disappointing," but made it clear Bonnie Plants "remains the most profitable segment of AFC’s businesses."

During his farewell address to AFC members, Paulk said it is vital for those who listened to make sure those who lead understand the importance of being accountable for their actions.

"We gratefully accept the responsibility of being good stewards of your equity in this cooperative and we recognize we must earn that right every day," he said.

Paulk said a two-way street exists as far as responsibility is concerned and reminded members that "you, too, will be held accountable – by fate itself if by no other.

"For decades, we have – all of us – bemoaned the fact farmers have no leverage, we buy and sell awash in the tides of an ocean of large companies who set the prices we pay or receive, based on their needs, not ours."

Now the times have changed, Paulk added, the shoe is moving to the other foot "and that gives us a choice. We can each go it alone, maximizing our own immediate self-interest, or we can use our new power, however temporary it may be, to build and strengthen those institutions that exist for the common good."

He underlined his final speech as AFC president with a call for farmers to provide even more support to their local cooperatives.

Paulk said that support is important "when there seems to be a growing horde of fertilizer dealers, feed and seed suppliers, and grain buyers pretending to be your new best friends."

He said current trends indicating better days ahead for Alabama agriculture represent "fun times" for everyone involved.

"The prospect of higher farm profits, growing sales and increased patronage payments makes getting out of bed more exciting each and every morning," he said.

Looking back on his 17 years as AFC President, Paulk is pleased to be part of a team that constantly focuses on excellence and allowing him to be the leader.

"You have humbled me and honored me," he said, as he concluded his final "State of AFC" address. "I will be forever grateful."