Jul 10, 2014
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Dairy Talk

RSS By: Jim Dickrell, Dairy Today

Jim Dickrell is the editor of Dairy Today and is based in Monticello, Minn.

Formalized Employee Management: What’s the Tipping Point?

Jun 30, 2014

How Wisconsin’s John Pagel learned to successfully handle more cows and more people.

At some point in every expanding dairy’s growth, you will have to formalize how you manage employees with full-blown job descriptions, regular employee meetings and job performance reviews.

For John Pagel, of Pagel’s Ponderosa Dairy LLC, Kewaunee, Wis., the tipping point came when he upped cow numbers from 1,500 to 3,650 cows in 2009. At 1,500 cows, he was already managing 65 employees. But that number shot up dramatically when he grew cow numbers 145%. Currently, he employs 140 employees to milk 5,000 cows, manage 5,200 replacements and farm 8,500 acres.

"At 1,500 cows, we thought we knew what we were doing. But when we more than doubled our herd size in 2009, we found out that we didn’t," he says.

He soon learned there was no way he could manage that many employees by himself. "I now manage eight managers and they manage 120 people," he says.

Now, he has a mission statement, organization chart, employee manual, job descriptions, a mentoring program for new employees, formalized job and safety training, and follow-up programs to shortcut seemingly inevitable procedural drift. He has a 6:30 a.m. managers’ meeting Monday through Thursday each week to discuss what’s happening each day. The managers, in turn, keep their crews in the loop.

"Before, my phone was constantly ringing all day long with things people needed. Now we discuss things in the morning and plan our days," he says. For example, northeast Wisconsin has been deluged with rain all spring. These "rain days" have left his cropping crew idle, but it has allowed those employees to help out with facility and equipment maintenance.

On good weather days when corn needs planting or alfalfa needs harvesting, his maintenance crew is shifted over to help with field work. That might have happened before, but with daily meetings and a formal chain of command, the work flows more smoothly.

Pagel’s employee management program is based on the tri-footed C-A-R principle: communication, accountability and respect. "It’s a program designed to let every employee know how we treat one another at the Ponderosa," he says.

• Employees are trained in communications skills, to actively listen, to be assertive (but not combative), show leadership and respect others.

• They are also expected to be accountable. "That means showing up on time every day and being ready to work," says Pagel. "It doesn’t matter if the Packers beat the on Vikings Sunday, come Monday morning employees need to be ready to work."

• Every employee must be treated with respect, and in turn, treat everyone else with respect. Example: A milker is not only a milker. "At Ponderosa Dairy, a parlor technician is one of the most important jobs on the farm," says Pagel.

Pagel readily admits that his approach isn’t foolproof, and he still deals with his share of employee issues. "Taking care of employees is an ongoing process and it will go on forever," he says. But he now has a formalized system in place that works reasonably well and keeps chaos to a manageable minimum.

Pagel spoke at the VitaPlus Calf Summit in LaCrosse, Wis., last week. A preview of his talk can be found here.

Know Your Rights When EPA Shows Up

Jun 16, 2014

Even with a court-issued warrant, you still have Fourth Amendment rights

The Environmental Protection Agency is stepping up surveillance and inspections of dairy farms for potential water discharge violations.

EPA has already done flyovers of dairy facilities in Michigan, Iowa and Wisconsin, and has followed up with document requests of numerous dairies, says David Crass, an attorney with Michael, Best and Friedrich, LLP, based in Madison, Wis. and Washington, D.C.

Farms will have to comply with those document requests under penalty of perjury, he says. And EPA is now in the process of following up on those document requests and making surprise, on-farm inspections. EPA is targeting those inspections to occur after large precipitation events that tax a farm’s runoff control measures, he says.

But this is still America and you still have Fourth Amendment constitutional rights from unlawful search and seizure, says Crass. "If the inspectors have a court-issued warrant, you will have to deal with them. But call your lawyer immediately," he says.

Make sure your employees direct EPA staff to your farm office upon their arrival, and have them wait there until you or someone you authorize can meet them. "Only your authorized farm personnel should engage these inspectors in discussions or bring them on a tour of your facilities," Crass says.

If the inspectors do not have a court-issued warrant, they are on your property as your guest, he says. "Unless they have a judicially-issue inspection warrant, a facility owner or operator can deny them access to the facility," he says. "You can offer to reschedule at a time that is more convenient for you if you are away from the farm or are otherwise scheduled on other matters."

"Inspectors don’t like that, but unless they have an inspection warrant issued by the court, you have the right to tell them to reschedule," says Crass.

In addition to rescheduling to a time that you are actually available, this will give you time to do your own facility inspection, and address any areas on the farm that need attention. Of particular focus by EPA during these inspections are manure storage, feed storage and leachate areas, calf hutch areas, outdoor lots and clean water diversions. "Make sure these areas are not resulting in any discharge to waters of the US," he says.

When the inspectors do arrive for the scheduled appointment, ask them specifically what they want to see. Crass says it is important to define the scope of the inspection up front. It must be limited to areas that could result in a discharge of contaminants to surface waters, which is the limits of EPA’s Clean Water Act jurisdiction. Define this scope up front and then keep the inspection limited to that scope.

"For bio-security reasons, inspectors don’t need to go inside barns, for example," says Crass. You have legitimate bio-security reasons to keep them out since you don’t know where they last were and what they might have come into contact with.

Always have two people from your operation accompany the inspectors so you have two witnesses to the inspection. "Take pictures of everything that they take pictures of and take samples where-ever they take samples," Crass says. That will create duplicates of everything inspectors have so you have your own verification should issues arise. Crass also emphasizes the importance of reviewing for accuracy and correcting the record after EPA issues a written report of the inspection.

Actually, Dairy Promotion Does Work

Jun 02, 2014

Without advertising, sales would decline. But here’s what the dairy industry really needs.

Despite record (or near record) milk prices, I continue to hear frustration with the dairy checkoff programs. I heard it at a veterinary conference last Wednesday here in Minneapolis from a dairy farmer friend of mine, and our own Robin Schmahl voiced his frustration last Tuesday in his AgDairy Market Update.

But the fact of the matter is that dairy promotion does work. In his Report to Congress on generic dairy promotion, Oral Capps, an economist with Texas A&M, shows that for every dollar invested in dairy promotion, consumers spend $3.05 more on dairy products. It varies by product, with fluid milk seeing the lowest benefit-to-cost ratio (BCR) of $2.14. The cheese BCR is $4.26, export promotion, $5.12, and butter, $9.63.

Yet fluid milk per capita sales, despite the Milk Processor Education Promotion (MilkPEP) budget of $95 million, continues to decline. (MilkPEP is funded by a 20¢/cwt. assessment added to the Class I price.) Over the last 10 years, fluid per capita sales have fallen between 15% and 20%. What gives?

Capps says it’s a combination of factors:

• "Consumer demand is generally affected more by [retail milk] prices and incomes than demand enhancing activities.

• "Dairy markets are becoming less responsive to demand-enhancing expenditures over time."

Consequently, dairy promotion spending on fluid milk only reduces the rate of decline, he says. According to Capps’ estimates, fluid milk consumption would be 197 lb. per person without MilkPEP ads, or 10 lb. less than they currently are. So simple math suggests the U.S. would consume 3.2 billion pounds less milk—roughly equivalent to Colorado’s annual output--without the MilkPEP ads.

To its credit, MilkPEP has done extensive research on its marketing program. It has dumped the ‘got milk?’ and milk mustache campaigns in favor of its Breakfast Project last year and Milk Life, launched in February. The Breakfast Project is predicated on the fact that breakfast is the largest milk consumption meal of the day, and fewer families are eating breakfast.

Dairy Today associate editor Wyatt Bechtel did a deep dive into the Milk Life campaign for our June/July issue. The campaign is designed to re-energize fluid milk advertising, using double entendre that "milk is life" and consumers should "milk life" for all its worth. Hopefully, the ads will jump start sales.

But go back to Oral Capps’ two bullet points above. Retail prices and income have more to do with milk purchases than advertising—and advertising is becoming less effective over time.
Jerry Dryer, in his June/July Market Watch Diary column, says the dairy industry must focus more of its effort on innovative fluid milk products, packaging and milk pricing. The Innovation Center for U.S. Dairy agrees, and launched its fluid milk initiative several years ago.

All of this will take energy, commitment, people and, of course, money. The industry really doesn’t have a choice. We can promote fluid milk all we want. But if we don’t have innovative milk products placed in attractive, easy-to-use packages in places where consumers can readily buy them at competitive prices, we’ll continue to see milk sales decline.

Read Oral Capps "Report to Congress" on 2012 generic dairy promotion and research here.

Windows for Immigration Reform Crack Open

May 19, 2014

Opportunities for meaningful immigration reform this year are there. But they come with a word of warning.

There may be several windows of opportunity for meaningful immigration reform this year. But a word of warning: If it doesn’t happen in 2014, reform chances are null and void until after the presidential elections of 2016.

So it’s imperative dairy producers and their organizations re-energize on the issue now. The most critical time will be the first week of June, when Congressmen and women are back in their home districts campaigning for the November election.

"We’re not to the end yet, but I think there is reason to be a little bit optimistic," says Craig Regelbrugge, co-chair of the Ag Coalition for Immigration Reform and a senior vice president of the American Horticulture Industry Association. "Speaker [of the House] John Boehner (R-Ohio) wants to get the issue done, and the mood among Republicans is trending better."

U.S. Chamber of Commerce President Tom Donohue, albeit facetiously, says Republicans need not field a presidential candidate in 2016 if immigration isn’t resolved.

"So there’s reasonable prospect for forward progress in June and July in Congress," Regelbrugge says. "If we get to August, it will be tougher as Congress then goes into full election mode."

Immigration reform is all politics practically all the time. It’s the reason we could not get reform earlier this year. Republican Congressmen and women, and some Senators as well, are afraid of appearing too pro-reform. If they could be portrayed as such by the far-right wing and/or Tea Party, they would face Holy Hell in the primary elections this spring. Conventional wisdom was that we’d have to get past the primaries to give a window of opportunity for reform efforts.

It appears that conventional wisdom is proving correct. For the most part, Nebraska’s Ben Sasse being the exception, incumbent Republicans have held off their Tea Party challengers this spring. That gives immigration reformers a chance this summer, after the Congressional recess the first week of June and before the August recess leading up to the campaign.

But Regelbrugge urges dairy farmers not to be complacent or leave the lobbying up to their co-ops, the National Milk Producers Federation or their farm organizations. Congressmen need to hear directly from constituents how lack of reform is impeding their business and what the economic consequences are, he says.

"You have to take the issue into your own hands, band together with like-minded colleagues and see your lawmaker. Press them to move a package of reforms or a series of bills and to take action between now and August," says Regelbrugge.

Failing passage this summer, there might be one more opportunity in the lame-duck Congressional session following the election in November. But that might be a much sparser, take-it-or-leave-it bill that Republicans offer Democrats and President Obama. How in-your-face that option would be likely depends on whether the Republicans gain control of the Senate and the number of House seats they pick up.

In other words, the time for bipartisan action—and meaningful reform--is now.
 

Irish Dairy Industry About to Re-awaken

May 05, 2014

Europe will lift its dairy quotas next year, unleashing its farmers to produce as much milk as they please and their bulk tanks can hold.

The lush, verdant pastures of Ireland, bespectacled by Holsteins across the virtual breath of this island nation, are poised to see even more cows in the coming five years.

On March 31, 2015, Europe will lift its dairy quotas, unleashing its farmers to produce as much milk as they please and their bulk tanks can hold. Irish farmers, perhaps unlike any others in the European Union (EU), are ready and willing and able to grow.

Dickrell   Richard Coughlan   Ireland 5 5 14   Copy
Unconstrained by European Union quotas, Irish dairy producer Richard Coughlan plans to grow his dairy herd over the next five years. (Photo: Jim Dickrell)

Thirty-one years ago, when the EU dairy quotas were imposed, Ireland was producing 11 billion pounds of milk annually. It’s doing that same volume yet today. In contrast, New Zealand was at that same 11-billion-pound level in the mid-1980s. Free to supply the world market with no constraints, New Zealand has quadrupled its production over these past three decades.

I spent most of last week in Ireland, talking to farmers and dairy co-ops about this new era of free market European milk production. I was there at the invitation of Enterprise Ireland, a quasi-government, business development promoter.

What I learned: Irish farmers are almost straining in the harness, seeing a world of opportunity with $24 milk prices, total costs of $18/cwt. and cash costs just a fraction of that. Survey after survey, conducted by their dairy co-ops, show Irish dairy farmers plan to grow milk output 50% to 60% by 2020.

One such farmer is Richard Coughlan, who farms just west of Mitchelstown in County Cork, in south central Ireland. Coughlan, a third-generation farmer on ground bought by his grandfather in the 1920s, milks 110 British Friesians and stocks 160 beef cows on 320 acres. His plan: "I’ll wind down the beef herd because of poor margins (2013/14 was disastrous) and gradually grow the dairy herd to 150 cows in five years," he says.

And he’ll do it at very little cost. First off, unconstrained by quota, Coughlan will be able to push for more production through more concentrate feeding. Because of quotas, he only feeds 4½ lb. of concentrate per cow per day. He’ll likely feed more grain at both the beginning and end of lactation (when grass, his primary ration component, is less abundant and energy dense). More grain should increase his rolling herd average from 15,400 lb. to 18,000+.

He’s already breeding for more replacements. In the past, he would use Angus semen on dairy heifers for calving ease and then feed the resulting calves out as beef. Now he’ll use high-indexing Friesian semen to produce more heifers. For next year, he has held over about 10 two-year-old heifers for another season that failed to conceive in time for this grass season. They’ll calve as three-year-olds, but with abundant grass to feed them, it’s cheaper than buying in replacements.

Parlor capacity isn’t a concern, either. Coughlan milks in a double-10 Dairymaster swing-over parlor. Even though it has just 10 milking units, Coughlan and an employee can milk his 110 cows in less than an hour. Adding 40 more cows will add less than 30 minutes to that routine.

The co-ops, economists and university dairy specialists I spoke with all confirmed that Richard Coughlan’s plans are mirrored by a good portion of Ireland’s 18,000 dairy farmers. Ireland’s total milk output on a global scale is modest (comparable to Pennsylvania’s). So increasing its production by half in the next five years will likely account for just 10% of the growth in world markets that is expected to grow another 55 or billion pounds in that same time.

But it does show what opportunity and a free market can unleash after 31 years of the unyielding constraints of quota. 

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