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An O-Dairy ListServ post from Kevin Engelbert
Added August 1, 2009.
Hello, O-Dairy Members.
Time to be politically incorrect.
I applaud Sen. Sanders’ effort at questioning Dean Foods’ pricing policies, but I'm willing to bet his attempt will be futile. Why? Gregg Engles does not care about family farmers, or any farmers for that matter. He considers himself one of the 'elite' in society, and he certainly doesn't consider farmers his equal. If anyone thinks I'm way off base with my explanation, I welcome your arguments. But in contemplating recent events in organic dairy, I can come to no other conclusion.
One of the first unspoken facts you learn in business school is that the more employees you have working under you, the higher your earning potential. If you are self employed, with no employees, the only money you can earn is from your efforts and your efforts alone. The same holds true of you are a laborer in any company. The CEO of a large corporation takes a share of the wages of everyone else who works in the company. That's how a CEO is paid tens of millions of dollars per year; no individual can possibly 'earn' that much money by him / herself.
Dean Foods has many, many employees; thousands when you consider that the farmers that supply their milk are, technically, Dean Foods employees, and so are all the employees on those farms, including the cows. The total compensation that Engles receives each year comes from the work of not just him, but everyone else 'below' him. I'm sure , along with most CEOs, he believes he deserves every penny, and probably thinks he should receive more, given the amount of money Dean Foods handles every year and the total number of people under Dean's employment.
That's the reasoning behind Suiza's purchase of Dean Foods, and Engles' drive to continue to purchase other dairy companies. Not because there are any economies of scale or efficiencies to be gained, but because growing in size increases the number of employees in the company, the amount of power Dean has in the marketplace and in the political arena, and, just as importantly, in the earnings potential of all the upper management people.
Increased power is the true reason corporations exist. And with that power comes the ability to accumulate more wealth. It's all about the money. The so called elites of our society consider themselves at the top of the social ladder. Their children go to private boarding schools and attend the elite colleges. Farmers' children are expected to go to vocational schools and attend ag colleges. Wealthy people don't look down with loving eyes at their newborn children and say "I sure hope he / she becomes a farmer, or marries a farmer." Heaven forbid! Either occurance would be a nightmare come true.
The fact of the matter is, while the elite consider themselves at the top of the social ladder, they consider farmers on the bottom rung, if that. They think of farmers more like cows than themselves: there will always be new ones coming on, so if you lose a few farmers, so what? Family farmers are an expendable production unit, easily replaced and not deserving of anything more than the poverty level income they are given. The loss of a few farms is simply the cost of doing business, and expected by the corporations.
The power has accumulated for decades, so that in any economic downturn, the farmers can be forced to bear all of the burden. That's why most dairies must pay to have their milk trucked to processing plants, why 'make allowances' came into being, why the price of dairy products on the store shelves doesn't drop as much as the price farmers are paid, and why parity pricing was abolished. Power can continue to consolidate, unless laws are written, and enforced, to prevent that from happening.
When a country takes its food supply for granted, bad decisions are made with regard to food production. Organic agriculture was envisioned as a more just and sustainable food production, distribution, and retail model. In organic dairy, because of the greed of Dean Foods, Aurora, et. al., that has not proven to be the case. Gregg Engles may pay lip service to Sen. Sanders, but to him all is right with the world: profits are up, Dean Foods stock is higher, the company is at full employment, there’s plenty of cheap milk available, Dean continues to grow, salaries and bonuses will be up, what could possibly be wrong?
The people with power in the dairy industry will have an epiphany at some point in time, but probably not until their judgment day. The damage done in the meantime will be tremendous.
PS: The preceding view does not represent the USDA, NOP, or the NOSB in any way, shape, form or manner.
Posted: to Industry News on Sat, Aug 1, 2009
Updated: Sat, Aug 1, 2009