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The Opportunity is Still Here

Report of Paul Chittenden, President
American Jersey Cattle Association Annual Meeting
June 23, 2001

As I was thinking about what to speak about here this morning, it occurred to me that much of what I would say has been said before. So with a little help from some staff, I have pieced together comments from past leaders that I feel are as fitting today as they were then.

In 1975, Amzi Rankin told the membership:

"In my time, and in the time that I have heard about, I don’t believe there has ever been a time when there was as much opportunity for the Jersey breed as there is right now. I think we have the opportunity to do something that we’ve talked about for a long time and that is to expand the breed. I think the time is here."

In 1981, Charles McGinnis said,

"Possibly there has been no time in modern history when this membership gathered for its annual business meeting that there has been so much right and so many opportunities for the Jersey cow, the Jersey owners and the AJCC. If we consider only our position in the industry relative to other dairy breed organizations, then we are better off than at any time during the most recent 50 years."

As David Spahr said in 1989,

"If you look at what is being written about us, you get the impression that we are a bona-fide success story."

"Progressive," "modern," "production-oriented," "courageous," "forward-thinking," "innovative," "will survive," "can compete," "a strong number 2 and gaining." "These are the words and phrases I have heard used throughout the industry to describe the Jersey cow and the Jersey organizations," Charles McGinnis told us in 1981.

Yes, the eyes of the industry are on us but this has not all just happened. We have been fortunate in having aggressive, open-minded, far-sighted Boards of Directors and staff that have moved this organization forward for the last 45 years.

In June 1957 in his first address as Executive Secretary, Jim Cavanaugh offered this four point program:

1. Sell the dairy industry on the value of Jersey milk
2. Dramatize the efficiency of Jersey cows
3. Increase the production average of Jersey cows
4. Glamorize Jersey cows and Jersey milk.

The membership responded. In 1980 some comments from my Dad’s report, "A Quarter Century of Progress."

"In the mid 1950s, the Oregon and Washington Jersey clubs had developed an All-Jersey milk program. It was realized that if this program was going to have much effect on the breed as a whole, it needed to become national. A committee from those states and a committee from the AJCC Board drew-up a framework that has since become National All-Jersey Inc.

"In 1956, the Board realized that if the breed was going to prosper and be a success, we needed a youth program to encourage young people to work with Jerseys. The first National Heifer Sale was held that year in Springfield, Missouri which established our National Youth Fund. From this beginning has grown a youth program that is the envy of all breeds.

"In 1968, we were the first breed to adopt the USDA sire summary. Now we have a predicted difference for type and production type index, the cow performance index, an exciting new program for proving young sires and a new type appraisal system. The combination of all of these programs will help keep the Jersey breed in first place for programs for some time. We are a long ways from first in numbers but we have their attention."

We can now add to that list of accomplishments the Equity program, genetic recovery, breed expansion, and the delivery of our core services via the Internet.

The progress our breed has made in the last 45 years has not been easy. It has required courage, hard work and dedication from the elected leaders, the staff, and the membership. The media, the critics, and the keen observers of the industry use favorable adjectives and issue abundant accolades when referring to our cow, our organization, and our staff.

You can feel comfortable knowing that your Board of Directors is committed to the same philosophy that has proved right over the years. Provide profit-oriented programs designed to benefit all Jersey owners while maintaining a financially sound organization.

 Joe Lyon told us,

"Breed Jersey cows that can give an abundant amount of milk and create an equitable market for that milk and the rest will take care of itself."

To repeat some of David Spahr’s words,

"We have a responsibility to work for the good of every person who owns a Jersey cow. That means being realistic about price, being ethical in sales practices, insuring customer satisfaction, and being good stewards of the Jersey cow. Work every day for equity in the marketplace and make every owner of Jerseys successful."

So simple to say but so challenging to accomplish. Amzi Rankin asked in 1975,

"Get involved, the AJCA as fine as it is and National All-Jersey, as fine as it is, can only do so much real promotion. The most effective promotion is what my neighbor sees and what your neighbor sees when he looks over the fence at your farm. If you are doing a good job with your herd of cows and if you are giving them the kind of management that gets the kind of production that he wants and the kind of profit that he would like to have, you have his attention with our Jersey cows.

"If we take positive attitudes towards the Club’s programs, positive attitudes toward testing, registrations, classification, and advertising, we are influencing others in the most effective way. There are a lot more of us than there are of the staff and we have the advantages in that our neighbor doesn’t realize that we are trying to influence him.’

As I complete my tenure as an elected leader of this Association, I am going to steal one more fitting comment. This one from my Dad in 1980.

"I will always remember and cherish knowing all of the great people I have worked with over the years and all of the Jersey friends and others with whom I have become acquainted."

Good news! We’re in the Jersey business.

I am very pleased to bring you a positive report of your Association today. The Jersey business has never been better. The combination of multiple component pricing (MCP), progressive programs and services designed to increase profitability, a profit-minded membership and the most efficient cow in the dairy industry have created the good times we now enjoy. Never before have I seen so much enthusiasm among Jersey breeders. Enthusiasm is contagious. Dairymen all across the country are considering adding or switching to Jerseys. We can take some satisfaction from the fact that people who were once skeptical about the Jersey cow now want to be associated with a breed and organization that is going places.

The success we now enjoy did not happen accidentally or overnight. It was by design, through careful long-term planning by the leadership of the Board of Directors and a dedicated staff. Your Association has been a leader in the dairy industry for many years, promoting progressive changes to create services that are practical, user-friendly and provide more opportunities for Jersey breeders to increase profits.

2000 was no exception. The Association recorded 63, 776 animals in 2000, the second consecutive year over 60,000 registrations and the first time that has happened since 1954 and 1955. Enrollment in AJCA performance programs continued at record pace, with 92,369 cows enrolled at year-end. Breed production increased by record levels for milk and fat (4%) and by the second highest increase in history for protein (3%). The important long-term lactation goal of 650 pounds protein was also achieved.

Challenges for the Future

Managing Inbreeding

One of the facts of life in the Jersey business today is inbreeding. You are talking and asking questions. In March the Board discussed the issue in depth and how the AJCA could increase the awareness and understanding of this challenge.

The Board and staff will continue to make this issue a top priority. But we need to remember where we come from and how we got to where we are—by selecting intensely for higher production. We don’t need outcross at all cost. Let me encourage each of you to make yourself aware of the inbreeding in your herd and take steps to manage it. It is important that we manage inbreeding rather than try to control it.

We’re working very hard to provide you with good information and tools and services that you need to manage inbreeding level—without compromising your gains in the profitable production of Jersey milk. To do anything less would be a step in the wrong direction.

Maintaining Identification

The AJCA provides many important services to you, the members. The most important is official, verified identification.

In recent years we’ve seen the number of transfers decline by a significant percentage. At a time when our breed is growing and registrations are increasing, this is very perplexing to me. I find it very hard to understand why a breeder and developer of Jersey cattle would sell any one of them without allowing them to continue promoting his or her herd.

Transferring registration certificates is the best opportunity you have for long-term promotion of your product, and that all of us have to promote our breed. Let me ask this question. Would John Deere sell a tractor without their brand name and the dealership boldly displayed on it? When asked about your Jerseys, most of you beam and express much satisfaction. All good Jerseys should be registered and promoted as the profitable cows they are.

To sell a good Jersey cow and then fail to transfer the official documentation of her pedigree and breeder is a missed opportunity. In today’s world we need to take advantage of all good opportunities.

Keys to Success

I think there are two big keys to our success. The first is that we own the most efficient cow in the dairy industry. The Jersey cow puts more money into your pocket while taking less out. Our cow has responded to every challenge we’ve thrown her way. I’m confident she can handle today’s challenges, if we provide the proper management and care that she needs.

The second is our Association. It gives you the tools and services you need to take advantage of many, many opportunities to increase your profits. It is a pleasure for the staff and me to work for a profit-minded membership. I assure you that the Board and staff are dedicated to improving the services that we have now and to adding new services so that you continue to make more money by milking Registered Jerseys.

I lied. There are three keys to our success. I believe the most important key is you.

My dear Jersey friends, now is the time for the Jersey business to grow and become more profitable than ever. The key is more involvement from you.

The person who has the greatest opportunity to sell the Jersey breed is you. We don’t all breed the same type of cow, but we all do sell Jersey milk and Jersey cows. So, we have a common interest that unites all of us.

Being united is the way we can continue to capitalize on our opportunities. A positive attitude is of the utmost importance in developing and protecting our image, and it’s going to be the way that we get more people involved in our Association.

There is no question that we have the attention of the dairy industry. The time to make hay is while the sun is shining.

 Good morning. Welcome to the 43^rd annual meeting of National All-Jersey Inc. I would like to thank our hosts, the Wisconsin Jersey Breeders’ Association, for providing us such a great location to celebrate not only the Jersey cow and her owner, but also to celebrate the 25^th anniversary of the Equity Program.

Multiple Component Pricing (MCP) for 85% of all federal order milk celebrated its first anniversary in January. The new component pricing program has been well received by industry and has been supported by the large cooperatives and processors alike. Most agree that the federal MCP system sends the right signal to processors and producers while providing room for the market signals to work.

The expansion of MCP in 2000, did much more than just grow the value of Jersey milk. It has also grown the demand for Jerseys. On January 1, 2000, 40 billion pounds of milk was priced on components for the first time. These producers soon learned what the real difference between Jersey and Holstein milk really was: 20 to 30 percent more value per hundredweight milk.

Since that time, Jersey Market Service (JMS) private treaty, commercial, and consignment sales across the country have sent truckloads of cattle into states like Texas and New Mexico that were experiencing a federal order MCP for the first time. Many of these cattle were sold into existing herds that were expanding. However, many of these Jereys replaced Holsteins, or were additions to completely new Jersey herds.

This same activity has occurred in other areas that had not previously enjoyed the component pricing that the new federal orders have provided, including New England, New York, and parts of Pennsylvania. No longer do most of the cows in these regional sales move west – a greater percentage stayed within the region.

This has been a real boom for the Jersey owners enjoying real MCP program for the first time and for Jersey breeders, who have seen their markets for cattle grow both in volume and price. Expanding MCP has resulted in greater values for Jersey cattle, whether through milk sales, cattle sales, or through increased herd value.

Thanks to 90% of the milk supply now priced on some type of component pricing, high prices for cheese and butter, reasonable grain costs, and record demand for cattle, the Jersey breed will enjoy a tremendous year in 2001.

However, NAJ’s work over the past six months tells us that we cannot take the new market changes for granted. At the NAJ annual meeting last June, I mentioned that;

"There will be challenges to the current MCP system, and NAJ must be ready for them. USDA held a Class III-IV hearing in May, where proposals were made that could make significant changes in producer component prices."

Well, those comments turned out to be more accurate than I had wished! When USDA released a decision on some federal order component changes last December, they had made some drastic changes that not only negatively impacted Jersey producers, but also were dangerous for the industry as a whole.

For the first time ever, the federal orders would have mandated cheese plants to pay more for milk components than what the producer would be paid. There were significant incentives for cheese plants to buy their fat needs from sources other than producer milk. The result was a potential for a large drop in demand for high-solids milk from cheese plants, lower premiums for Jersey milk, and lower prices for all federal order producers, regardless of milk composition.

Your NAJ staff went to work early to evaluate the pricing changes. When others were quoted by the press as being reasonably satisfied with USDA’s changes in early December, NAJ was unwilling to endorse USDA’s new rules. Our staff worked hard to get the information necessary to evaluate the changes USDA had made, even though it was not readily available.

After your NAJ staff determined that USDA’s changes were not in the best interest of neither Jersey breeders nor the entire industry, they held a national industry meeting to discuss the problem and develop ways to correct the situation. By the end of January, NAJ had nearly 80 organizations endorsing our unified comments on USDA’s decision. We assisted a group of cooperatives in their court battle to discard the poorly designed changes.

These efforts were effective. The courts threw out the changes to Class III and producer butterfat and protein prices put forth by USDA, told them to re-evaluate their decision, and to LISTEN to the rest of the industry. NAJ’s efforts had focused industry support behind a single, unified set of comments. These unified comments told USDA, the courts, and the rest of the dairy industry that the changes were unacceptable and had to be corrected. And the courts agreed.

The national leadership role played by NAJ during this fight, shows the kind of respect that the dairy industry has for NAJ and its staff. It also showed others that had not worked directly with NAJ before, the capabilities of staff and our organization.

But this recent fight also reminds us that we cannot take our many gains in the milk market for granted. NAJ must be always ready to defend the value of Jersey milk when needed and to continue to search for new and better markets for our members’ milk.

And our staff cannot do it all. We as NAJ members have responsibilities as well. We must be sure that we breed and manage our herds to take full advantage of the milk component pricing opportunities that most of us enjoy today. MCP is breed-neutral. It doesn’t pay much for water, regardless of the breed of cow it comes from. In addition, we must be sure that we market the kind of Jerseys that will make people want more.

Looking to the future, NAJ is working to develop new ways to help us with the bottom lines of our dairy businesses. NAJ already helps members with forward contracting opportunities on an individual basis and we are beginning to develop risk management programs for some of the milk companies we have worked with -and our members have sold milk to- for many years. NAJ hopes to provide even more milk marketing and farm management services to our members in the future – services that can further improve our returns form the milk and cattle sales opportunities that we as Jersey owners enjoy today.

I again thank you for the opportunity to serve as your President and for your support of National All-Jersey Inc. It is an honor to serve you during the 25^th anniversary of the Equity Program and to report on the progress of NAJ. I am confident that the next years will provide new success and provide new ways to better serve our milk markets, our cow, and our dairy businesses.

What is National All-Jersey Inc.? What is our purpose? Why do we exist?

It has always been to improve the value of and profitable production of Jersey milk. Later on, we added to the equation, to improve the value of and demand for Jersey cattle.

Let’s take a look at the history and progression of National All-Jersey Inc.

Before National All-Jersey even existed, there was Jersey Creamline. That started in the late 1920s and there were even Creamline bottlers into the early 1950s.

All-Jersey®, as some of the folks from Oregon and Washington will tell you, was started in the early 1950s. The AJCC took the program national in 1957. In the early days, the All-Jersey® fluid milk program was the vehicle of Jersey breed growth. It was so effective in my home state of Mississippi that we ranked in the top five for registrations for many years.

In time, the markets changed. The All-Jersey® program died in Mississippi, as it did in many other All-Jersey strongholds: South Carolina, North Carolina, California and the Northwest. When that happened, the commercial Jersey population died with it. Those who were just milking Jersey cows got out of the business.

NAJ did not run and hide. In the ‘70s, NAJ started to encourage higher fluid milk standards and took a look at the problem of how Jersey milk was being priced. In 1976, Campaign Equity was born.

The Equity program turned out to be the most important program NAJ has ever been involved with.

All during this meeting, we have celebrated the success of Equity. That’s what those ribbons and pins are all about. Last night, we recognized the key players of the early years. We recognized those who answered the call to start Project Equity . . . the 171 people who were charter investors. We recognized those who sustained their Equity support for 25 years.

And we recognized the pioneers who were willing to take the chance on an untried formula for pricing milk—multiple component pricing (MCP).

On January 1, 2000, 24 years after Equity was started, multiple component pricing went into effect in seven of the 11 reformed Federal Orders, pricing 85% of all Federal Order milk.

We’re just now beginning to see the full effects of the Equity program, through fair market prices for Jersey milk and through unheard-of demand for Jersey cattle.

The point of this summary is this. Our Jersey milk programs have always helped us find some way to influence the pricing of our own product. When the markets changed to put Jersey milk at a disadvantage, we responded with Creamline, All-Jersey® milk and Equity. They were all very different methods of marketing milk, and each one of them was very effective in its time.

Each one of those programs increased the demand for Jersey cows, and the price of Jersey cows.

In the early 70s, the NAJ Board saw the need to influence the price and availability of Jersey cattle through an organized marketing service. JMS did not get serious about cattle marketing until the late 80s. From 1990 through 2000, JMS has grown each year, increasing its market share to record levels. Last year, JMS marketed $9.8 million worth of Jersey cattle . . . Registered Jersey cattle. Why do I emphasize "registered"? Because it is JMS policy to register all eligible animals it sells.

NAJ is the closest that we can come to controlling the price of our products: Jersey milk and Jersey cows.

NAJ, as we know it today, will change its face in the next few years. The dairy business is changing. Risk management is the future, so in the very near future NAJ will expand its services to help you manage your business through the highs and lows of the milk markets.

This is new territory for us. It will be a risk. But so were All-Jersey® and Equity.

The programs, services and marketing policies of National All-Jersey and Jersey Marketing Service provide us the ability to protect our investment, the Jersey business. National All-Jersey is the Jersey business.

Ladies and gentlemen, I would like to thank you for your support and encouragement during the past year and also during my years as a director. It is appreciated.

I, too, was inspired by the remarks made in 1975 by Mr. Amzi Rankin, one of our breed’s great leaders. What most surprised me about his remarks was that they are still true today. But then I realized that it should not surprise me at all. Jersey breeders have always held true to the course for more than just the last 26 years. That course is to strive to make the Jersey cow the most profitable of all dairy breeds.

The window of opportunity has never been wider than it is today. The Jersey cow is in demand. Jersey milk is in demand. Owners of other dairy breeds use our bulls and buy our cattle for one simple reason . . . they want to become more profitable.

How have we progressed all of these years? It is because of you—the owners and caretakers of our Jersey cow. You became involved, stayed involved, and made sure the Board and staff got the message that we would not settle for second best. The Board and staff responded with programs and services to achieve this goal.

We must continue our vigilance and not lose focus. It is up to you, the members and owners of Jerseys, to challenge the Board and staff to continually find ways to increase the profit potential of our cow and organization. So, stay involved, give us your ideas, your concerns, your suggestions on issues such as finances, inbreeding management, young sire sampling, and the list goes on.

Mr. Amzi used a phrase, "It is time to hitch up our britches and get going." On our farm we say, "It is time to rock and roll." Maybe that denotes a difference in generations, but no difference in meaning. We will continue our progress. Our successes have created new challenges. Answering these challenges creates more opportunities. Let’s take advantage of these opportunities that we and those before us have worked long and hard to achieve. Let’s take our breed to the next level.

It IS time to rock and roll.