Stephen D. Maddox Sr., is a third-generation California dairy farmer with a pedigree ranking him and his dairy operation as one of the best of the best. An unselfish leader, Maddox, of Riverdale, Calif., has dedicated many years of his life to serving the dairy industry he loves, while building a strong family business.
When Maddox was appointed to the National Dairy Promotion and Research Board (NDB) in 2007, he was coming off serving on the California Dairies, Inc., board of directors, where he had developed an expertise in export markets. With that experience, he served on NDB’s export committee. By the time his maximum two, three-year NDB terms were up, he served two years as vice chairman and two years as board chairman.
Reflecting on all those years in leadership positions, Maddox sees encouraging trends in the industry, and some disappointments. But, something he didn’t expect was the impact that involvement had on him personally, and on his business back home. As a board member – out of necessity – Maddox had to become a better manager.
“Because of the increased demands for my time, I quickly learned I needed to do a better job of planning and communicating with those back at the dairy farm,” Maddox said. “Traveling and being in meetings forced me to focus on developing my next level of dairy managers. We have all benefited from that process.
“We believe in strict procedures at the dairy from the ground up, and I had to put those procedures in place at management levels,” he said. “Communication was key. My situation (with the board) helped me get my staff thinking more globally. It really enabled us to galvanize the staff. They learned to rely on each other and focused on our priorities.”
From a dairy farmer’s standpoint, Maddox was most excited about the leveraging of producer dollars in partnerships with leaders of different food categories, such as McDonalds, Domino’s Pizza, and the “Fuel Up to Play 60” program in conjunction with the National Football League. Another partnership, with the Innovation Center for U.S. Dairy, involves more than 300 companies contributing time, effort and money to address concerns on safety and other issues effecting the industry.
“All this led to enhancing consumer confidence and nutrition, and in the way our milk is produced,” Maddox said.
One of the more challenging categories for dairy remains long-term declining fluid milk sales. Partnering with Quaker Oats on their “make it with milk” initiative was very good for the dairy industry, Maddox contends, making it one of the first “successes” of the fluid milk initiative.
“Dairy Management Inc. (DMI), Quaker Oats and Safeway launched programs, and milk sales jumped 5% to 10%,” Maddox said. “Unfortunately I went off the board before they came back with how much was residual – after the special sales program. But that gives you hope for reminding people of the benefits of milk.”
Fluid milk priority
Maddox cited the fluid milk initiative as probably “the most challenging project” DMI has ever undertaken. “They are taking a shotgun approach, seeing what hits the target and resonates with consumers, and then follow up,” he said.
“We didn’t get into this mess (poor fluid milk sales) overnight, and we’re not going to fix it overnight,” he said. ”The industry has changed, the bottling industry has changed, and the consumers have changed. We have to sell them in the way they want it to fulfill their changing needs, and we haven’t been doing that.”
Fluid milk also represents one of Maddox’s disappointments: It was a challenge finding enough partners willing to co-invest or even make an effort to resurrect that category.
“It’s not a big deal for a California, Idaho, Wisconsin and Upper Midwest dairy producer, because it’s such a small part of our milk checks,” he said. “But for certain areas, the fluid milk component is a huge part of the milk price.
“I was discouraged,” he admitted. “Over the years we basically made fluid milk into a commodity. In doing so, it also made it into a commodity for the bottlers.
“You have generational situations on the farm,” Maddox continued. “And, we have a multi-generational situation at the bottling plants of narrow margins, undercutting one another, leaving no room for innovation; no research and development (R & D). That’s the only category of milk sales that really hasn’t had a lot of R & D, and innovation suffers in that kind of market. It has suffered over last 20-30 years.”
“We need to go back to whole milk,” he said. “Grandpa and Grandma didn’t have it all wrong. We have so much and plenty to eat. But Grandma always had us drink some milk before we went to bed at night, because when she was growing up, sometimes there wasn’t enough food to cover the plate. That whole milk filled their stomachs and made them sleep better. As we got into this low-fat thing, you don’t have the fullness that whole milk provides.”
Not going back
When DMI went looking for industry ideas to address fluid milk challenges, proposals were disappointing, continuing the “cheaper-is-better” mindset.
“Some were going back to cardboard, gabled cartons,” he said. “As my son likes to say, ‘we want to progress, not regress.’ The reason they gave was they thought they could pick up market share from the competitor. Well, the NDB doesn’t want to cannibalize other sales. We want to grow sales. Obviously, we didn’t partner up with the people who were going in that direction.
“The deeper you get into the fluid milk issue, the worse it seems to get,” Maddox said. “The dairymen are willing to do what it takes, and we’ve put a lot of money into advertising milk. There’s more fluid milk advertising in California than anywhere in the United States, and the per-capita consumption on fluid milk sales were dropping faster here than anywhere else.”
“We have more competition here than anywhere else,” Maddox said. “Tom Gallagher (DMI president and CEO) recognized it, and others recognized it coast-to-coast. A lot of folks thought we just needed to advertise. We had this model here that didn’t work, even though a lot of those advertisements were award-winning efforts. They sold milk, but not enough to offset this competitive trend.”
Another trend detrimental to fluid milk sales is people are not eating breakfast at home.
“Thank goodness for the school breakfast program,” he said. “But, only 20% of schools nationwide provide breakfast. That’s why the breakfast initiatives are so important. It also helps the kids do better in school.”
The next generation
The challenges of fluid milk are an issue the next generation must address – just like the challenges of dairy farming.
Like most family dairy operations handed down from one generation to the next, Maddox learned the business from his father, the late Doug Maddox, who learned it from his father, Rufus Maddox. Steve is now doing the same with his son, Stephen D. Maddox, Jr.
While he jokes that he is still trying to teach his son patience, he has seen him take on more responsibilities.
“We talk through our business plans for different areas of the operation,” Maddox said. “Where do we go from here? What are some of our annual goals, and what long-term goals should be priorities?
“We still have family estate things we’re dealing with, but after the last five or six years, we want to make sure we stay bankable going forward,” he continued. “Despite the good times right now, the sun won’t always shine, so we are paying down debt and doing capital improvements, particularly the ones that will have a quick payback.”
Those improvements included updating animal cooling systems and replacing worn-out stanchions. They’re looking at updating their milk barn with a rotary or carousel, and may be considering some robotics in the process.
A tradition of innovation
Maddox Dairy was recently honored with a U.S. Dairy Sustainability Award from the Innovation Center for U.S. Dairy. The operation has been at the forefront of innovative cow management practices, and Maddox was one of the first to feed cottonseed and total mixed rations. RuAnn Dairy has hosted multiple university calf studies, and was one of original dairies to implement pre-dipping practices.
As award recipients, innovative practices cited:
• a 5-acre, 1-megawatt solar project completed in 2012, which handles about 80% of the Maddox Dairy’s power needs. It represents a 95.6% reduction in carbon-intensive grid power from a renewable source.
• the recent addition of a dual-fuel retrofit system, using 50% propane and 50% diesel fuel, reducing
fuel costs by 25% and diesel consumption by 50%. The system is estimated to save them $25,000 annually, not including labor or equipment operation and maintenance, which will result in even greater savings.
• the addition of high-efficiency, variable-speed pumps and mixing boxes to blend irrigation water with manure water, using gravity instead of mechanical blending. This innovation allowed for greater efficiency irrigation, both in time and uniform distribution, and with fewer pumps.
Through early adoption of technologies, the Maddox family has “moved the needle” in terms of improved animal care, dairy sustainability and overall environmental health – all while also ensuring financial stability for future generations.
Stephen D. Maddox, Jr., is good with that direction, and knows he has a storied tradition of innovation to live up to.
About the author: Ron Goble is a longtime ag writer and owner of Ron Goble & Associates/Goble Communications in Visalia, Calif.