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Paulk
had good reason for saying goodbye to a year that produced a devastating
drought, low yields, high input prices, one of the smallest patronage
cash rebates in years and concerns over a new Farm Bill.
"The
best thing I can think of to say about 2006 is that it’s finally
over," Paulk said in his "State of AFC" speech to several
hundred AFC members and relatives at the Wynfrey Hotel in Birmingham.
Silver
linings are appearing, however, and Paulk’s assessment of 2006 was
softened somewhat by hopeful expectations for 2007 as result of a good
start.
Some
of his reasons for optimism:
*AFC-owned
SouthFresh Aquaculture broke out of the gate in fine fashion with
catfish farmers enjoying the highest pond bank prices in years.
*Bonnie
Plant Farm, one of AFC’s crown jewels, is expecting a record year
after receiving "Vendor of the Year" honors from Wal-Mart as
well as launching a new relationship with Home Depot. The latter
development could mean up to $20 million in increased sales for Bonnie
Plants this year alone.
*AFC’s
Grain Division and Feed Farm & Home Department are expecting a good
year.
*Currie
Gin Division is on the threshold of a record-earnings year thanks to a
late blooming top crop and the support of cotton farmers in the
southwestern part of Alabama.
*Biologic,
AFC’s game nutrition arm, is winning awards in its industry and
gaining brand recognition. Biologic also is becoming a big asset for
local cooperative stores that serve the needs of hunters and wildlife
enthusiasts.
Paulk
also outlined AFC’s move to sell its Peanut Division, effective March
30. He called the impending sale of Anderson’s Peanuts to Birdsong
Peanuts a "bittersweet decision."
"Consolidation
in the peanut industry among AFC’s competitors and customers was
rapidly decreasing our relative size and negotiating clout in this
industry," he said.
"The
risk of more adverse decisions by USDA, as evidenced by their gross
malfeasance every week in setting the National Posted Price, known as
the Repayment Rate" produced "devastating results for the
entire peanut industry."
Paulk
said the AFC Peanut Division witnessed the first loss in its history
last year, but that wasn’t the only "scary part."
"If
there had been a bumper crop of peanuts in the Southeastern U.S. last
year, the loss could have been much worse than it was," said Paulk,
who added: "The problem would have carried over into 2007,
resulting in two consecutive, substantial losses in our Peanut
Division."
He
said AFC will receive $14.2 million from Birdsong for Anderson’s fixed
assets "and we’ll be transferring some inventories, too.
"The
money we receive will be used to pay down debt and, if our financial
condition warrants it, we anticipate being able to divert between $4 and
$5 million to an optional offering to retire some farmer equity,"
Paulk said.
The
upcoming sale of Anderson’s Peanuts is even more difficult to swallow
because of Anderson’s important contributions to AFC through the
years.
"I
can tell you we have an emotional attachment to Anderson’s
Peanuts," Paulk said. "It carried this company through the
1980s and early 90s and we have some misgivings about selling it. But, I
can also tell you we’re proud of the decision itself and the way we
made it. The timing was right."
Paulk
said in his speech that 2007 could be difficult for AFC as well as other
farming organizations around the country because of the expected Farm
Bill. Early reports from Washington are not promising, he said, and
current events have a lot to do with it.
"We’re
hearing Congressmen and Congresswomen, even those who are friendly to
agriculture, say the huge budget deficits and the war in Iraq are
draining the funds available for farm programs," said Paulk.
He
pointed out that Congress helped create the country’s current
financial problems and farmers are likely to suffer because of decisions
in Washington. The Bush Administration is proposing drastic cuts in the
baseline appropriation for agriculture, eliminating some programs and
imposing payment limits on others.
He
said Congress tried to do the same thing in the 2002 Farm Bill, but
"some great champions of agriculture" refused to allow that to
happen. Some of farming’s best friends are no longer in Congress
"and in my opinion and the opinions of others, their replacements
do not share their devotion to agriculture."
Paulk
ended his speech with an optimistic outlook on 2007, saying, "We’ve
had huge changes before and our farmers and your Cooperative rose to the
challenges wrought by those changes.
"We
can all be grateful that AFC has a long history of being proactive in
adjusting to the changes it anticipated and reacting promptly and
appropriately to the changes it did not anticipate."
Paulk
said AFC’s continued accomplishments during the past 70 years have not
been accidental.
"Our
success as a company is a testament to our flexibility and our
willingness to change," Paulk said. |
