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October 2012 Archive for Dairy Today Expo Extra

RSS By: Catherine Merlo, Dairy Today

Dairy Today's Catherine Merlo brings you the latest from the World Dairy Expo.

Dannon Holds Kansas Dairy to a Higher Standard -- and That’s a Good Thing

Oct 07, 2012

When McCarty Family Farms of Rexford, Kan., sealed a sole-supplier deal with Dannon Company late last year, the agreement did more than provide a secure market for the dairy.

The exclusive contract with the yogurt maker has lifted the dairy to a higher standard in all aspects of its operations, Ken McCarty said during a Virtual Farm Tour on Friday at World Dairy Expo.

 


McCarty Family Farms and Dannon Co. will be featured speakers at our Elite Producer Business Conference Nov. 6 in Las Vegas. Click here for more information.


The McCarty partnership with Dannon has made the Pennsylvania natives more aware than ever of their responsibility to consumers. It’s brought a new focus on employee oversight, milk quality, animal welfare, sustainability and community involvement. The McCartys could have met all that with a grudging acceptance. Instead, they have embraced it.

As part of its Dannon arrangement, the McCarty operation has undergone a third-party certification for animal welfare practices. "That’s shifted our mentality with employees," said McCarty, one of four brothers who are running the family operation.

Now, standard operating procedures, documentation, videos and training are part of the daily management. Any perceived animal neglect or abuse is grounds for immediate termination. The new focus has been transformative. "We should have done it a heck of a lot quicker," McCarty said.

McCarty told how his parents, Tom and Judy, moved the family, including their four sons, to Kansas from Pennsylvania in 1999. Back then, the dairy milked 300 cows. With Pennsylvania’s urban encroachment, the future looked bleak. Today, their Kansas operation consists of three dairies milking 7,200 cows. They are spread out among the Bird City, McCarty (Rexford) and Scott City dairies. The McCartys also have on onsite processing plant near their Rexford dairy. McCarty Family Farms employs about 102 employees.

McCarty declined to give much detail about the family’s marketing agreement with Dannon. "It’s a cost-plus business model," McCarty said during the Expo session. "Our relationship with Dannon is fantastic."

In the video shown during Friday’s session, brother Mike McCarty said the family knew it had to find consistency amid the volatility that has become a part of the dairy business. So it found Dannon. The McCarty family operation ships its milk to Dannon’s Fort Worth, Texas plant to be made into yogurt. It ships its cream to the Daisy Brand company.

The 45-minute session was sponsored by the Kansas Department of Agriculture. The Department assisted the McCartys when they began looking at Kansas some 15 years ago. The state is actively seeking more dairies to relocate there, where agriculture is the No. 1 industry.

"Kansas is an ideal place to dairy," said Brock Peters, a McCarty employee who helped present the Virtual Farm Tour on Friday.

Not every dairy can garner a deal with a major processing plant as the McCartys did. But maybe there’s a lesson or two in the family’s decision to take major, life-changing steps to survive and grow. They uprooted from Pennsylvania and moved to Kansas where they knew no one. They took chances by building two new dairies and buying a third one with some baggage attached to it. They transitioned to management roles and forced themselves to take a hard look at new ways to do business.

"It’s been positive," Ken McCarty said. "We love what we do. We want to keep growing."

His father, Tom, said it best in the video: "We can’t become complacent. When we see opportunity, we’ve got to run with it. We made a bold move. It worked. We’ve had a lot of scary moments, but we keep plugging away."

There are no guarantees that the McCartys’ gamble will succeed into the next generation. But it’s worth watching as a long-term strategy that could open up a new business model – and future – for more dairies nationwide.

Risk Management Gains Traction

Oct 04, 2012

In a sign of dairies’ growing sophistication and need, risk management took a front seat during yesterday’s Virtual Farm Tour at World Dairy Expo.

United Pride Dairy of Phillips, Wis., devoted a good chunk of the session to talking about how it uses a marketing strategy with milk and feed hedging to manage the uncertainty it faces.

That’s not a subject that’s typically explored in these Virtual Farm Tours. Normally, successful producers describe the nuts and bolts of their dairies, using photos and videos to describe their cows, barns, people and operations.

Sure, owners Jon Pesko and Ed Jasurda discussed things like cow comfort, housing and employees. They told the story of how, in 1996, they merged their two neighboring dairies and then expanded from a 300-cow herd to the 1,800 they milk today.

But yesterday’s Virtual Farm Tour also focused on an increasingly necessary element, risk management, which is still not widely used by dairies. At United Pride Dairy, however, it plays a key role.

Pesko and Jasurda can pinpoint the start of their risk management operation to late 2009, when they decided to expand their dairy and upgrade their milking parlor. The two dairy partners realized they needed more price certainty.

“Until then, we only had limited use of marketing tools,” Pesko said. “But with the expansion, we had more money at risk and volatility was increasing.”

Their need brought them to Stewart-Peterson, the risk management firm that sponsored today’s session. Pesko and Jasurda also brought in their lender and communicated their plans. “After 2009, it was tough to get a lender to talk to us about expansion,” Pesko said. “So we had to take out some of the risk.”

Working with their market advisor at Stewart-Peterson, they developed a clear understanding of their goals and strategies. They learned about a weighted average price and rehearsed various price scenarios so they wouldn’t be caught off-guard if the market took an unexpected turn. The expansion went forward. Their risk management savvy slowly grew.

Today, United Pride takes a disciplined and consistent approach to marketing. While they receive daily emails and a weekly call from Stewart-Peterson, Pesko and Jasurda aren’t preoccupied with this new element of their business. “We already have so much drawn out in advance,” Pesko said.

One of today’s take-home messages was that risk management is essential for the success – and future – of United Pride Dairy. It takes initiative to decide to do it, time to get educated and commitment to stay with it. But a risk management program has helped keep the dairy in business and looking forward. For these producers, operating a dairy with a solid risk management plan is as essential as their rotary milker, sand separator and nutrient management program. Risk management is not the future anymore. For progressive dairies like United Pride, it’s the here and now.
 

PETA Comes to Expo

Oct 04, 2012

People for the Ethical Treatment of Animals (PETA) is here at World Dairy Expo this week in the form of an earnest young man whose mission is to end the practice of de-horning calves.

David Byer, manager of PETA Corporate Affairs, attended yesterday’s Virtual Farm Tour, which featured Golden Oaks Farm of Wauconda, Ill.

The sophisticated dairy, which milks 720 Holsteins, is one of the last dairies in Illinois’ suburban Lake County. The farm encompasses 2,300 acres and raises 70% of the feed for its herd of 1,400 registered Holsteins. It sits about 45 minutes northwest of Chicago O’Hare, or as the dairy’s CEO Tom Patterson says, "within an hour of 5 million to 6 million people."

Golden Oaks is not only moving forward with high-tech breeding but with environmental stewardship, including a major composting operation called Midwest Organics Recycling. Its Organimix, a mixture of cow manure and landscape waste, is sold to landscapers, Whole Foods stores and the Chicago Botanical Gardens. The dairy hosts tours for hundreds of school children every year. Golden Oaks has even launched its own farmers’ market. In 2010, Golden Oaks was honored with the Illinois Environmental Stewardship Award.

"Public perception is key in all of our decisions," Patterson told the packed room of about 175 dairy producers and industry people.

During the question-and-answer session that followed the Golden Oaks presentation, a woman asked if the dairy had ever had any trouble with PETA. Byer, sitting behind her, spoke up and said he was from the animal rights group.

You could have heard a pin drop. Then someone from the audience said, "You’re pretty brave to come in here." Byer calmly remained in his chair. Golden Oaks’ head herdsman, Ethan Heinzmann, responded that the dairy had not had any PETA trouble.

In fact, the dairy has been pursuing the one thing Byer has as his mission. Golden Oaks and Heinzmann are interested in developing livestock selectively bred from "polled" genetics. Polled cattle are born without horns. The dairy has been polling genes from its red-and-white Holsteins and looking at breeding them into its black-and-white Holsteins.

"Polled genetics is something we want to continue to pursue," Golden Oaks president Tom Patterson told me afterwards. "We’ve already had some success with it. But it takes time. When you’re talking about the number of Holsteins in North America, making an industry transition could take decades."

PETA sees polled genetics as a way to stop the painful act of de-horning calves. Patterson sees naturally hornless cows as safer for the rest of the herd as well as the humans who work around them.

Byer says he wants to find common ground between dairies and PETA in looking for a solution to end de-horning. The 31-year-old lawyer, who works from an office in rural North Carolina, says he has meetings scheduled this week at Expo with about half a dozen corporations and large cooperatives to discuss that common ground. He was well-spoken and polite.

Byer will remain at Expo all week. By Wednesday, he told me, it had already been "a worthwhile week."

"I’m excited that people are talking about polls," he said.

But he wants more. "I want to hear people planning to take actual steps and talking about it on their own," Byer said. "At the end of the day, it’s all about tangible steps because change can begin now."

Byer was in the right place today. He met face to face with a dairy that’s already taking "tangible steps." Like many U.S. dairies, Golden Oaks knows what it’s doing and where it needs to go. It doesn’t need PETA to get in the way.

South Dakota Knows How to Recruit Dairies

Oct 03, 2012

You’ve got to hand it to South Dakota.

Over the last seven years, the Mount Rushmore State has recruited 21 dairies to make the state their place of operation. Most of them are congregating along the I-29 corridor that runs north and south in eastern South Dakota. Among the newcomers is a dairy from my home base of Bakersfield, Calif. That producer, A.J. Bos, has chosen a site near Brookings, S.D., for a brand-new dairy with a 3,500-cow Jersey herd. Bos’ dairy is expected to be up and running by next spring. (He’ll still keep his Bakersfield dairy, I’m glad to hear.)

Today, South Dakota is home to 92,000 milk cows and in need of more milk. It counts nine milk processing plants, including Davisco, Valley Queen Cheese Factory and a brand-new $100 million Bel Brands facility that will launch late next year.

And just last October, it opened the $9.3 million Davis Dairy Plant, a state-of-the-art teaching, research and dairy processing center. South Dakota State University also is actively recruiting nationwide students to its dairy science program.

The state’s recent dairy growth is, in fact, the result of a concerted effort by South Dakota, says Dr. Vikram Mistry, head of the Dairy Science Department at South Dakota State University.

"What has made the difference is the state decided it was going to make it happen," Mistry told me yesterday at World Dairy Expo. "In 1999, when Davisco decided it was going to build its new plant in Lake Norden, S.D., we realized the state would need more cows."

South Dakota got to work. Working through the South Dakota Department of Agriculture and Mistry’s Dairy Science Department, the state began an intensive dairy development plan. Among other things, its recruitment efforts included appearances at places like World Dairy Expo.

"World Dairy Expo is a huge show for us," David Skaggs, dairy development specialist with the South Dakota Department of Agriculture, said yesterday at Expo. "It gets us a lot of exposure, and helps us plant the seed to get people to explore the Upper Midwest. We’re seeing people from the Netherland and Canada looking to re-locate, and they see South Dakota as a viable option."

For many, Skaggs has been the face of South Dakota’s dairy recruitment efforts since he took on the job seven years ago. He knows that successful recruitment is the result of four or five years of relationship-building. He knows what producers are looking for.  And when they – like California’s Bos – choose South Dakota, "it’s a business decision for them," Skaggs said.

They see a state with good feed availability in its hay, corn, soybeans and forages. They see lower transportations costs. They see milk plants that want milk and farmers who want dairy nutrients for their cropland. The cost of farmland along the I-29 corridor ranges from $3,000 to $9,000 per acre, still in the affordable range for many.

A small fly in the ointment might be that, since the first of the year, South Dakota has lost about 8% -- or about 25 herds -- of its licensed dairy farms, likely due to the drought and high feed prices. But that’s not been a loss for the state, since larger dairies probably have absorbed many of those cows.

Perhaps the most important driver for the state’s dairy development efforts is South Dakota Governor Dennis Daugaard. "He is our No. 1 salesman," Skaggs said.

Daugaard has been a key player in South Dakota’s dairy development efforts. He and his team, which includes State Agriculture Secretary Walt Bones, have made the state’s support and easy access to the higher levels of government a reality for interested dairies. Gov. Daugaard’s office has an open-door policy and is only a phone call away, Skaggs told me. The permitting process takes 90 days if a dairy is in the right location.

Daugaard is not there only for the ground-breaking ceremonies. I’ve seen him in California pitching for dairies to consider coming to South Dakota.

And when Bel Brands – maker of the Mini Babybel, The Laughing Cow and Boursin products-- announced its decision to build its third U.S. cheese plant, there was no missing Daugaard’s exultation.

"I am thrilled to welcome Bel Brands to South Dakota," Gov. Dennis Daugaard said in February. "The impact of this project goes beyond the creation of up to 400 jobs. It goes beyond the estimated annual $500 million economic impact once the plant is fully operational. And it goes beyond the opportunity for our dairy operations to expand both capacity and market share. Having an internationally respected company like Bel Brands as our newest corporate citizen tells the world that South Dakota is open and ready for business from anywhere around the globe."

More dairy states need a champion like Daugaard -- and a team like Skaggs, Mistry and Bones -– people who don’t just mouth the words but put them into action.


Is Dairying Worth the Hassle Anymore?

Oct 02, 2012

At least three suicides by dairy producers have occurred this year in California’s Kings County, which adjoins Tulare County and makes up part of the nation’s No. 1 milk-producing region.

Financial stress is not only widespread in California’s San Joaquin Valley but across the U.S. There are reports that some dairies are losing $100,000 per month. Many expect this year’s dairy farm troubles to approach the severity of 2009’s crash-and-burn ordeal. Equity – or what was left of it – is vanishing, leaving many producers with little to show for years of hard work. Congress apparently doesn’t care enough about the industry’s woes, since it couldn’t or wouldn’t pass a farm bill before it recessed a couple of weeks ago.

So, it’s not unreasonable to ask if dairying is worth the hassle anymore.

I posed the question to Charlie de Groot, a third-generation dairy producer from Fresno, Calif., and one of Dairy Today’s 2012 Dollars & Sense columnists. His family operation milks 2,400 cows.

"In the short term, no, dairying is not worth the hassle, but we can’t just close the doors and move on to something else," de Groot told me. "It’s not easy to get in and out of. A majority of dairy operations are family-owned and -operated, and so it isn’t just a job that we can quit. It’s a lifestyle that we’ve invested our time, talents and treasure into." 

That’s a pretty sobering assessment from a man who’s only 33 years old, with a wife and four children.  Makes me want to look for help and hope. Which brings me to where I am today – at World Dairy Expo in Madison, Wis.

World Dairy Expo is the dairy industry’s show of shows. This dairy Disneyland at the Alliant Energy Center brings back the shine to the industry, if only for a few days. From Oct. 2 through Oct. 6, more than 65,000 people from 90 countries will visit Expo. They’ll come for the cattle show judging, award winners, educational seminars, the best in cattle genetics – and so much more.

Some 860 animal health, nutrition, equipment, marketing and dairy service companies will share their best and latest products and services. Millions of dollars have been invested in those companies and on these grounds. In the Madison area alone, the show has an estimated impact of $15 million on the economy. Behind the scenes, there will be more high-stakes meetings than most people would ever guess.

World Dairy Expo reflects the industry’s expertise, technology and commitment. It reveals the incredible focus of driven, intelligent people. It proves the U.S. dairy industry still dazzles, leads and performs.

World Dairy Expo may seem a world removed from the dairy you face every morning in California’s San Joaquin Valley, Idaho’s Magic Valley or the Texas Panhandle. It may be the furthest thing from your mind during that stressful meeting with the lender who’s ready to cut you loose. But maybe there’s something here for you – some thread of an idea, some possible product or service, some person you meet. You might click with an exhibitor who convinces you to take a closer look at doing business in his or her state. Maybe something you find here will restore your belief that dairying is still worth the hassle. 

World Dairy Expo is also a reminder that you’re not in this alone. There are hundreds, perhaps thousands of dairy producers here this week who can share in your thoughts as no one else can. Like you, they’re part of a noble profession and an essential cog in America’s enviable food production system.

Even though Charlie de Groot won’t be here at World Dairy Expo this week, this show is for him – and thousands more who struggle and hope, just as he does.

"My hope is that ultimately dairying is worth the hassle, and that I’m able to see future generations of our family be able to continue this lifelong journey of dairying," de Groot said. "I don’t think our world can survive without dairy products, so I’ll remain optimistic that this industry will rebound and our operations will become profitable again."

Do you agree with de Groot? Email me at cmerlo@farmjournal.com and let me know what you think.

 

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