For those who are rich and well-off, food prices are generally of
little concern because food prices constitute a small percentage of
their disposable income. But for the rest of the population facing high
heating costs and higher energy costs, their economic well-being will
deteriorate this winter.
I have just returned from a 10-day visit to Lithuania. The purpose of
my trip was to talk to some dairy farmers about their conditions and
their problems; to talk with some milk processors and inquire about
their problems in the marketing of their products, their problems that
involve government and the pricing system; to talk about subsidies and
payments to farmers; and the loss of markets (primarily Russia). I
spoke with a member of the parliament serving on the agricultural
committee. I spoke with journalists. I spoke with university people. I
spoke with families and also with consumers. I drove many, many
kilometers viewing in sadness Lithuania’s idle capital - its unused
agricultural lands. I was informed of the recent bankruptcy of a large
cooperative milk processing plant. Though there was much that I saw and
heard that would warrant deep pessimism, I was moved emotionally by the
underlying strength that Lithuanians evidenced in their talk and
comments. They wanted some direction, some goals. They wanted to see a
government that understood and acted on the problems of the dairy farmer
and the problems of the dairy industry. They were disgusted with
patchwork and the indifference of temporary cures.
One farmer commented to me, “What is there that a farmer can do? How
can we make conditions better, produce more milk cheaper and
profitably? There is no guidance, no help or interest on the part of
the government to study our problem and make recommendations like you do
in America.” Then in a most interesting and humorous analogy, he
commented, “Our government, our president, our agriculture minister, our
parliament ministers are all ostriches when it comes to problems of
agriculture.” When I asked what he meant, he said, “I am told that when
this big, flightless, running bird confronts a problem, he hides his
head in the sand and believes himself to be unseen. I regret that I
have to describe our peoples’ representatives in government in this
manner.”
This incident reminded me of our former American president, F.D.
Roosevelt, during World War II, when he said to the American people, “
We must live as men, and not as ostriches.”
To the question of how can milk be made cheaply in Lithuania so that it
could be competitive anywhere in the Europe, Russia, and the global
market, my answer was: I strongly believe that Lithuanian dairy farmers
can produce milk as cheaply or cheaper than any country in Europe, but
under very specific conditions:
2. For this to become a reality, farms must become specialized.
3. For a farm to be profitable, constant attention must be given to
keeping costs down -- constantly seeking ways to reduce costs to stay
competitive. This is positively a must, a number 1 condition, without
which there will be no success.
4. It is difficult to be successful and have a profitable dairy
operation if you don’t enjoy working with dairy cows. If they are not
profitable, it is impossible to enjoy them.
5. You do not have to be big to be profitable. A specialized dairyman
will basically only milk cows. He will have his cows harvest his own
forage crops as pasture and he will buy any needed grain and roughage
from yet another farmer who has his own specialty - raising crops. The
dairyman and his family, with a very minimum amount of equipment capital
investment, can milk 20 - 50 cows as a specialized milking business.
My point here is that there is no possible way that a concerned
Lithuanian government can divorce itself from the milk industry if the
country has a vital economic interest at stake. Indeed, there is no
question that the dairy industry has been and is still very vital to the
economic health of Lithuania, both now and in the future. I find it
absolutely unbelievable that, as far as I know, there still does not
exist a comprehensive study on how cheaply milk can be produced in
Lithuania. I am told that, if there is one, it is kept secretly locked
up in Holland’s government vault.
I was asked if the free market was best left to itself to work out the
problems of supply and the pricing of milk. The answer is very simple:
There is NO free market in the milk industry. There never was, there is
none now, and there never will be. In all countries - in Europe, the
U.S., Canada - where there is a dairy industry, there is government
involvement in very significant and varying degrees in supply management
(quotas) and in pricing of milk. The excess milk produced in a country
will have varying subsidized prices which are specifically determined to
move this excess out of the country. A free market in global trade is
an illusion! Cheap, subsidized food as a permanent source of cheap food
is also an illusion.
Concerning the E.U. and Lithuania as relating to milk product prices -
that is a matter of negotiated self-interests. Question: Who in the
E.U. is interested in milk products from Lithuania? Why and under what
conditions? Imagine a new-born lamb (Lithuania) and full-grown lions
(E.U.) with full sets of teeth and claws negotiating selected positions
from time to time. The weak never win.
How does Lithuania become a lion? With teeth and claws? It has to
produce a lot of clean, high quality, cheap milk so that processors can
produce excellent quality milk products competitively priced in the
global markets. There is not much to fear if Lithuania should decide
to develop a dairy industry and become an exporter of quality milk
products. It is going to take considerable time to build up the
industry. And it will demand not only effort, but Lithuania’s brain
power.
On the morning of my departure from Lithuania I had the pleasure of
meeting again with a dedicated Lithuanian, Jonas Macys, presently Mayor
of Vilkaviskis. Jonas Macys is a farmer by inheritance and training and, when not in public service, farms intensively. He was an original
member of the Seima and served as vice-chairman of the agricultural
committee in the formative years of independence. No one who breathes
Lithuanian air is more concerned about his Lithuania, its people, and
the Lithuanian farmers. His summary to me warrants the deepest
attention and respect from all of us: Dairying is Lithuania’s largest
industry. It is the most important industry that directly affects
peoples’ health and economic well-being. It has always been a mainstay
in Lithuania’s economy and must continue to be so. The solution to the
problem demands the attention and concern of not only farmers, but also
those people who live in cities. The success of the dairy industry
demands the political support and participation of all active voters.
Government’s inattention will cost all of us in higher costs for food
and a lower standard of living. “Watch,” says Macys, “and experience
the next six months. They are not going to be pleasant, and could be
brutal for many.”
This is not a pleasant ending to my commentary. But problems are
solvable if they are viewed realistically, and brains are employed
wisely in reaching solutions. The power of voters lies in their voices
and in their right arms when voting time arrives. And in a democracy,
voting time always comes around. There is a saying in America: “What
goes around, comes around.” If something is done poorly, the results
will come back to face you. If something is not done politically and is
neglected, the consequences will be addressed by the voting right arm of
citizens in the coming elections.
Jonas Macys asked me to please return so that I could talk with more
groups of farmers. He is in favor of encouraging these meetings. I
thanked him for his thoughtful and kind invitation and we parted with
warmth and my continued respect for an outstanding and dedicated public
servant.
The future? Higher food costs! And an increasingly higher percentage
of disposable income for food!! This is not something just to be read
in the newspaper. It is something that will be felt and something
Lithuanians are going to experience as reality. Food is going to
continue to be expensive the day after tomorrow and increasingly more
expensive after that because the government’s leaders have been ignoring
and are continuing to ignore the high food costs in Lithuania’s economy.
1. If you want to produce clean, cheap milk, you must produce a large
volume of milk per cow per man.
It is increasingly apparent that there is a glaring contradiction in
that, on the one side, there are high food prices and, on the other
side, huge numbers of hectares of productive agricultural lands unused,
neglected, and capital structures lying idle, with a large number of
unemployed agricultural workers. How can any sensible person not be
shocked? How can anyone not recognize that something is seriously
wrong? How can a government be observing this ongoing economic
severity, this painful and devastating economic disaster engulfing the
farms and fundamentally ignore it? How could a succession of prime
ministers believe that, after the destruction of the production units
and the so-called “entrance” into the free economy, a newborn dairy
industry would survive the entrenched, self-centered capitalists of the
“free marketing” structure. To see how foolhardy this is, you only have
to imagine a lamb entering into an arena of lions. Who could expect the
lamb to grow into a survivor that would compete for its economic life.
