2013 Innovative Dairy Farmer of the Year: McCarty Farms

McCarty Farms solely supplies Dannon yogurt plant

You could call Clay McCarty a benevolent dairy case stalker. Every time he walks into a grocery store, large or small, he heads directly to the dairy case and makes a beeline for the stacks of yogurt cups. He isn’t looking for odd flavors or new varieties—nor is he a yogurt junkie.

Rather, he’s picking up the Dannon yogurt cups and packs, scanning each for the plant locator code. His quarry: PLT 48.

That’s the code for yogurt produced in Dannon’s Fort Worth, Texas, facility. All of the milk that is used to produce that yogurt comes from McCarty Family Farms’ 7,200 cows in northwest Kansas.
Yep, all of it.

In Europe, Dannon’s parent company, Danone, has long championed its arrangement with dairy farms. "One of their core corporate values is to have a direct relationship with their dairy farmers," McCarty says. "They call it ‘cow to cup.’ They value their dairymen as true business partners."

So since April 2012, the McCartys—parents Tom and Judy and sons Mike, Clay, David and Ken—have been the sole supplier of milk for the Texas plant. Three tankers of condensed milk solids leave Rexford, Kan., each day and make their way 650 miles south to Texas.

The unique arrangement, among many other innovations, has garnered the McCartys the recognition of being named the 2013 Innovative Dairy Farmer of the Year. The award, now in its 15th year, is sponsored annually by the International Dairy Foods Association (IDFA) and Dairy Today magazine.

The family will be honored at Dairy Forum 2013, sponsored by IDFA, in Orlando, Fla., later this month.

McCarty Family Farms received two nominations for the award. The first came from Dale Rodman, Kansas Secretary of Agriculture; the second from The Dannon Company, Inc., itself.

"Tom and Judy McCarty took a risk and moved from rural Pennsylvania to the plains of Kansas in 1999 to give their four sons the opportunity to fulfill their goals to be dairy farmers," Rodman says.

"Thirteen years later, McCarty Family Farms has become an innovative leader in the Kansas dairy industry and a key component in three western Kansas communities, creating steady jobs that are a boost to rural economies," he says.

Adds Michael Neuwirth, senior director of public relations for The Dannon Company: "The vision of the McCartys to find a partner who provides economic stability during volatile swings in pricing is an example of their commitment to innovation and future economic and business planning."

Back at the dairy case. "My wife thinks I’m a little crazy for checking the yogurt aisle every time I go into a grocery store," Clay says. "But when I can go into a store and find a cup of yogurt that is from the milk my family produced, that means something to me."

Last spring, when the first yogurt cups with PLT 48 started showing up in local food stores, Clay’s wife, Kristy, posted a photo on her Facebook page.

"It was amazing how many of her friends read her Facebook post, went to their stores, and posted their own pictures and comments about the yogurt that was produced from milk from our farm," Clay says.

Knowing that the yogurt had originated at McCarty Dairy Farms isn’t just a feel-good, "atta boy" pat on the back. It has transformed the culture on the family’s three dairy farms.

The brothers, Mike, 41, Clay, 39, David, 34, and Ken, 30, say they and their 105 employees realize that with this new level of recognition comes added responsibility. There is now a direct link back to their dairy, for any reason, both good and bad. So they have vowed to continue to be model citizens in terms of milk quality, animal care, environmental stewardship, work environment for employees and community relations.

"We’ve always been driven by cow care and cow comfort. But this new relationship with Dannon has taken that dynamic to a new level," Ken says.

Employees have bought into the concept as well. They, too, realize that they are no longer producing milk as a commodity that disappears into the national milk stream once it leaves the dairy.

They know that now the milk that leaves the McCartys’ dairy can—and does—end up right back in the grocery and convenience stores where they and their neighbors shop. Tom and Judy, who live on the dairy, can reach into their refrigerator and know that the Activia yogurt they eat each morning started its journey in the barns just a few yards away.

The McCartys operate three separate dairies in Kansas: Rexford, with 2,100 cows; Bird City, with 2,700 cows, and Scott City, with 2,300 cows.Their innovation is really twofold:

• A marketing agreement with Dannon to supply all of the milk for the Texas yogurt facility.
• A milk condensing plant built, owned and operated by the McCartys adjacent to the milking parlor at the Rexford dairy.

The marketing agreement is for five years, and is based on cost-of-production (COP) plus a margin. The arrangement is outside of the Federal Milk Marketing Order system.

The Fort Worth plant is a non-pooling plant, which means that it does not have to pay the McCartys the Class II minimum price each month. But the plant also won’t be eligible for pool draws and will have to make up the difference on its own to pay the COP plus margin to the McCartys.

While neither Dannon or the McCartys will share many details of the marketing agreement, they do say it is designed to reduce price volatility for both parties.

The agreement allows the brothers to focus on production efficiency and worry somewhat less about milk price and paying feed bills. "We’re hoping to drive an upward spiral on efficiency," Mike says.

That, in turn, should help them to continue to focus on long-term business decisions rather than lose sleep over meeting the month’s cash flow. In the past, for example, they might have automatically culled a cow producing 50 lb. of milk even though she was 90 days confirmed pregnant. They still might cull her, but they now have a little more breathing room to make that decision—based on her genetics, her past performance and the genetics of the calf she is carrying.

The agreement also allows them to have meaningful conversations with their vendors. In the past, it was always about getting the cheapest price. "Now, we want products that give us the best value and consistency and at a price we can lock in for a longer period," David says. "That’s something new for us and our vendors, and we’re both still feeling our way through this."

The on-farm condensing plant is a first in the nation. The plant produces three 50,000-lb. loads of condensed milk solids and one load of cream from 500,000 lb. of milk. The 17,500-sq.-ft. building’s footprint and many of its components—boilers and chillers—are in place for a doubling of capacity.

Milk from the Rexford dairy is simply pipelined from the milking parlor’s bulk tanks 200' away. Milk
from the Bird City and Scott City dairies is tankered in and unloaded in one of the two drive-through truck bays. Milk from the Bird City dairy is 4 to 8 hours old by the time it arrives at the condensing plant. Milk from the Scott City dairy is 8 to 12 hours old when it arrives at the plant.

"From the farm to Fort Worth, we’re usually talking 36 hours," says Joe Gillespie, the farm’s herd veterinarian turned condensing plant manager. "We go from cow to cup quickly," he says. And that means better yogurt because there’s less hold time, less time for milk solids to warm and less time for milk proteins to denature.

Before entering the plant, the milk is tested in a lab identical to Dannon’s Fort Worth plant. The McCartys have the advantage of knowing exactly what antibiotics to test for because they know what antibiotics they are using on the dairies.

Once milk enters the plant, two-thirds of the water is removed from the milk with steam condensers. Reverse osmosis condensers were also considered in the original plant design, but steam condensing won out since it worked best with Dannon’s yogurt-making process, Mike says.

The 40,000 gal. of reclaimed water from the process can be reused in any number of ways—to operate the condensing facility, as drinking water for cattle or for watering crops. This past summer, with the drought in full throat, the reclaimed water was diverted to the lagoons and used for crop irrigation.

Because the plant is dedicated solely to supplying the Fort Worth plant, its output can be tweaked to meet that facility’s needs. For example, this fall Dannon requested that the plant make a slight change to the viscosity of the condensed solids. "We changed the concentration and tailor-made what they requested," Gillespie says.

It’s also a much more consistent product in terms of quality. Prior to the McCarty deal, Dannon sourced its milk from Dairy Farmers of America. The 10 tankers of raw milk needed each day came from numerous farms with varying management levels and milk quality. All the milk met the required somatic cell count (SCC) level, but it still varied in quality.

Yogurt manufacturers use the Rowland Index, a nitrogen fractionation test that measures the proportion of true protein that is casein.

"Casein as a percentage of true protein will be lower on cows that have had a history of mastitis but currently have what would be considered a low SCC," explains Dave Barbano, a dairy food scientist with Cornell University. "This is because there is some lasting damage to milk quality from previous lactations."

On the pooled milk samples from a year ago, the Rowland Index was 12. This past July, in the heat of summer, the McCartys’ Rowland Index was 18. Higher is better—because it reflects more casein and less true protein degradation, Gillespie says.

"So far, our milk has met or exceeded Dannon’s expectations," he says.

Maintaining that quality is an obsession for the McCartys. "We’ve definitely stepped up our training and the level of training," Mike says.

Employees at all three dairies have completed Dairy Beef Quality Assurance certification. "The McCartys have taken it even one step further," says Kansas Secretary of Agriculture Rodman. "Staff at the Rexford facility has just completed the Validus Certified Responsible Producer certification, an intensive animal welfare training program."

That program was developed and is regularly reviewed by renowned animal welfare expert Temple Grandin. There are less than 25 dairies in the country that have been certified in the program so far. The McCartys’ Bird City and Scott City dairies are currently being evaluated as well.

The brothers realize that working with Dannon in such a public way increases their exposure. "This is a different deal—and the guys out in the barn get it," Mike says.

"What employees do in the parlor at 3 a.m. has to be the same as what they do at 10 a.m. when there are people watching," Clay adds.

"We operate our dairy like 98% of other dairymen across the country. But we can have no slip-ups in milk quality or animal care," he says.

It all comes back to locator code PLT 48. It’s as though Dannon has stamped McCarty Family Farms on every yogurt cup it sells from its Texas plant. In fact, it has.

"We’ve always been driven by cow care and cow comfort. But this new relationship with Dannon has taken that dynamic to a new level," says Ken McCarty.

Kansas Immigrants

What’s so amazing about the McCarty dairy operation in Kansas is that none of it existed 14 years ago.
   
For 85 years, the McCarty family had dairied near Wyalusing, Pa., about 35 miles northwest of Scranton. In the late 1990s, they were milking 200 cows in a tie-stall barn and farming 1,100 acres. But that acreage was cut into 142 fields. "You do the math on the size of our fields—it was less than 10 acres," says Tom McCarty.
   
Logistics and high-priced land, even then, made farm expansion and growth difficult, he says. That’s why he looked west—to Kansas.
   
"At the time, corn silage was $15 a ton and alfalfa wasn’t much more," he says. Milk was still priced very similarly to what it was back East. So in 1999, Tom bought wheat ground where the current Rexford dairy and condensing plant are now sited.

The family began milking 700 cows in 2000. They are now milking 2,100 cows at the site and have their heifer raising operation for 6,000 head there as well.

In 2007, the community of Bird City, Kan., 50 miles northwest, asked the McCartys to build a dairy nearby. Bird City saw what an economic driver the McCartys had been to Rexford—employee housing plus 30 to 40 additional children to the school district—and wanted the same for its community. By 2008, the McCartys were milking 2,700 cows there.

In the spring of 2010, the McCartys started discussions with Dannon to build the milk solids condensing plant at Rexford. They finally got the green light in September 2011, agreeing to have the plant ready to ship its first load on April 1, 2012.

During these discussions, the McCartys were also building a third dairy at Scott City, Kan., 70 miles to the south of Rexford. It began milking in 2011, and now totals 2,300 cows.

Total tally:

• 13 years of expansion.
• 7,200 cows.
• 1,300 acres with more land/feed contracted with local farmers.
• 105 employees.
• Three tanker loads of condensed milk solids and one load of cream sold daily.
   

McCarty Family Farms 15th Recipient

The Innovative Dairy Farmer of the Year Award is co-sponsored annually by the International Dairy Foods Association and Dairy Today magazine. The McCartys will be honored at Dairy Forum 2013, Jan. 27–30, at the JW Marriott Orlando Grande Lakes in Orlando, Fla.
   
The 2012 winner was Sweetwater Valley Dairy Farm, Philadelphia, Tenn. Previous winners were Brubaker Farms, Mount Joy, Pa.; Haubenschild Dairy Farm, Princeton, Minn.; Mason Dixon Farms, Gettysburg, Pa.; Clauss Dairy Farms, Hilmar, Calif.; Baldwin Dairy/Emerald Dairy, Emerald, Wis.; Si-Ellen Farms, Jerome, Idaho; Pagel’s Ponderosa Dairy, Kewaunee, Wis.; C Bar M Dairy, Jerome, Idaho; North Florida Holsteins, Bell, Fla.; KF Dairy of El Centro, Calif; Joseph Gallo Farms of Atwater, Calif.; KBC Farms, Purdy, Mo.; and High Plains Dairy of Friona, Texas.