At AFC’s 70th Annual Meeting
By Alvin Benn
||AFC President and CEO Tommy Paulk addresses AFC’s 70th Annual Meeting
Good riddance to 2006.
That, in a nutshell, is the way Alabama Farmers Cooperative, Inc. President Tommy Paulk summed up the past year for his organization during the 70th annual AFC membership meeting February 8.
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.