BUSINESS

From Constraints to Catalysts: How Ag Leaders Turn Hardships into Strategy

Thu, 02 Apr 2026 18:19:04 GMT

In an industry defined by “one-year-at-a-time” cycles, the greatest threat to a growing operation isn’t just a market downturn—it’s the inertia that comes with size. Farm Journal CEO Prescott Shibles argues that long-term survival requires a rare blend of faith and agility. To maintain an entrepreneurial mindset, leaders must lean into “conviction” as the core of a strategy that survives the lows.

Here is how four industry leaders are turning today’s constraints into tomorrow’s differentiators.

1. Build when times are hard.

When Brent Smith, president and CEO of NewLeaf Symbiotics, joined the company in 2023, the grain market was entering a significant down cycle. While some saw a risky time to lead a startup, he saw an opportunity.

“I learned in my first startup that the best time to build a business is in hard times,” Smith said said during a discussion at Top Producer Summit. “Because if you can’t withstand tough times, you’re not going to survive long term.”

For Smith, survival meant doubling down on the company’s core: science. Despite the pressure to cut costs, NewLeaf continues to spend half of its operating expenses on science.

“It would be very easy to peel that back,” he admits. “But we focused on projects that make the most impact the quickest, while keeping an eye on the long-term innovation in our pipeline.”

2. Control what you can control.

Farmers face the ultimate constraint every year: the weather. Scott Beck, president of Beck’s Hybrids, recalls the planting crisis of 2019 when constant rains kept tractors out of the fields well into May.

“I was concerned for our customers not being able to plant, but also for us not being able to plant our seed for the next year,” Beck says. “There was nothing that we could do to control the weather, but we could control how we interacted with our customers.”

Rather than retreating, the Beck’s team focused on transparency and empathy, using video series to connect with farmers and even forming small groups for prayer and support. Ultimately, they wanted farmers to know they cared and were there to support them however they could.

Despite the financial reality of what could happen if farmers didn’t plant and returned seed, Beck’s decided their course of action would not include employee layoffs. Instead, they prepared to sell land to protect their people.

“Fortunately, the weather broke and everybody was able to get planted,” he says. “Then the second miracle happened. We had the second warmest September on record, and that’s what brought the crop through to enable 2019 to not turn out as bad as it started.”

3. Turn disadvantages into advantages.

In 2014, Lamar Steiger, owner of The 808 Ranch, was tasked with a monumental challenge: helping Walmart reinvent its beef supply chain. At the time, the retail giant was at a disadvantage, forced to accept whatever the major meatpackers provided.

Steiger’s strategy was to turn that lack of control into a new kind of independence.

“I convinced the Walmart team to go around the traditional supply chain,” Steiger says. Today, Walmart sources 28% of its beef from its own “farm-to-table” supply chain.

There’s no question that decision was really good for Walmart. But Steiger says it was also really good for him personally.

“It reminded me that no matter how big you are, there are always challenges,” he says.

4. Create “white space” for the future.

When the day-to-day tasks of an operation become overwhelming, long-term strategy is often the first thing to go. James Burgum, CEO of The Arthur Companies, believes leaders must intentionally carve out “white space” for their teams.

“It’s important to find ways where people can actually spend their time working on the business, not just in the business,” he says.

By protecting time for team members to execute ideas that are three to five years out, Burgum manages the tension between short-term urgency and long-term viability.

“It’s hard to step away from the daily fires you’ll face in your operation, but it’s important,” he adds. “How we manage that tension of short term and long term is creating that white space and making sure that we consciously work on the business.

The Long Game

Ultimately, resilience in agriculture is about knowing when to push and when to pivot.

“You have to know when to put the gas down, and you need to know when to tap the brake,” Smith says. “And regardless of what you are doing, you need to stay focused on what you’re doing.”

Whether it is investing in science during a downturn or choosing customer empathy over the bottom line, these leaders say constraints don’t have to be roadblocks; they can be the very catalysts that drive an operation forward.

Fake Farmer Steals $8.75M In Green Energy Scam

Wed, 08 Jan 2025 21:27:19 GMT

Wearing a saccharine grin, Ray Brewer swished fat fingers through a bucket of fertilizer pellets and rattled out the mating call of a con man—the sweet sound of money. In droves, the faithful dumped $8.75 million into his agricultural skin game.

Nestled in a basement chop shop beneath the glamor of an infinity pool and a house in the hills, Brewer bilked investors and farmers from 2014-2019, based entirely on cow manure and the lure of biogas, renewable energy, and tax incentives.

Most agriculture crimes are coated in a veneer of reality—enough truth to hide the rot. Not so with silver-tongued Brewer. His scam was a total lie.

He understood the rules of a modern ag heist: Nothing so green as a green energy con.

The Man From Nowhere
In a single day, a dairy cow can expel close to 100- plus lb. of waste. The U.S. leader at roughly $9.7 billion in annual milk sales, California is home to the nation’s largest dairy herd: 1.7 million defecating milk cows.

In 2014, Ray Holcomb Brewer, 57, navigated California’s Central Valley agriculture as a commanding, highly intelligent, and persuasive predator. At 6’ and 300 lb., balding and silver-mustached, Brewer presented himself as an engineer with knowledge of each nut and bolt, along with every profitability angle, of anaerobic digesters—alchemy machines that churn turds into money.

He made the rounds of dairy industry events, conferences, and equipment tradeshows, showing leg to potential investors via construction or operation of a whopping 12 anaerobic digesters ( 129 digesters are currently functioning statewide) in Fresno, Kern, Kings, and Tulare counties, and a lone digester in Idaho. As the CEO of CH4 Power, headquartered in Tulare, Brewer promised investors returns in less than two years, generated from 66% of methane gas sales, carbon offsets, fertilizer, and tax breaks—all derived from his dairy digesters.

Brewer paved his scam with fake digester construction photos.

(Photo by DOJ)

In truth, despite Brewer’s peacocking, he had no digesters under construction; no functioning digesters cooking manure; no byproducts; and no farmland. Nuffin.

Brewer’s track record was blank, says Henry Carbajal, assistant U.S. attorney for the Eastern District of California and Unit Chief for White-Collar Crime. “It was almost like he popped out of the blue. Prior to the early 2000s, we still don’t know where he came from. We believe he had a background in the agriculture industry, but it was very difficult to find records beforehand.”

“The evidence we uncovered shows he worked as a consultant or had a digester-related role, but we don’t know where,” Carbajal says. “That was in the early 2000s, but again, before that he is somewhat of an unknown.”

Joseph Barton, assistant U.S. attorney under Carbajal, says Brewer mastered the lexicon of the agriculture industry. “He created entirely fake power generation reports which were extremely complicated and detailed. He’d send the reports to investors and say, ‘Look how much power my digesters are generating.’ Where did he learn to prepare those? We don’t know.”

“This was not someone who decided overnight to execute a fraud,” Barton adds. “Brewer was a guy with a past in something agriculture related.”

Indeed. The man from nowhere knew precisely how to build a Ponzi on farmland.

Ray’s Magical Beans
Brewer hung a shingle in Tulare. His company, CH4 Power, occupied an executive suite in an office park, manned by less than 10 employees. Purposely, Brewer hired agriculture newbies unfamiliar with livestock or farms. “We don’t believe any of them knew what was going on,” Barton explains. “The people working for him thought he was running a legitimate business.”

As always with Brewer, nothing was real, including fake construction schedules for nonexistent digesters.

(Photo by DOJ)

And business, Brewer asserted, was building a better mousetrap. He didn’t claim to invent breakthrough digester technology. Rather, he insisted, his innovation was streamlining the overall digester process with superior knowledge in mechanics, land approval, environmental regs, code compliance, timeline, local authorities, farmer connections, and permitting process: I am the engineer and I know.

As described in a federal 2019 indictment: “Defendant Brewer purported to have developed an anaerobic digester that would help dairies meet or exceed greenhouse gas emission standards and generate up to ten times the amount of energy that the dairies used, which would create reliable revenue streams for years to come.”

He sought big-city investors (domestic and foreign) eager to catch the carbon wave, but ignorant about agriculture, and wooed them via marketing materials, power generation reports, digester photos, and signed buyer contracts. As a cherry on top, Brewer promised a green energy tax incentive if payment was made before the calendar year ended. The investors, on Brewer’s word, anticipated the immediate tax money bump, followed by booming returns upon digester completion the following year.

To build his bonafides, Brewer signed several lease agreements with Central Valley dairies, falsely promising to build digesters. Simultaneously, he forged lease agreements with other dairies, backed by fake farmer signatures. Brewer then used the growing pile of counterfeit documents to deceive investors. All the while, he never began construction on a single digester.

Fancy house, smooth driveway, and loads of furniture: The money all filtered to Brewer’s pocket.

(Photo by DOJ)

Whenever investors visited on-site in Tulare to eyeball completed digesters or units under construction, Brewer took them to a genuine, functioning digester and feigned ownership, or carried clients to a farm (that he didn’t own) and claimed that digester construction was imminent.

“With the ties he had in the agriculture industry, he got access to a real digester,” Barton says. “It wasn’t his, but he passed it off as his. These were machines that had to be managed, but ran by themselves for extended periods of time, so Brewer would take his tours there at the right time and there wouldn’t be hardly anyone around.”

Adding layers to the cake, Brewer kept buckets of digester-produced, no-scent fertilizer pellets in his Tulare office, gleefully showing the contents to curious investors as tangible proof of amazing returns, i.e., Ray and his magical farm beans.

“It was such a compelling prop,” Barton notes. “He had pails of pellets to give to investors. He’d say, ‘We’re so successful that even our byproducts are selling and I’ve got contracts I can show you right here. A win-win.’”

Capping off the tours, Brewer wined and dined visitors roughly 120 miles north of Los Angeles at his fine residence in the hills, a 3,700 sq ft home on 10 acres purchased with seed money from his initial investors, complete with infinity pool and the new shine of several Dodge Ram trucks parked in the driveway, along with ATVs aplenty.

Money, honey. The manure Ponzi climbed higher and higher. If, and when, the base began creaking, Brewer would take his millions and run.

$100 Million Flex
The levers of fraud were pulled in an office basement at Brewer’s home—a chop shop.

Hunched over a desk, Brewer forged financial records, power generation reports, invoices, REC certificates, construction schedules, and permitting documents, keeping unsigned templates at the ready for repeated use. He also manipulated photographs, according to the subsequent federal indictment: Defendant Brewer obtained stock photographs of anaerobic digesters that were under construction that he did not own or control and had no involvement in building. Defendant Brewer then sent the photographs, sometimes after causing alterations to be made to the photographs, to different investors at various times to show them progress on different purported digesters when there had not been any construction.

Fake license of Ray “Lenair” Brewer, purported military hero and international businessman.

(Photo by DOJ)

Each time Brewer received new investor money, he opened a corresponding bank account, and then slid the money into sub-accounts with deceptive titles (Interconnection Engineering; Interconnection Permit; Water Board Fees) seemingly related to digester construction. He then blew the funds on personal items, while maintaining forged invoices as proof the money was spent on digester materials.
As dollars poured in, Brewer partied.

According to investigators, every penny of the Ponzi traced to personal expenditure: RVs, trucks, Harley-Davidsons, scores of guns, property, and more personal assets. He spent zero on construction material.

Beyond U.S. agriculture, Brewer managed to pull in big money from foreign investors.

(Photo by DOJ)

“The dedication and detail to money laundering is almost unique to Brewer,” Carbajal says. “You just don’t see it often in these cases because it takes heavy forethought and planning.”

Brewer’s wire transfers composed a steady chain of theft across 2016-2018, ranging from $14,900 to $5,000,000. As the money flowed, Brewer made a $100-million flex: He faked a letter from Rabobank backing a $100-million loan to build anaerobic digesters.

“I think he was having a good time,” Barton says. “It was as if he’d gotten his Series A startup going with several million dollars, and now it was time for Series B. The fake $100 million letter was a broadcast to investors that a real financial institution was backing it all up. With a number so big, investors assumed everything must have been vetted. Therefore, this had to be the real McCoy.”

“But it was a lie; the letter was altered by Brewer,” Barton continues. “In the genuine letter, the bank stated it was not committed to lending money until due diligence was performed. Investors never saw the genuine letter.”

In classic Ponzi mathematics, Brewer kept his early CH4 Power investors smiling by providing them with small payments gleaned from subsequent investors.

However, as the months rolled by, he ran short of Peters to pay Pauls. Irate investors, sick of Brewer’s promises, began filing lawsuits.

One step ahead of tar and feathers, it was time for Brewer to bounce. The natives were restless.

Grifters Gonna Grift
Arkansas and Nevada were Brewer’s ticket out of California. With a stolen Social Security number plucked from a dead man in Arkansas (first used by Brewer at least as far back as 2003), and a bogus “Ray Lenair Brewer” Nevada driver’s license, he moved 1,100 miles northeast to Sheridan, Montana, and switched his remaining assets to his wife’s name.

Brewer may have separated his scams from pillow talk. “He was married, but his wife later claimed she never knew he was doing anything illegal—and based on the evidence, we believed her,” Barton says. “When we talked to victims, they had met his wife, but they said that during business talks, she wasn’t around or referenced.”

In southwest Montana, Brewer hit the ground running in a blur of skullduggery: He bought a 12-acre property in Madison County, obtained a $118,000 COVID Paycheck Protection Program in the name of defunct CH4 Power, started another digester company—Mesa Renewable Energy, and quickly scalped his first victim of $90,000 by masquerading as a custom storage shed builder.

Grifters gonna grift.

However, Brewer finally reaped the whirlwind of his prior scheme. His power generation reports from the ghost digester in Idaho, sent to a nonprofit for certification of carbon offset credits, had generated an audit. The result? A blank, i.e., the Idaho digester didn’t exist. A federal investigation opened as the dominoes fell, and Brewer popped into the crosshairs of two bulldog U.S. attorneys—Carbajal and Barton.

According to indictment records, Brewer was a major Dodge Ram fan and repeat customer.

(Photo by DOJ)

Arrested by Madison County sheriff’s deputies in November 2020, Brewer maintained flimflam form in custody, insisting his identity was “Ray Lenair Brewer,” and not “Ray Holcomb Brewer.”
When the ID switcheroo failed to gain traction, Brewer spat out stolen valor.

Hoping to gain sympathy, he told deputies he was a Navy veteran who had once saved several members of a flight crew on the deck of an aircraft carrier. After an incoming jet caught fire during a rough landing, Brewer suffered burns while shielding the crew from flames, according to his fabrication. (Significantly, Brewer floated the identical war story to several digester investors.)

“Not true,” Barton says. “Complete lie. It wasn’t true for any of his identities. He never served in the Navy or any other branch of the military.”

“In our experience, most Ponzi schemers finally give it up when they’re caught solid,” Carbajal adds. “Not Brewer. It was doubling and tripling down. He tried to get out of anything and everything to the end.”

Sent back to California for trial, Brewer was nailed to the wall when Carbajal and Barton exposed the paper trail. Brewer, 66, pleaded guilty to wire fraud, money laundering, and identity theft charges—yet lied to the end.

Brewer, the man from nowhere, stole almost $9M based on biogas, renewable energy, and tax incentives.

(Photo by Madison County Sheriff’s Office)

At sentencing in June 2023, he arrived in a wheelchair with a final tale to spin. During his detention at Fresno County Jail, a nurse had been attacked by inmates. Brewer played on the incident in open court by telling the judge he had jumped into the assault and saved the nurse from further injury, resulting in knee damage to himself and the necessity of a wheelchair.

Barton sets the record straight: “He lied—again. Brewer had hurt his knee previously in a motorcycle accident on one of the Harley-Davidson motorcycles he bought with stolen investor money.”

Brewer, federal inmate #14502-097, received six years and nine months in prison and was ordered to pay $8.75 million in restitution.

Green Web
At the peak of his Ponzi power in December 2016, while raking in millions, Brewer spoke to the Visalia Times-Delta about the failure of past digester models, and told a telltale lie: “In our world, we’re the guys that come in with the fund. All the dairymen have to do is collect the money.”

It was one more gross falsehood in a green web of fiction: “It was all fake,” Barton says. “There were no contracts, no digesters, no end customers, and no farmland. There was nothing but the investors.”

For more from Chris Bennett (@ChrisBennettMS or cbennett@farmjournal.com or 662-592-1106), see:

Corn and Cocaine: Roger Reaves and the Most Incredible Farm Story Never Told

Cottonmouth Farmer: The Insane Tale of a Buck-Wild Scheme to Corner the Snake Venom Market

Bagging the Tomato King: The Insane Hunt for Agriculture’s Wildest Con Man

Ghost in the House: A Forgotten American Farming Tragedy

Priceless Pistol Found After Decades Lost in Farmhouse Attic

Bizarre Mystery of Mummified Coon Dog Solved After 40 Years

American Gothic: Farm Couple Nailed In Massive $9M Crop Insurance Fraud

Evil Grain: The Wild Tale of History’s Biggest Crop Insurance Scam

Fleecing the Farm: How a Fake Crop Fueled a Bizarre $25 Million Ag Scam

The Arrowhead Whisperer: Stunning Indian Artifact Collection Found on Farmland

Skeleton In the Walls: Mysterious Arkansas Farmhouse Hides Civil War History

Farm Business Resolutions for 2025

Thu, 26 Dec 2024 19:38:00 GMT

We asked past Top Producer award winners to share what’s new for them in the coming year. Here are some of the responses they shared with us:

(Top Producer)

"2025 is the year of artificial intelligence (AI) for Carroll Farms. It’s a top-down push for training and implementation. The ability of AI to automate processes, write contracts, prepare reports, perform HR functions, and analyze data is stunning. I think the world could look dramatically different in five years as AI moves into all areas of our lives and businesses. “
~John Carroll

“This year is about going back to the basics like when I first started farming in 2015 in the last margin squeeze. I’m giving my personal family living budget a solid look, diving headfirst into the farm cash flow, developing a marketing strategy, and sticking to it. We’re replacing the tropical vacation with a staycation to do projects around the homeplace to eliminate some repair and maintenance bills. And for the fitness center I own and operate after all the updates and changes made this summer, I am going to let it operate for a year before any other drastic things are done. The only thing new thing I am trying is adding my significant other to my health insurance policy.”

~Maggie Holub

(Top Producer)

“I have sat down with my last two years of profit/loss (P/L) statement and “scrubbed” every line item. I asked where/what are the reductions or cuts that could be made. Then, I made a list of any/all line items that need to be looked at more in depth. I then am looking into these expenses one by one to understand if it is a merited expense or an “extra” that can be reduced. If it doesn’t provide a defined ROI, it is definitely out!
Cash rents that do not have a flex bonus have been negotiated and (thankfully) reduced appropriately. This is a reflection of a continual dialog year around about their farm and all-encompassing topics like profitability.

We have a continuous dialogue throughout the year with our lender(s) as to how we are doing business. Sharing these things listed above really helps the relationship and their confidence in our operation.”

~Dave Nelson

“I’m trying four new and/or different things for 2025.

Beef: We are moving to a fall calving schedule for our beef cattle. We have typically had spring and early summer calves. We are shifting to this schedule so that we can AI more efficiently and have better management of the schedule.

Labor: We are shifting our mindset on labor. We are re-evaluating how to structure part-time and seasonal workers to be most beneficial to both parties. We want the employee to receive maximum benefit for their time and talents as well as running our operation as efficiently as possible.

Advocacy: I am putting more focus on our media and promotion of agriculture and our farm operation. It has been somewhat of a passive project. I am working on making it deliberate and intentional this year. Promoting agriculture and educating the public is a great passion of mine.

Marketing Diversity: We are exploring new ways to connect with customers locally with the ear corn and freezer beef businesses. We continue to load containers for export and are looking at future marketing diversity in that entity as well.”

~Marcia Ruff

(Top Producer)

“At Splitter Farms, we are looking at 2025 as a reset year and getting back to firm foundations. We’re planning to focus on employee retention and development as well as improved landlord relationships, including consistent communication with them throughout the entire year. We are also scheduling in time for data analysis; we do a great job of data collection and we’d like to make analysis a priority again.”
~Matt and Janna Splitter

Read even more farmer New Years’ resolutions here.

Generation to Generation: Essential Advice from Producers on Bringing Back the Next Generation

Mon, 05 Aug 2024 14:34:46 GMT

In the past, passing down a farm from one generation to the next often happened without much conversation. It was a silent expectation, with many farms simply expanding by adding lean-tos or another barn, along with more milk cows to support the growing family. However, today the formula requires robust conversation and strategic planning to financially integrate another family member into the business. Two farmers from opposite ends of the country share their stories of succession and offer advice to the next generation of producers.

From Potatoes to Dairy
From an early age, a deep love of agriculture was sparked by machinery intrigued Paxton Robinson, a dairy farmer from Oakley, Idaho.

“I’ve always felt like if you had a terrible day, you could still find something that went right living and working on a farm,” Paxton, who represents the sixth generation of farmers and second generation of dairy in his family, says. More than two decades ago, the Robinson family made the life-changing decision to build a dairy. This decision was significantly influenced by the interest and passion shown by two of their sons, Nick and Paxton, in returning to the family farm. The shift from a potato-centric operation to dairy farming didn’t happen overnight; it was a gradual transition aimed at strategically utilizing their acres to grow feed for their cows.

“As we were phasing out, we were growing 1,000 acres of potatoes,” Paxton explains. “You cannot buy feed in our area, or it comes at an extreme cost as we are competing with so many other industries—potato and sugar beets especially, and some very large dairies,” he says.

Acme Dairy in Idaho

(Maggie Malson)

Today, the Robinson’s entire 5,000-acre crop production now serves to feed their herd of approximately 6,000 milk cows, which extends to 11,000 when factoring in young stock and dry cows.

Transition and Challenges
The family’s transition from potato farming to dairy farming came primarily out of necessity. As agricultural markets fluctuated, the Robinsons saw an opportunity to adapt and diversify their operations. Growing feed for their cows on their land allowed them to control costs and ensure the quality of the feed, which is crucial in maintaining a healthy herd.

“Competing with other major agriculture sectors for feed can be incredibly costly and hard to secure,” Paxton explains, noting that growing their own feed was a more sustainable and cost-effective solution, aligning with their long-term vision for their farm.

Today, the Robinson’s dairy is completely integrated, as the family co-owns High Desert Milk, a processing plant, with three other dairy producers. Built in 2008, this plant processes milk into powdered milk, butter, and recently, cream cheese.

While Paxton knew early on that farming was what he wanted to do, his parents encouraged him to further his education and after graduating from Utah State with an ag business degree he came back to the dairy. Today, he owns and operates the dairy with his older brother, Nick, and their father, Randy. Paxton manages the farm, employees, and equipment, while Nick focuses on the milking herd and feed procurement. This division of labor highlights the significance of both practical and operational knowledge to ensure the farm functions optimally.

“In the last 24 years, we’ve grown from milking 1,500-plus cows to 6,000 head,” he shares, noting the fast-paced adoption to growth.

No Sugarcoating
Paxton says he loves going home knowing that he got a lot done and can see the fruits of his labor. Although, he won’t sugarcoat that owning and operating a dairy isn’t for the faint of hearts.

“You have to be progressive and be super motivated to really make it,” he says, sharing that it is hard to teach motivation. “You must be born with a desire to be successful. A lot of these younger generations come back thinking they are going to be the boss. That is not really how it goes. They need to come back and start from the bottom and work their way to the top. Truthfully, it is hard enough to find good employees, I would say it is even harder to find people in the industry that have kids that want to come back and are truly willing to work hard.”

Paxton says that this especially holds true in larger operations, and it is hard to find someone who is willing to get their hands dirty.

“They must be able to get their boots dirty,” he says. “If you want to be respected by the employees, you must be willing to work alongside them.”

Nick came back to the family operation right after college to run the newly built dairy. He had experience working in construction. There are also two other brothers that did not have an interest in the family business, and they went and did other things.

“For us, to transition the dairy from my father to me and Nick was kind of easy because we had interest from the get-go,” Paxton says, sharing that both he and Nick have children and so the conversation for the next generation to come back will include the same motto: get some kind of education or training and work for someone else first and the same opportunity to work on the family farm can be there.

“My brother’s oldest boy is 21 and this summer he is learning manual labor,” Paxton shares. “This way he can make a conscientious decision about coming back to the operation. We are not going to raise lazy kids. We already have enough issues; we don’t need to entice laziness.”

Working for someone else first is essential, Paxton says, even if it’s just a summer internship.

“To be a good boss you have to have been bossed,” he says. “You have to be able to take orders and to be criticized so that you’ll know how to be in that role someday.”

Paxton doesn’t sugarcoat the difficulty of being a dairy farmer – and that message is clearly communicated to the next generation.

“I want the next generation to know that a lot of days can be mentally hard,” he says. “And, the reason you come back isn’t because ‘it’s the easy route,’ it’s because you have to really have a passion for what you do.”

Reflecting on Generational Opportunities
Head east, and you’ll find Pennsylvania dairy farmer, Luke Brubaker, the 2014 Top Producer award winner who works alongside two of his sons and one grandson. Brubaker shares that he and his family have been blessed with opportunities and says their success is not completely built off of good fortune, as they have faced many challenges. This includes a barn fire that completely destroyed their 1,200-head hog unit in 1999. Although, this setback forced Brubaker and his sons to focus on the dairy and make it a true profit center.

The Mt. Joy, Pa., farmer shares their succession plan early on wasn’t the most efficient. He recalls adding lean-tos to his barn and making room for additions to accommodate additional cattle.

“I didn’t’ realize it at the time, but I was actually becoming more inefficient. We were at a point where we couldn’t keep doing what we were doing; we needed to stop or grow and modernize,” the seasoned farmer admits.

The Modern Brubaker Operation
Fast forwarded to today, and the Brubaker family’s dairy operation is a modern sight. The family now milks 1,400 head of cattle, farms thousand acres plus, along with two poultry barns which is a testament to their willingness to embrace change and innovation. Their journey to this point stemmed from their ability to continually evolve to meet the challenges of modern agriculture while seizing opportunities for growth.

Brubaker family’s dairy

(Brubaker Farm)

Luke Brubaker’s smile widens when he talks about his sons, Mike and Tony, who came back to the family’s Pennsylvania dairy operation when they finished college in the mid-90’s. Despite both having promising careers ahead of them, both chose to return to their roots and continue the farming legacy. With open minds and hearts, their decision ushered in a new era on the family farm.

Tony says his parents embraced change and brought a very positive, can-do attitude to the farm.

“Even if it meant leveraging their equity to expand our future,” Tony explains. “They were smart risk takers, as dad was fairly aggressive on running and growing land base.”

This decision to carry on the family legacy exemplifies the family’s values of allowing each member to find their path while ensuring they are well-prepared for the responsibilities ahead.

The farm business transition didn’t happen overnight, but a lot of open communication unfolded and in 2014, they changed their business structure to an LLC and generated a flexible business model that not only allowed Tony and Mike to become owners, but kept an open mind for the next generation, too.

“Really, estate plan and transition plan need to work simultaneously,” Tony says.

Listening to the Younger Generation
Soon after the boys came back, Brubaker listened to his sons’ ambition to double their herd size to 400 head. The herd quickly grew, and the family purchased a neighboring dairy farm a decade ago and built a second milking parlor to accommodate for the growth.

Brubaker says transferring the farm to his sons was the best thing he could have done.

“They took to it right away,” he says. “They followed our family’s passion for farming.”

Although before the transfer of ownership and when his sons decided they wanted to come back and work on the farm, Brubaker emphasized the importance of ensuring it was the right move for them.

“So, between college summers, I told them if they were going to come back to the farm, then they had to do everything from breeding the cows to tractor work to cow management to feeding cows,” he says. “They needed to know what they were getting into. And, they have been such an asset to the farm.”

In 2020, Brubaker’s grandson, Josh graduated from Penn State and bought into the family farm as a 20% co-owner. Brubaker couldn’t have been prouder to have another generation following in his footsteps but says it’s crucial to have a passion for whatever they want to do in life.

“That is where success lies, and we have been blessed. God has blessed my family with many opportunities to buy additional farms and to do this together,” he says. “There was never a time that we couldn’t work out a disagreement. We have fun working together.”

Brubaker also notes that a significant element of their success is his sons’ willingness to take risks and their exceptional communication skills.

“It is key to keep moving ahead and pray for wisdom to stay ahead of it all,” he says. “We have great employees, and it is important to work with people who are smarter than us to stay ahead of the game,” he says.

When it comes to passing on advice to others who have a next generation interested in the family farm, Brubaker encourages to have the conversation sooner rather than later.

“Make decisions and preparations for the rest of your family as soon as you can. You can’t push this conversation because it is uncomfortable off for another day,” he says, sharing that financial advisors are essential to help figure out how it all fits together.

The journey into the future of agriculture is seldom straightforward. Both family dairies share that transparent communication, meticulous planning and a deep passion for agriculture are not only cornerstones to their success, but also inspire the next generation to follow in their footsteps.

California Lawmaker Proposes Reversal on Overtime to Farm Workers

Wed, 20 Mar 2024 21:25:14 GMT

Labor concerns continue to unravel on farms across the U.S. From rising minimum wages to labor availability, to overtime laws being introduced across more and more states, labor has been a top concern for dairy farmers, as it is one of their top expenses.

Recently Assemblyman James Gallagher (R-Yuba City) proposed a bill to pull back current overtime rules and mandate overtime for farmworkers working more than nine hours in a day or 50 hours in a week. Gallagher argues that the 2016 law did not account for the “realities” of the agriculture industry and is hurting both farmers and their employees.

“Let’s put a pause on this law and relook at what would be a better way to ensure that we are benefiting farm workers and also the family farms that provide food for the world and provide jobs in agriculture,” Gallagher says.

California began phasing in overtime for agricultural workers in 2019. In 2022, the Golden State began requiring that any ag employees working more than 8 hours a day or more than 40 hours a week receive overtime compensation.

“Our minimum wage is $15, and we’ve got employees that are saying, ‘Hey, I’ve got to make more money,’” California dairy producer, Melvin Medeiros in Layton says.

The California dairy producer says the quality of labor is tough and he doesn’t have a magic wand to fix it.

“I do know when legislation gets involved, it turns it into a mess. We’re in that mess now and trying to figure it out and how do we invest in this farm to make it more efficient and cut back on labor,” he asks.

With legislature dominated by Democrats, Gallagher’s bill has a slim chance to make any headway.

A 2023 study concluded California farmworkers earned less money as overtime reform efforts were phased in. Relying on worker-reported federal data, the research found that farmworkers in the Golden State worked 15,000 to 45,000 fewer hours in 2019 and 2020 while making $6 million to $9 million less per week than they would have if the farming industry had continued to enjoy an overtime exemption.

Dairy producer Ryan Junio of Four J Jerseys in Pixley says they have always taken the stance to pay overtime on staff as opposed to bringing more employees onto payroll to cut overtime from the others.

“Carrying extra staff to avoid overtime creates more exposure and liability on several fronts,” he says. “So, we just assume pay our employees that have been with us the overtime.”

Dairy Herd Management will continue to follow this legislation update.

Want to Grow Your Farm? Ask These 10 Questions First

Wed, 17 May 2023 19:57:51 GMT

More than 50% of farmers intend to grow their operation, based on responses in Purdue’s February 2023 Ag Economy Barometer.

(Farm Journal)

If you’re thinking about scaling your farm, Michael Langemeier, Purdue ag economist, says it’s important to first ask these questions.

1. Why should I grow my operation?

Before an operation expands, consider the vision and direction you want your farm to take.

“Are you interested in a commodity-based approach or a differentiated product strategy? Commodities will focus on cost control while products will be centered around value-added production and above-average prices for your crops,” Langemeiers says. “Start here and consider how growth impacts your direction.”

Once an approach is chosen, it’s time to decide which dominoes you want to play in the expansion game.

2. What ways I can grow my farm?

There are many ways to expand an operation: acquire land, new equipment and technology, upgrade facilities, etc. However, Langemeier says some producers need to think outside the box.

“Don’t just think about what you currently do or have always done. This step is a good time to do some soul searching to consider where you want to be in five to 10 years. Do you want to be the same enterprise, or do you want to make changes?”

Langemeier says this soul-searching step is especially important when someone is coming back to the farm.

“We’re seeing that a lot of students who come from farms want to go back, and we have to look into whether there are opportunities there or not,” Langemeier says. “There’s always new interest and ideas that come with the transition back to the farm.”

After establishing how you want to grow, consider your growth approach.

3. What should my growth approach look like?

A strengths, weaknesses, opportunities and threats (SWOT) analysis is a common growth approach in business. Langemeier says another way to think about SWOT is in terms of internal and external analysis.

“Internal analysis means looking at key resources and capabilities of a team or operation,” Langemeier says. “Does someone possess a unique skill you can maximize? Take advantage of those unique skillsets.”

Internal analysis mainly centers around strengths, but weaknesses play a role here, too. Are there areas in your operation that need professional development? Langemeier says this is the time to work on both.

External analysis, on the other hand, examines economic and market trends.

“The easiest example is in livestock; raising pasture pork, poultry or beef, or offering direct meat from a producer rather than a grocery store, are all growing trends,” Langemeier says. “If you have those opportunities, think about how they might fit into your operation.”

While there’s more risk in external factors, Langemeier says “the risk can be worth the reward” for producers who understand what trends they can support.

4. How do I evaluate my farm’s growth ventures?

Now that the growth options are laid out, how does a producer choose which option to pursue?
These eight criteria can help:
• Strategic fit
• Expected returns
• Risk
• Capital required
• Cost and ease of entry and exit
• Value creation
• Managerial requirements
• Portfolio fit

Strategic fit is one of the biggest points to consider, according to Langemeier.

“A few years ago, many growers were interested in hemp production. I would ask them if hemp would require new machinery and if they were used to dealing with contracts,” he says. “If the answer was yes and no, then it probably wasn’t going to be a good fit.”

He says ease of entry and exit is the second criteria he points farmers to.

“If your farm were to pursue a new venture and it fails, would it mean you could lose the whole farm? Because there will be things that fail,” Langemeier says.

If a specific venture requires a lot of capital, he says it is pivotal to explore how the investment could affect balance sheets in the long run.

5. What skills are needed to grow, especially in people returning to the farm?

Taking stock of employees’ skillsets, this is the part where growers consider the strengths and weaknesses of human capital currently on the farm and those soon returning to it.

“When someone’s thinking about coming back to the farm, that’s the time to assess the skills that are currently needed, and then try to encourage the younger person to garner some of those skills,” Langemeier says. “We might have the skills to expand our operation, but do we have the skills to start a new venture in a different enterprise? Think about it from all angles.”

6. How do I finance?

Are you willing to take on debt to expand? If so, how much debt are you willing to take on? Langemeier suggests looking at debt as enabling you to take advantage of an opportunity, not as a negative.

“If you have 2,000 acres and are thinking about adding 1,000 acres, even if that’s leased ground, you’re still going to need more machinery and people. You probably don’t have that retained earnings, so you’re going to take on debt,” he says. “As long as you’re making a profit on those additional acres, and you can make the debt payment, it’s not a problem.”

Langemeier warns that a small profit margin can quickly turn into an issue when a venture flops. He advises producers keep a somewhat equal balance of debt and projected venture profits.

7. What business models do I use to grow?

Expanding internal growth with retained earnings and debt is a typical business model for most operations, according to Langemeier. He says there’s a new trend in this arena.

“I’ve seen a lot of production ag cases recently where a farm acquires assets from a retiring farm,” he says. “Not only do they farm the land, but they also buy the machinery, the bins and the whole farm. This really works for some operations.”

Another model that’s becoming somewhat common is a joint venture. Agribusinesses use this model frequently, but Langemeier says more mid-sized operations are leaning toward this option.

“One of the advantages of joint-venture contract turkey, laying or finishing operations, especially in the Corn Belt, is that there’s a partner with you,” Langemeier says. “It allows us to grow effectively.”

Finding a partner to go-in on the venture isn’t always easy. However, Langemeier says producers often look in the wrong places.

“Some farmers say they don’t have any outside investors, so I tell them to think about family or non-farm heirs. Pitch it as a way of investing in your business so that you don’t have to make them partners or an operating entity,” he says. “Land, for instance, could be an outstanding source of outside equity with non-farm heirs.”

8. How would an expansion impact my current operation?

When considering growth options, it’s vital to your growth success to consider how each option will impact the farm’s balance sheet and income statement. Langemeier suggests running three projected scenarios — worst, most likely and best case — through a spreadsheet or a software, like the University of Minnesota’s FINPACK system .

If you choose to run the projections by hand, this is the process Langemeier suggests:

a. Impacts on cash flow and balance sheet

“A growth change will impact both — don’t just look at cash flow,” he says.

b. Debt versus equity

“Maybe the change will reduce your liquidity and increase your solvency too much,” he says. “If that’s the case, you can’t pursue that particular venture.”

c. Time management

“There are only so many hours in the day, and some of us sometimes work too much,” Langemeier says. “Say you’re going from conventional to organic, it’s going to be management intensive. Be realistic about what you and your team can handle.”

9. What challenges would an expansion create?

Construction delays, cash flow shortages, depleted working capital, short-term inefficiencies and management bottlenecks are often at play when starting a new venture, according to Langemeier. He advises producers to be proactive.

“If a venture creates massive cash flow shortages and eats into your working capital, you need to have a plan to deal with those issues. If you don’t, it will lead you into other challenges, like inefficiencies, and you’ll end up with a failed venture,” he says. “Make sure you have a contingency plan.”

10. What is my sustainable growth rate?

Calculating a sustainable growth rate means saying what a growth rate would be if retained earnings is the only money used, and then compare that to what a growth rate would be if only debt was used. Langemeier says this equation has other variables that often go unchecked.

In the debt scenario, he says you have to think about the downside of debt — the chance of going bankrupt and variability.

“Even if your operating cash flow is low, the lender still wants his payments,” Langmeier says. “You have to think about the coping strategies to make those debt payments even when corn is at $5, compared to $6.50. Make sure you run all the numbers imaginable.”

The Main First Step When Considering Expansion

With all 10 points in mind, Langemeier says the first stage of growth shouldn’t include producers running to formulate a 50-page business plan. He says step one starts with a conversation.

“You should be having regular farm and family meetings, at least once a year, to brainstorm with your employees and family members about the things you could do differently on-farm, and allot time to consider continued improvement, opportunities and threats,” he says.

According to Langemeier, these meetings will offer more than exploring growth; they will ensure farm, family and employee survival.

Crop Insurance 101 Protect your balance sheet

Wed, 05 Oct 2022 18:44:12 GMT

The 2008 farm bill requires that farmers have crop insurance on all crops—including forages and pastures—to be eligible for federal disaster payments.

With balance sheets in tatters and equity levels at record lows, crop insurance has renewed importance this year.

“Crop farmers look at crop insurance as a protection of their income, but too few dairy producers take it out,” says Robin Schmahl, a commodity broker and crop insurance agent based in Elkhart Lake, Wis., who is also a columnist for Dairy Today’s biweekly eUpdate.

In reality, crops are worth more to the dairy producer than to the crop farmer, he says. If dairy producers have a crop failure, not only are the input costs already spent on the crop, but they must also buy feed for their herd.

In addition, the 2008 farm bill requires that farmers have crop insurance on all crops—including forages and pastures—to be eligible for federal disaster payments. Not having crop insurance is like not having liability or fire insurance—it’s a disaster waiting to happen.

“Crop insurance is another way to protect the value of your crops, whether they are used as feed for your dairy or sold on the open market,” says Steve Bodart, a financial analyst with Lookout Ridge Consulting, Baldwin, Wis.

“Producers should look at their cropping operations as separate enterprises that sell feed to the dairy at market value,” he says. “Crop insurance helps protect their hedges if producers are taking positions on the futures market, so they know they can get a return on their crops.”

Jim Kastanek, owner of Total Agri-Business Services in Albany, Minn., agrees. “Crop insurance is part of a dairy producer’s risk management plan,” he says. “Producers should be looking at both yield protection and revenue protection on their crops. It’s a little more costly, but they will have a safety net to help them through if crops fail.”

Here are some crop insurance options:

Crop-hail policies. Not government-subsidized or part of the federal crop insurance matrix of programs. Available directly from insurance companies, they can usually be purchased any time during the growing season.
Multi-peril crop insurance. Must be purchased prior to planting, with state-specific deadlines. Covers drought, excessive moisture, frost, delayed planting and disease. Producers select a coverage level from 50% to 85% of yield and are paid when yields fall below. Premiums are based on coverage. Generally subsidized by the federal government up to 50% or more, to encourage enrollment.
SURE. The Supplemental Revenue Assistance Payments program, created by the 2008 farm bill to supplement the protection producers purchase from private insurers. Payment is made if actual crop revenue is less than the guarantee, calculated as the sum of all crops in all counties involved in the farming operation. Payment cap is $100,000.
ACRE. The Average Crop Revenue Election program, an alternative to USDA’s Counter-Cyclical Payment Program. Provides protection based on state revenue. Once a producer signs up for the program, it is irrevocable through the 2012 crop year.

These programs can be complex. “Sit down with your agent well before the deadline so you understand all your options,” Kastanek urges. “The volatility in weather and crop markets, input prices and milk are just too great to be without protection.”

Bonus content:

Crop insurance basics

ACRE –Average Crop Revenue Election

Is ACRE worth the gamble?

SURE program

Market Watch Diary The height of possibility

Wed, 05 Oct 2022 18:44:12 GMT

Alan Levitt

Milk prices will be better in 2010, but how high will we go, and will it be enough? These are the questions dairy producers are asking themselves at the onset of the new year.

In a January report, USDA is projecting a 2010 average All-Milk price of $16.60, on par with futures prices for the year. In the same report, it projects that corn prices will average $3.70 this marketing year. Put those two together and you’ve got a respectable year, with slightly greater profitability than the 10-year average of income over feed costs.

But there are so many variables that could impact prices and profitability. Milk production will certainly be lower in 2010—we start the year with approximately 250,000 fewer cows than we had a year earlier—but will supply reductions lead to $20 milk, $16 milk or something less?

Equity has been burned and credit remains tight, so farmers’ ability to quickly expand in response to higher prices is questionable.

Overall commodity prices are rising, looking eerily like the rallies that started three years ago. By mid-January, spot prices for Brent crude oil had topped $80/barrel, a 15-month high. Prices have been increasing steadily for nearly a year, accelerating since last fall. Recent price gains for fuel are attributed to large speculators bidding prices higher after the extremely cold start to the winter nationwide.

Meanwhile, the Food and Agriculture Organization’s Food Price Index for 2009 neatly parallels the trendline for 2007 (see chart). By December, the index had climbed to 172, up 17% since July, led by runups in sugar and dairy.

For their part, large global dairy players are downplaying the possibility of another 2008-type dairy boom. Monthly prices on Fonterra’s closely watched whole milk powder auction slipped 7% in January after almost doubling in the last five months of 2009. The company calls the market more balanced now, crediting the rally to pipeline rebuilding that has been completed.

Apparently, U.S. dairy producers aren’t the only ones asking these questions and considering the possibilities. The investment research firm Variant Perception points out that Google searches for “food inflation” have more than doubled in the last three months. Most of the queries are coming from developing countries—Pakistan, South Africa, Singapore and India—where food makes up a large part of consumer spending.

The prospect for runaway inflation is there again, but at this point buyers (and sellers) are more cautious about feeding the fire.

Bonus content:

FAO food price index

Dairy Talk Innovate or die

Wed, 05 Oct 2022 18:44:12 GMT

Jim Dickrell

As the U.S. dairy industry emerges from the trauma of 2009, the battle over its future is now beginning.

The world’s appetite for dairy proteins fueled the euphoria of 2007. Skyrocketing prices and the global recession that began in 2008 crippled demand and drove world prices to U.S. support levels—and worse.

The question before the industry and USDA’s Dairy Industry Advisory Committee is where we go from here.

The Bain report, commissioned by the Innovation Center for U.S. Dairy and released this past fall, says world demand will again outstrip supply as emerging nations increase their use of dairy proteins. Does the U.S. want to participate in these potentially lucrative markets?

We have three choices, says Tom Suber, president of the U.S. Dairy Export Council (USDEC):

Become a reliable supplier to world markets.
Continue to be a last-in, first-out residual supplier.
Lock out the world market.

The third option will be necessary if the industry embraces supply management. But we then become Canada South, with little opportunity for growth. Some producers say they’d gladly take the Canadian approach—but I doubt any are willing to pony up a $25,000/cow quota.

The second option is no longer an option. The irony is that our dairy price support system did little to help U.S. producers but bailed out our competitors. “Our tax-supported system is a safety net for New Zealand,” Suber says.

In my view, the first option is the only viable one. And U.S. processors and co-ops are starting to get it. “Not every manufacturer has to be an exporter. But producing only for the domestic market would be fatal,” Suber says.

USDEC is working with manufacturers to produce Gouda cheese, a huge seller in export markets such as Mexico and Asia, and to economically produce casein and milk protein concentrates with U.S. milk to displace imports.

These are just first steps. The U.S. must prove it can be a reliable supplier—particularly of specialty milk powders.

Product innovation is key. In fact, it’s not even optional.

Bonus content:

Trade opportunities

Impediments to trade

USDA Dairy Advisory Committee

Dairy Talk A lot to like

Wed, 05 Oct 2022 18:44:12 GMT

Jim Dickrell

As more details emerge on the National Milk Producers Federation’s 2012 dairy policy proposal, there’s a lot to like:

Dairy Producer Income Protection Program. Patterned after Livestock Gross Margin for Dairy, it provides fully subsidized margin insurance—the difference between the U.S. All-Milk price and national feed cost. Level of coverage will likely fall between 75% and 90% of a farm’s milk production the year prior to enactment. No payment, production, region or size limits. Supplemental insurance can be purchased at a subsidized premium.

Federal Milk Marketing Orders. Maintains Class I and II Orders and uses a competitive pay price to establish a Class III, ending complex formulas and make allowances. Class IV pricing is still under development. This is a disappointing backslide; the original proposal had Class I for fluid and all other products in a manufacturing class.

Dairy Market Stabilization Program. Triggers based on milk price minus feed cost margin comply with World Trade Organization rules. If a trigger is reached, producers receive no payment for milk production above 99% of a farm’s base production; triggers for 98% and 97% are also set. Processors transfer money from the 1% to 3% unpaid milk to USDA to increase dairy product disappearance via feeding programs, school nutrition, exports, etc.

This is the weakest link in the proposal, since a 1% to 3% cutback in milk price probably won’t discourage production. The upside: dollars flowing into USDA would be used to increase consumption.

Cooperatives Working Together (CWT). Remains voluntary, but requires a two-year sign-up with a commitment of 1.5¢/cwt to 3¢/cwt. The goal is to collect $40 million annually: $30 million targeted toward exports and $10 million for the domestic program. Processors can bid for CWT assistance to make products such as casein and milk protein concentrates to compete with imports.

All in all, the proposal shows forethought and creativity. NMPF hopes to have the plan fleshed out for board approval in June. Then the real work begins, as it tries to sell the program to producers, processors and Congress.

Bonus content:

NMPF’s Foundation For the Future

California's Turning Point? State faces an uncertain dairy future

Wed, 05 Oct 2022 18:44:12 GMT

In 1993, when California seized title as the nation’s No. 1 dairy state, its meteoric rise seemed unstoppable.

“There’s real opportunity for California with increased world demand,” says producer Tony Mendes. “But our dairies have to survive first.”

Over the next 15 years, the Golden State set record after record for milk production, dominating the U.S. dairy scene and coming close to taking over Wisconsin’s spot as the top U.S. cheese producer.

The past few years, however, haven’t been kind to California’s dairy industry. True, the state still leads the nation in milk, with some 20% of U.S. production. In 2008, it set a record of 41.2 billion pounds, almost twice that of No. 2 Wisconsin, and counted farmgate receipts of $6.9 billion.

But the pretty picture stops there. Widespread difficulties have many wondering where this giant is headed.

“Uncertainty about the future is creating consternation among producers,” says Tony Mendes, who milks 1,400 cows near Riverdale, Calif. “We’re preoccupied with survival.”

The challenges ahead are many and daunting, Mendes and other California dairy leaders say. Leave out, for a moment, 2009’s price downturn, which hurt dairies nationwide. Set aside California’s well-publicized water shortages and state budget problems. Consider the plentiful other troubles.

For starters, there’s California’sunfriendly business environment and stringent environmental regulations. Mendes estimates his yearly water- and air-quality compliance costs at $35,000 to $40,000. This year, he’ll also have to replace the engines on his water wells—at some $35,000 each—because regulators now say the units must be powered by electricity, not natural gas.

“Dairies are spending ridiculously to comply with air- and water-quality regulations,” he says.

Milk processing plants face similar compliance issues, says Alan Pierson, executive vice president and chief operating officer of Land O’Lakes.

“We are under tighter scrutiny at plants for things like energy conservation and air emissions,” Pierson says. “Operating in the San Joaquin Valley, where air quality is so important, we’ve got to reduce our carbon footprint.”

Pierson believes that the challenge can be turned into opportunity. “The higher [environmental] scrutiny spreading across the country could give California, with its newer infrastructure, a significant advantage,” he says.

Pierson also says it’s difficult to build a new plant in California. “The incentives and business climate in other states are more favorable.”

Another major problem is the high cost of feed, much of which comes from the Midwest. That—along with the state’s expensive fuel, labor and energy; liability costs; and worker compensation outlays—has bumped up production costs to the $14/cwt. to $15/cwt. range for a 1,400-cow dairy.

“These [costs] are hurting us tremendously,” says Mendes, a third-generation dairy producer with a law degree who also serves as chairman of California Dairies Inc. (CDI). The processing cooperative handles almost 45% of the state’s milk supply.

One day’s supply of alfalfa hay at Tony Mendes’ Riverdale dairy totals 12 to 14 tons. The high-priced feed costs about $190/ton.

“As efficient as we are, these problems are affecting our competitiveness,” Mendes says. “The golden days of California’s expansion and growth are going to stop.”

In fact, California recently saw its largest year-over-year milk production decline since 1956. Between December 2008 and November 2009, the state’s dairies produced 3.7% less milk, a cutback of some 1.5 billion pounds. That marked an abrupt turnabout in a state that grew almost nonstop for more than a decade.

While 2009’s decrease stemmed from a milk oversupply amid the recession’s slowed demand, California also has contracted in another way. Between 2004 and 2008, the state saw a net loss of 255 dairies, leaving 1,852 operations. The California Department of Food and Agriculture had not released 2009 numbers by press time but believes the number of remaining dairies fell sharply last year.

Michael Marsh, CEO of Western United Dairymen, says 150 California dairies might have closed in 2009.

Recovering from 2009’s downturn remains a challenge. Financing is tight, and lenders are not only scrutinizing budgets but some are even crafting them for dairies.

“People are in bankruptcy or trying to find a graceful way to exit the industry,” Mendes says. “Most are trying to hold on to what little equity they have left.”

“There is money to lend, though nobody is willing to lend without the fundamentals of credit quality,” says Cornelius Gallagher, global agribusiness executive with Bank of America and chairman of the Agricultural Lending Committee for the California Bankers Association.

“The core problem is that we may see only break-even prices in the next 12 months,” he says. “That’s not enough to restore lost equity.” And the likelihood remains for price volatility—"the source of our grief,” Mendes says.

“California is in an adjustment phase,” says John Jeter, president and CEO of Hilmar Cheese Company, which handles 12% of California’s milk production. “The system was so good for so long, but it needs major change.”

The state simply could not sustain its massive, steady growth of 3% to 4% annually, Jeter says. Its “very controlled” milk pricing system has retarded the change needed for competitive global markets, he adds. And its increased production of commodity products has not positioned the state for emerging demand.

Jeter points to recent adjustments made by the Midwest dairy industry. “They went up the value chain and turned the corner,” he says. “Their milk supply is growing and they’re in a good position.”

That’s not the case in California, where capacity is often short. The state’s processing plants have struggled in recent years to handle the 41-billion-pound supply. Although that changed in 2009, many believe the problem hasn’t disappeared.

Hector Ochoa oversees California Dairies’ processing plant in Visalia, where a recent expansion boosted milk-handling capacity to 10 million pounds a day.

“A year and a half ago, California was in serious trouble with its plant capacity, and it will get there again,” says Richard Cotta, CDI’s president and CEO.

CDI just expanded at its seventh and newest plant, in Visalia, Calif. That boosted the site’s capacity to 10 million pounds a day, mostly for butter and powder. But Cotta doesn’t expect the expansion to end the capacity shortages.

“The dairy industry needs to decide where it wants to go in the long run,” he says. “All the players need to be at the table.”

California has been increasingly cut off from sales to the eastern U.S., says William Van Dam, CEO of the Alliance of Western Milk Producers.

“Texas, New Mexico and Idaho have recently built dairies and big, efficient cheese plants,” he says. “They’re 1,000 miles closer to the Eastern market than we are.”

To compete, California would have to sharply reduce its prices, something Van Dam says the state’s industry just cannot afford to do.

Despite the difficulties, no one is willing to write off California yet. It still has the advantages of a moderate climate, the San Joaquin Valley’s vast flatlands and a well-oiled dairy infrastructure. And all acknowledge the state’s best and biggest prospect: exports.

“The shining opportunity in California is the export trade,” Van Dam says.

“The future lies with a hungry world,” Land O’Lakes’ Pierson agrees. “California is well positioned to serve the export market. And California itself is a large market that needs to be served. Processing plants are positioned within the state to service that growth. Land O’Lakes is definitely here for the long term.”

Many also are optimistic that California’s dairy industry can find ways to readjust its business model.

“We have to find ways to be more efficient and innovative, rather than using economy of scale,” Mendes says.

He foresees more dairy consolidation, perhaps with a family operating not one but several dairies. “They may be more efficient if they’re jointly buying feed, raising heifers or paying for transportation,” Mendes says.

“California producers are highly intelligent and their dairies are well run,” Van Dam says. “I have a lot of confidence in their ability to adjust to the circumstances presented to them.”

In a state accustomed to change, the idea that its dairy powerhouse must adjust to new circumstances shouldn’t come as a surprise. California’s dairy industry transformed itself once before and catapulted to success. The question is: Can it do it again?

NOT HEEDING MCKINSEY’S REPORT

California’s problems were predicted two years ago in a 20-year strategy study the state’s dairy industry developed with McKinsey & Company. Commissioned by the California Milk Advisory Board (CMAB), the study pinpointed three key challenges: rising environmental regu-latory costs, an oversupply of raw milk and lack of investment in innovation and proprietary capacity.

McKinsey advised the industry to address those challenges by:

minimizing the costs of environmental mitigation;
continuing investments in promotion and marketing;
investing more in production efficiency and product innovation;
suggesting more efficient laws and regulations; and
refinancing quota.

“In 2007, when prices fell, the industry agreed with McKinsey’s findings,” says CMAB’s Stan Andre. “But when 2008 brought high milk prices, all that enthusiasm for doing something went out the window. The industry has not yet heeded McKinsey’s advice.”

Bonus content:

View From the Top: California Dairy Leaders Weigh In

Read Tony Mendes’ chairman’s letter in the December 2009 issue of the California Dairies, Inc. newsletter

California Dairy Landscape...2009 Reflects Net Loss of 109 Dairies

California Records Net Loss of 109 Dairies For 2009

Prevent Hay Fires Take precautions to reduce risk

Wed, 05 Oct 2022 18:44:12 GMT

Summer’s coming and so is the likelihood of hay fires.

Increasing in frequency on America’s farms, hay fires occur most often during the hot months of June, July and August, says insurance and workplace safety expert Rick Adams.

“Insurance companies are very concerned about hay losses,” Adams says. “The loss ratio for most insurers on hay coverage is 200% or more. It’s not uncommon to see $500,000 losses in a single hay fire.”

You can reduce the risk of a hay fire on your farm with these tips from Adams, who’s with California-based Winton Ireland Strom & Green.

Electrical sources are common starting points for hay fires, Adams says. When possible, keep electricity out of barns used for hay storage. Maintain and monitor the condition of all electrical units. That means no open boxes. Keep dust under control as much as possible.

Lightning is another frequent cause of hay fire. To reduce risk, place lightning rods on metal barns. Hay in the open is also susceptible to lightning, though fire usually results after lightning hits a neighboring structure and spreads to your stored hay.

Hay fires frequently originate with arson and accidents. Disgruntled employees are the No. 1 cause in this category, Adams says. To lower the risk, keep hay away from public access and maintain dusk-to-dawn lights. Make certain any smoking areas are well away from hay and that proper cigarette receptacles are placed there. “Better yet, have a smoke-free workplace,” he advises.

Spontaneous combustion is another leading cause of hay fires. Cut hay is not dead, since plant sugars will continue to burn, or “sweat.” That’s a normal process that occurs naturally in all bales. “But baled hay with a moisture level of 20% or more can produce a perfect environment for bacteria growth, making it susceptible to spontaneous combustion,” Adams says.

To reduce the fire risk from hay moisture concentration, make small bales at a moisture level of 20% or less. Large bales or rounds should have a level of 18% or less.

Concern over hay fires now has insurers writing stack or dollar limits into policies. “This is even when the hay is in the barn,” Adams says. “This can limit your coverage in the event of a loss.”

CONTROLLING A HAY FIRE

Contact your fire department immediately with your address and directions.

Evacuate any livestock.

Turn off any electrical to that area.

Monitor wind direction and remove other hay and commodities located downwind.

Be careful when removing hay from a burning barn. Smoldering hay can ignite easily and spread the fire.

Water down surrounding hay and buildings if a high-pressure hose is available.

If the fire department wants to accelerate burnout by breaking into bales, make certain the firemen have adequate trucks, equipment and water.

Bonus content:

Spanish translation

Signs of an imminent hay fire

More tips on controlling hay-fire risk

Headed to the Grid: California dairies combine for manure-to-energy benefits

Wed, 05 Oct 2022 18:44:12 GMT

California dairies combine for manure-to-energy benefits

Today, it’s just an empty, three-acre plot of dirt on the edge of Steve Maddox’s dairy near Riverdale, Calif.

By next year, however, the site will be part of a major renewable energy project that will produce manure-generated biogas, not for Maddox’s dairy but for use in California’s extensive electricity grid.

Maddox Dairy is one of eight central California dairies partnering with Microgy, Inc., to generate methane-rich biogas to sell to Pacific Gas and Electric Company (PG&E), one of the state’s three major energy utilities. Divided into three clusters, the eight dairies will eventually produce enough pipeline-quality renewable natural gas (RNG) to power 50,000 California homes. The project is expected to reap real benefits, including gas royalties and carbon credits, for its participants.

“First and foremost, this project makes sense financially,” Maddox says. “I’m probably putting up $300,000, all told. With margins as tight as they are, there’s not a lot of spare money to throw at new projects you’re not sure of.”

Microgy, a subsidiary of Environmental Power Corporation, will fund, build, own and operate anaerobic digesters at the dairies, using manure and other ag waste to generate the biogas. It expects to break ground for the digesters and necessary pipelines at the dairies late this year.

Microgy will also install and operate the scrubber, or centralized gas-conditioning unit, that makes the biogas acceptable for entering PG&E’s pipeline system. In addition, the company will be responsible for pressurizing and injecting the gas into the pipeline and connecting it to the pipeline network.

In the Riverdale Cluster, Maddox Dairy milks 3,500 cows, as do neighboring producers John Verwey and Buddy te Velde, for a combined 10,500 milkers. Microgy will build five digesters among the three Riverdale dairies. Together, they’ll generate an estimated 621,000 MMBtu, says Jeff Dasovich, Microgy senior vice president. (One MMBtu equals a million British thermal units.)

The other dairy clusters involved in the venture are Bar 20 in Kerman, the site of two dairies, 8,500 cows and four digesters, and the Hanford Cluster, with three dairies, 13,500 cows, and five digesters. They are expected to generate 601,000 MMBtu per year and 732,000 MMBtu per year, respectively.

The Riverdale, Bar 20 and Hanford projects have received financing and permitting approvals. In May, Microgy obtained a $65.35 million funding allocation for the Riverdale and Hanford Clusters. In July, it received an allocation for up to $26 million to support the Bar 20 project. The allocations came from the California Debt Limit Allocation Committee, a government body that issues tax-exempt bond financing. (Microgy plans a fourth California project with Joseph Gallo Farms, a large, multi-site dairy in Atwater. It’s still in the permitting stage.)

For his part, Maddox will invest in two or three Honey-Vac units at a cost of about $70,000 each. The units will suction up fresh manure from freestalls into a tanker. The load will be transported to the methane digester, where it will be dumped and held for about 20 days. Microgy will reimburse the dairy for manure collection costs.

Each digester will separate liquids from solids and capture biogas. After it’s been “scrubbed,” the gas will be sent via Microgy’s pipeline to connect with the natural gas network.

Microgy says its anaerobic digestion process will reduce odor and increase the value of the manure solids. As an added benefit, Maddox will keep the solids for use as stall bedding or to spread on his fields. “The solids that exit Microgy’s digester will be extremely clean,” he says.

The digesters at the dairies are expected to capture thousands of metric tons of greenhouse gas emissions each year. And that creates carbon credit value.

“A typical project producing 635,000 MMBtu per year could generate between 75,000 and 250,000 metric tons of greenhouse gas offsets, depending on a number of factors,” says Mark Hall, senior vice president of Environmental Power Corp. “Those include the manure management practices in place at the dairies before our projects are built and the historic fate of the organic materials that we co-digest with the animal waste.”

For Maddox, the project’s ability to reduce greenhouse gas emissions can’t be ignored. “Whether or not you agree with public opinion on global warming, the decision has already been made,” he says. “We don’t have enough dairy votes to change that. We must do our part. If the business model works, the environmental benefits are icing on the cake.”

Maddox Dairy is one of eight dairies with more than 30,000 cows in three clusters which will generate nearly 2 trillion BTUs of energy annually.

POWER IN NUMBERS

Helping spur Microgy’s manure-to-energy project is California’s state mandate calling to derive 20% of its electricity from renewable energy sources by 2010.

That’s driven the state’s big utilities to look at alternative energy sources. They’ve never shown much interest in a single dairy’s power-generating ability, but a cluster of dairies, totaling about 10,000 cows, is a different story.

An operation of that size can justify the cost of generating enough biogas to make a gas purchase agreement feasible. That’s where Microgy and its dairy partners come in.

Microgy has a long-term gas purchase agreement with PG&E that calls for up to 8,000 MMBtu of renewable natural gas per day from the dairies. Dairy producer and project participant Steve Maddox says the utility will pay “enough so that we can afford to do this.”

The agreement is “a small part of the overall picture for PG&E, but it’s a first step in converting organic waste into energy,” says Rod Boschee, business development manager in the utility’s gas transmission and distribution group.

PG&E serves about 9.2 million gas and electric meters in northern and central California. The utility has a similar purchase agreement with BioEnergy Solutions for gas generated by California dairies.

PG&E is also working with Microgy to purchase renewable natural gas from the Huckaby Ridge dairy project near Stephenville, Texas, and transport it to California.

Bonus content:

Environmental Power is a developer, owner and operator of clean energy production facilities, which can generate significant quantities of tradeable carbon offset credits. Click here to go to its Web site.
Follow this link to read “ A closer look at Microgy .”

Posilac PR Re-educating the food chain about BST

Wed, 05 Oct 2022 18:44:12 GMT

Since Elanco acquired Posilac from Monsanto in 2008, it has made re-education about the dairy production technology a priority. The Indiana-based company has reached out to the entire dairy food chain to promote Posilac’s safety and its role in affordability and sustainability, says Dennis Erpelding, director of corporate affairs for Elanco’s international business division.

As part of the outreach, Elanco commissioned a safety assessment and consumer research report. The assessment reaffirmed that rBST is safe for human consumption. The consumer report showed that:

milk is considered a staple of the American diet;
people trust dairy products, and concerns over hormones are in the minority;
consumers are more likely to base purchase decisions on taste, price, freshness and fat content.

When making purchase decisions, only 3.6% of those polled consider hormones as a factor versus the primary purchase factors of taste, price, freshness and fat content (24.9%). When prompted, respondents said they would likely be concerned about rBST, but they gave the same answer when asked about rJSP—a mythical protein.

“We’ve tried to work with all key stakeholders to ensure they have factual information about BST to disseminate,” Erpelding says.

Another Elanco goal is to help farmers improve their management practices with a technology that helps them to be more profitable. “We believe farmers should determine what’s best or most appropriate for their oper-ations,” he says.

About one-third of U.S. dairy herds are supplemented with Posilac. The product, at about $6 per dose, yields about 10 lb. of additional milk per cow per day, according to Elanco. Erpelding would not give sales figures for Posilac, saying only that the product “is doing well.”

No stranger to Posilac, Elanco held exclusive sales rights outside the U.S. for a decade before acquiring it from Monsanto. Today, Elanco sells Posilac in 20 countries, including Mexico, Brazil and South Africa, he says.

BST is the manufactured form of a protein hormone that occurs naturally in cows. The technology was approved for commercial use in the U.S. by the Food and Drug Administration in 1993.

Bonus content:

Read Elanco’s research findings on BST

Know your numbers Production costs, cash flow needs

Wed, 05 Oct 2022 18:44:12 GMT

While it’s not always possible to lock in a margin through hedging, knowing your cost of production and monthly cash flow needs are critical in any risk management plan.

“The lesson of 2004 through 2009 is that markets can and will do the unexpected. We can get $10 milk, $8 corn and $150 crude oil prices,” says Alex Gulotta of Valley Futures Trading, Weyauwega, Wis. “Risk management cannot be ignored. You will make mistakes, but if you’re
making a profit you can’t go broke.”

Know your cost of production, says Steve Bodart of Lookout Ridge Consulting, Baldwin, Wis. These include feed, labor, replacements less cull revenue, depreciation and overhead less other income. For Bodart’s clients, this averages to $15.25/cwt. “Cash flow break-even will be higher than cost of production because it includes loan principal payments,” he says.

Work on a budget. “Monitor actual performance and stay dynamic. Don’t let short-term cash decisions interfere with long-term viability,” Bodart says. “Monthly variation in cash needs may change what you need from your marketing efforts.”

Last fall, for example, some dairies opted not to empty lagoons because of tight cash flow. This spring, they’ll need more cash to get those lagoons emptied ahead of planting.

Bonus content:

More on risk management:

Lookout Ridge Consulting

Valley Futures Trading

Radical New Plan NMPF proposal would change

Wed, 05 Oct 2022 18:44:12 GMT

National Milk’s new dairy policy seeks to put the U.S. on the road to compete globally.

After months of planning, Jerry Kozak, president and CEO of the National Milk Producers Federation (NMPF), has finally started to detail his organization’s proposal to revitalize U.S. dairy policy for the 21st century.

Parts of the plan are bold and creative; others are head scratchers. “Everybody will hate something in our package,” Kozak acknowledges. “But that’s a sign of a good program for an industry as diverse as ours.”

The program has three legs. Each is needed to support the other two, Kozak says.

1. Federal Orders reform. Class I would be retained for fluid milk and differentials, but only the differentials would be pooled. Classes II, III and IV would be collapsed into a single class; price formulas and make allowances eliminated; and manufacturing prices based on competitive bids. Reporting of competitive prices would be mandatory to ensure transparency and set a base for Class I prices.

2. Dairy Producer Income Protection Program (DPIPP) established. The Dairy Price Support and Milk Income Loss Contract programs would be eliminated and the savings used for a margin-over-feed-cost insurance program. DPIPP would pay an indemnity when margins fall to a certain level, either because of low milk prices or high feed costs. Participation would be voluntary, but government-subsidized for minimal protection. Producers would also be able to purchase additional coverage.

Eliminating the price support program would send prices to market-clearing levels. Kozak says current support levels have made the U.S. the balancing plant for the world, allowing lower-cost producers such as New Zealand to profit even with our $9.90 floor. Eliminating that floor to world prices will put all competitors on the same footing, he says.

3. Cooperatives Working Together (CWT) revitalized. NMPF is looking for ways to increase participation (currently at just 68%) and is considering making the program mandatory. New programs might include partial herd retirements and heifer buyouts.

Another option is a domestic product diversification initiative—fancy lingo for a program to promote U.S. manufacturing of products such as liquid casein, which is currently imported. Also being considered is an export marketing agency-in-common (stealing from the Kiwis’ bag of trade tricks) and food bank assistance to move commodities to domestic feeding programs for the disadvantaged.

Final approval by the NMPF board could come as early as June; the goal is to get the package passed into law in the 2012 farm bill. Phased implementation will take years more.

Bonus content:

Less Milk, But More Profit? Kiwi-style dairying puts new spin on industry

Wed, 05 Oct 2022 18:44:12 GMT

Lining up like children at a carnival, hundreds of cows wait for their ride around the milking carousel. Fifty cows quietly ride side-by-side around the concrete platform at Focal Dairy in Harwood, Mo. The carousel mechanically milks the cows for eight minutes. The milking machine is a sophisticated, mesmerizing New Zealand creation.

Kevin van der Poel shipped the carousel from his native New Zealand to Missouri in the fall of 2005. Van der Poel, a co-owner of Focal Dairy, began an intensive, pasture-grazing business with a new spin on old dairy traditions. The business is not about producing the most milk. The New Zealander’s method is focused on efficiency, management and reduced costs.

Pasture-grazing operations, like Focal Dairy, are becoming less foreign to Missouri as they prove to be a profitable trend.

“Pasture-based dairying, for everyone, is not a religion and not a philosophy,” said Jackie Klippenstein, vice president for industry and legislative affairs at Dairy Farmers of America in Jefferson City, Mo. “It is a profitable way of producing high-quality and safe milk.”

Van der Poel grew up helping on his family’s dairy farm in New Zealand. He continued his dairy career for 15 years. Van der Poel and his wife, Cherie, owned a 600-cow herd before leaving New Zealand. Growing their operation using the pasture-grazing method proved profitable. But when van der Poel wanted to expand, New Zealand’s high land prices forced him to look for a new opportunity.

With New Zealand land selling for almost $20,000 an acre, van der Poel, his brother and Spectrum Investment Group formed Focal Dairy, an equity partnership. Quickly, the group began searching for land outside New Zealand to start a pasture-grazing business.

Van der Poel traveled to Australia, Chile, the Southeastern United States and Missouri, searching for land with similar climate and soil to New Zealand. The dairy investors may have New Zealand accents, but after traveling to other countries, they realized speaking their native language, English, made the United States more appealing. A DFA tour led the foreigners to Missouri.

Missouri dairy specialists Joe Horner, Stacey Hamilton and Barry Steevens greeted van der Poel at the airport in Springfield, Mo. Van der Poel wanted to see a pasture-based operation similar to the one he operated in New Zealand. The specialists drove van der Poel to MU Extension’s Southwest Center in Mount Vernon, Mo., where research on pasture-based dairies is done.

“They saw that we had a seasonal grass-based dairy at Southwest Center for several years, so they could see the concept there,” Horner said. “They wanted some place where they could raise perennial rye grass, because it was a species they had used in dairy in New Zealand. And, they wanted to be assured there was a milk market.”

Missouri was the last stop on the New Zealander’s tour. Van der Poel’s visit to Missouri showed the investors a pasture-based system functioning with techniques, crossbred cows and grasses similar to New Zealand farms. After the investors visited Missouri, van der Poel knew the business had a future.

In February 2005, the investors bought a 3,000-acre farm near Harwood. Three months later, van der Poel and his family arrived in Missouri. They started milking in March 2006.

Focal Dairy now employs 30 local workers to operate the 3,700-cow business. The staff works in two shifts. Two workers manage the carousel while a third employee herds the cattle to the carousel. All employees work six days on and one day off and receive vacation, health benefits, sick leave and hourly pay.

Focal Dairy’s intensive pasture-grazing method requires employees to have strong management skills. With one to two people showing up daily at Focal Dairy looking for work, van der Poel said ambition in individuals is more important than dairy experience. The New Zealanders want to teach people with positive attitudes how to manage a dairy operation.

“We need American people to become involved so the business can move forward,” he said.

People who have an interest in dairy farming can earn more than a wage when working at Focal Dairy. Employees who show potential as a manager can earn a stake in the company. The enticement encourages employees to be efficient managers and eliminates a conflict of interest, knowing their dedication and effort will benefit them personally in the future.

Young farmers, like many in New Zealand, can find success working as a sharemilker. Sharemilking allows people to work on someone’s dairy farm, paying for some expenses, while also receiving a share of the milk check. According to Horner, in 1880 Scotland introduced New Zealand to sharemilking, helping workers gain experience in the dairy industry by first working at small dairies and growing to larger dairies. The method allows youth without a dairy background or equity to enter the industry and gain experience without gaining debt.

“It creates a very motivated employee and it aligns the interest of the owner and the sharemilker very well,” Horner said. “They brought that concept to Missouri and it is in the process right now of being validated in our system.”

Focal’s business model encourages sharemilking. Sharemilkers usually work for a few years as hourly employees learning about the industry and dairy management. Then they can move to a low-order sharemilker, where the employees use the dairy owner’s land, facilities, equipment and milking herd but share the profit and some of the operating costs with the owner. After gaining experience as low-order sharemilker, workers can earn sometimes 50 percent of the milk check and will own the cattle and equipment, but still use the owner’s land and facilities. Many young New Zealanders, including van der Poel, embark on a sharemilking career path.

Horner said pasture-grazing dairies hold tremendous promise for the dairy industry because they solve two major issues. Retired dairy farmers do not want to reinvest in facilities, and young people do not have enough capital to enter the industry.

“I like to say it is going to work perfectly in Missouri,” Horner said. “But, quite honestly, we have to prove it for a few years to see how well it is going to work, but that is ongoing right now.”

Focal Dairy is a business dedicated to reducing costs and improving efficiency. Employees move cattle to different pastures, measure grass and operate the milking carousels.

Focal’s intensive grazing method moves the cows every 12 hours to a new field. At times their diets are 90 percent grass, but annually their diets are 60 percent grass. Van der Poel said with increasing genetics he is confident cows’ diets will be 75 percent grass. Feeding them more grass cuts down on the cost of feed.

“We don’t make as much milk, but our profits are higher,” van der Poel said.

Van der Poel and Tony Coltman, an employee and investor in Focal Dairy, did not invent pasture-based grazing, but their entrepreneurial spirits led them to success in Missouri.

“We are here to make money, have a sustainable business and have fun,” Coltman said.

Coltman said people call him and van der Poel pioneers in the dairy industry, but he is just happy to be self-employed, even though the business is capital intensive.

“They are a group of individual farmers who put capital together as a dairy equity partnership to get to that scale, and there is nothing magical about being a New Zealander that allows you to do that,” Horner said. “It can be done by farmers anywhere.”

The carousel milks 250 to 300 cows an hour. Each cow is milked twice a day, producing an average 46 pounds a day. Larger carousels are available but demand more workers and bigger facilities.

Focal’s two milking sheds, each with a 50-cow carousel, are different than many in New Zealand. Missouri’s hot summers demand tall ceilings in the sheds to keep the facilities cool. In New Zealand, most of the milking sheds are open, but with Missouri’s cold winters, the barn needs to be enclosed.

Focal Dairy carousels require two employees to operate. One has 12 seconds to slip the milking sleeves on the udders and check each cow’s health. After the cow finishes its eight minutes on the carousel, another employee takes off the milking sleeves and sprays the udders with iodine to prevent infection.

Van der Poel said Focal’s cows are healthier than cows in confinement dairies. Cows in pasture-based operations experience less stress than cows in confinement dairies. Not only are the cows milked less, they walk and graze more. That increases their life expectancy and fertility. Focal replaces 10 to 15 percent of its herd each year, compared with the roughly 30 percent replacement in a confinement operation. Cows at pasture-based farms can produce milk for five or six years, compared with three years in most confinement operations.

At Focal, most of the heifers are 5-year-old crossbred Holstein and Jersey cows. Crossbreeding creates a cow that can better handle the walking and foraging that pasture-based operations demand. Focal cows not only live longer, but they have a 75 percent fertility rate, compared with 30 percent in confinement.

In a nearby barn, brown, black and white one-day-old baby calves curl up on the crisp golden hay in four pens while others try to stand and walk. Each of the pens has 20 calves, easy for the Focal workers to monitor keep an eye on.

During the fall calving season, more than 60 calves are born each day at the dairy. In the spring, about 100 calves are born each day, keeping the farmers busy. Focal’s “mega mom” is a milk of fresh milk from the carousel that efficiently feeds the baby calves with teats on the sides of the tank.

The milk provides the calves all the nutrients they need for the first two weeks. After that the calves are fed grain in the field. When the cows are 12 weeks old, they begin eating grass, too. Once the cows are two years old, Focal Dairy begins milking them.

Van der Poel and Coltman keep especially busy during calving season, but most of their work is managing the grass. The New Zealander’s intensive pasture-grazing method allows the managers and cows to spend less time in the milking parlors and more time in the pasture. MU Extension’s Ryan Milhollin said traditional confinement dairies milk an average of three times a day while pasture-based dairies usually milk twice a day. Spending less time in the parlor allows pasture-based operations to focus on moving the cows to different pastures to keep the grass from going to seed.

Horner said the cows should be grazing on pasture that looks like an overgrown yard, not a hay field. Horner described why the cows are consistently moved to new fields.

“It’s like you go to a fresh buffet every 12 hours, rather than eating the same buffet that has been picked over,” he said.

Most New Zealand dairies grow perennial rye grass, so the New Zealanders first planted only perennial rye on their Missouri farm. But with Missouri’s climate, the grass goes dormant in the summer and winter. After three frustrating seasons, they looked for help.

Horner said MU Extension specialists suggested to Focal Dairy manages that they plant more species of grass than perennial rye. And van der Poel now plants summer crops that the cows can harvest themselves and grows corn silage to feed the cows through the winter.

Growing grass is a precise science at Focal Dairy. Employees measure the density and height of the grass weekly by dragging a computerized instrument behind their ATV. The computer converts the data into a variety of graphs and charts, showing farmers their feed situation for the next week. The data indicate whether cows should be fed more and how much corn silage and bailed grass is needed. The data also show farmers whether more nitrogen fertilizer is needed or if certain paddocks should be taken out of rotation for hay.

This information about the grass is key in pasture-based dairies. Focal Dairy grass data and feed budgeting techniques help the operation maximize energy and nutrient levels from their grass for optimum milk production.

“We have had one heck of a good year in grass management,” Hamilton said.

Cows fertilize the grass and reduce dairy managers’ work by distributing their own waste. The added benefit requires less labor and equipment and is more environmentally friendly than traditional confinement operations. Van der Poel said people like to see free-range cows. The Focal Dairy cows may look like they’re grazing aimlessly in open fields, but, he said, the operation is a product of a sophisticated, scientific and cost-effective management plan.

Research at the Southwest Center showed pasture-based operations cost farmers less per cow. Comparing the total operating costs, a 700-cow confinement operation costs $14.52 per 100 pounds of milk and a 600-cow pasture-based operation costs $14.08 per 100 pounds.

“A bigger difference is reflected in the return on assets, because the grazing dairy tends to have a high percentage of the capital invested in purchases that appreciate and reproduce rather than rust, rot and depreciate,” Horner said.

The Focal Dairy owners hope to expand the operation, but for now they are focused on reducing costs, becoming more efficient and increasing profits. As milk prices continue to decline in this economic downturn, dairy specialists, MU Extension and the DFA are encouraging and educating farmers to add more pasture-grazing techniques in their operations.

“We really have hit rock bottom in the dairy sector for prices this year,” DFA’s Klippenstein said. “Whether you do it as an intensive style, rotational pasture-based operation or whether you just bring some pasture into your feeding operation, it is going to save you money or make you money.”

Bonus content:

Sharemilking

More grazing stories written by Missouri students

Grazing economics

Sonja Hillgren/Farm Journal Ag Journalism Field Reporting Institute

Volatile Times Solutions offered to tamp down price volatility

Wed, 05 Oct 2022 18:44:12 GMT

As dairy price support levels become less and less relevant to cost-of-production levels, milk price volatility has brought cash flows from booming highs to crushing lows.

A panel discussion at this year’s Dairy Forum addressed this vexing problem. Here are the highlights:

Some volatility is actually not bad, because the overall price trend has been upward, says Cal Covington, former CEO of Southeast Milk. But it hurts dairy sales when prices get too high and leads to crushing losses when prices bottom.

The way Federal Orders set minimum fluid milk prices can exaggerate underlining price changes in cheese and powder markets. Minimums each month are set using just two weeks of prices. Rolling averages of monthly prices—from four to six months—would smooth out the changes but still give direction, Covington says.

Other commodities, such as coffee, chocolate and grains, have as much volatility or more as milk. But because there are direct hedging opportunities, producers and processors are better able to deal with price changes in these markets, says Mike McCully, director of dairy procurement for Kraft Foods.

The Federal Orders four-class system makes direct hedging of dairy products difficult. Complete deregulation is a nonstarter politically, McCully says. Going to a two-class system, as proposed by the National Milk Producers Federation, with fluid milk as Class I and all other products as Class II, would simplify hedging and managing risk.

Getting government involvement out of agriculture, not only dairy, would allow processors and producers to work more closely together, says Bob Naerebout, executive director of the Idaho Dairymen’s Association.

Some milk buyers are interested in long-term price and volume contracts. Those contracts, however, would have to be indexed to reflect price changes for feed and perhaps other inputs. “If a customer wants to lock in prices for an extended period, we would like the regulations to allow us to do it,” Covington says.

“Quotas is an evil word, but what I think we need is structure that would allow for controlled growth. Without one, when prices increase, everybody chases those margins,” says Rob Vanden Heuvel, executive director of the California Milk Producers Council. That extra milk forces prices to crash, and the cycle of bust and boom repeats. “Each cycle gets more severe,” he says.

Now is the time for change, but consent is difficult. Idaho producers may support supply management if it were producer controlled, Naerebout says. In Florida, about a third of producers support a free market, another third support supply management and the remainder vary depending on prices and when you ask them, Covington says.

“The answers are there. We need leaders to push solutions,” McCully says.

“If in five years we don’t see any policy changes, we’ll still be discussing this,” Naerebout says.

Bonus content:

Radical New Plan - NMPF proposal would change

Holstein Association USA Dairy Price Stabilization Program

Recession opportunities Now is a good time to hire skilled workers

Fri, 23 Sep 2022 21:32:15 GMT

The bleak unemployment numbers rolling out of federal and state government offices month after month are a dark cloud for the overall U.S. economy. But there can be a silver lining for employers looking to fill key positions, says agricultural labor management consultant Don Tyler of Tyler & Associates in Clarks Hill, Ind.

“There are more job-seeking candidates available in regions of the country that have had stable employment for many years,” Tyler says. “Many of my clients are finding they now have several good candidates applying for a position where before they felt like they had to take anyone who expressed an interest because there weren’t a lot of candidates to pick from.”

To take advantage of the opportunity, Tyler recommends employers consider the following:

Upgrade your hiring process. If you’re not using job application forms, job descriptions, employee policy handbooks and so forth, put them in place.

“Many of the new candidates will come from a more-structured business environment,” Tyler says. “If you appear to be disorganized or unprofessional, you may lose your opportunity for making the best hire.”

Be selective. Ask more “behavior-based” questions of candidates that help you get to their motivations, attitudes and values. Examples: “Have you ever had to work with a team of people who did not work well together or did not like each other? How did you deal with the situation?” or “When someone in higher management challenged one of your decisions, how did you react?”

Be understanding. Tyler says employers should expect that some new hires might not stay long if they find a better position or higher pay. “That can hurt you and might seem to be unprofessional on their part,” he says.

“But as an employer, you need to realize they might be in a position where they’re trying to keep bills paid based on a previous lifestyle with a higher income.

Another $100 to $200 a month might mean the difference between keeping and losing their home.”

Tyler also advocates ramping up pay for quality hires at a faster rate than you normally would. “It could make the difference between keeping them and losing them for a few more dollars a month.”

An Issue of Trust

Fri, 23 Sep 2022 21:32:06 GMT

Bonus Content:

Farm Journal Legacy Project

Every morning at 4, Jim and Greg Moes meet in their office at their dairy’s new milking center to plan the day’s activities. It’s quieter then, before feed wagons and skid steers and milk trucks roar through the operation.

The brothers were both born in 1953, only 11 months apart. While they can be strong-willed and opinionated with outsiders, they’re in near perfect unison on their goals for their families, employees and business.

They’re so close that they can—and usually do—finish each other’s sentences. “We need to get a transition plan in place; we need an endgate for us,” Jim says. “And we need to plan for the next generation,” Greg adds.

Their situation is an ideal case study for the Farm Journal Legacy Project. The project, sponsored by Pioneer Hi-Bred, is working with three farm families that are transitioning their operations.

The Moes’ case is complicated by the fact that they manage three separate business entities:

MoDak Dairy, a 1,400-cow operation, milks three times a day and raises all replacements.

MoDak Feeds manages some 3,000 acres of cropland for the dairy operation.

MoDak Trucking provides trucking services for the dairy and, up until the MoDak dairy expansion in 2008, provided total mixed rations to neighboring dairies.

Jim and Greg have nine siblings—six sisters and three brothers—all of whom are heirs to part of the operation’s land base. None are active in the business. And all but one live within an hour of the Moes’ century-plus farm on the outskirts of tiny Kranzburg, S.D., a dozen miles east of Watertown.

The family is close-knit and gets together for holidays. At Thanksgiving, they each sit in the same spot around the table as they did when they were kids. But as Jim and Greg start the work of passing the farm to the next generation, things are getting complicated. And they fear the transition could blow up the family, the operation, or maybe both.

“We grow all of our forages, so we have a little better control on our feed costs,” Greg says. “But that’s why we need the land base kept together to grow feed and get rid of the manure,” Jim immediately adds.

Here’s why transition planning is so complicated for Jim and Greg. Their mother, Eileen, owns several quarters of the land they operate.

Another huge chunk of land is in a family trust, with other siblings named as heirs to specific quarters.

The problem is that the acres in the trust have different values because of varying soil type and because some is cropland, some is in pasture. Jim and Greg fear that when their mother passes on, this could cause trouble. There have already been rumblings from some siblings that they want their money as soon as possible.

Buying their siblings out in one fell swoop would be a challenge for Jim and Greg. Financing that, along with their $10 million dairy facility, would stretch cash flow to the breaking point. Even now, with dairy prices hovering near break-even, the operation is in survival mode. “Every $1/cwt. swing in milk price equals $320,000/year in cash flow,” Greg says.

Their estate planners’ only suggestion was to buy life insurance. But each year, as Eileen, Jim and Greg age, the premiums become more cost-prohibitive.

The land issue aside, Jim and Greg want to set up a transition plan that allows the fifth generation of Moes to take ownership. They have several longtime employees that they want to bring into ownership as well.

Lack of a clear transition plan was the reason, at least in part, that Jim’s daughter Nichol and her husband, Eric, left the operation a year ago. They had come back two years before that to help manage the new dairy, which has grown from a few hundred cows to its current 1,400. Jim also has two sons who have worked on and off at the dairy. Neither are currently involved.

Greg and his wife, Julie, who serves as chief bookkeeper and paymaster, have three children. Their youngest son, Scott, came back to the farm three years ago to work as herd manager. His older brother, Jake, came back last year to manage the double-20 parlor (expandable to a double-30). Greg and Julie’s oldest child, Janet, lives in North Carolina with her husband, Matt, and their baby daughter.

And then there’s Lee Tol, the son of Jim’s wife, Cathy, by another marriage. Lee, a trained mechanic, has worked with Jim on the cropping side of the operation for two years.

The long-term employees that will be part of the transition plan are Jeremiah Pederson (six years), who manages Mo-Dak Trucking; Joe Turbes (23 years), the Moes’ main cattle feeder; and Blaine TeKrony (20 years), who is the assistant crop manager and works with Jim.

“Our employees built this operation alongside us, and they deserve a share in ownership,” Jim says. “Without them, we would not have grown as we have,” Greg adds.

The Moes’ situation is typical of multigeneration farms trying to create a succession plan. “The Moes have tried to engage in the succession planning process,” says Kevin Spafford, Farm Journal’s succession planning expert. “But the effort loses steam due to the complexity of the
endeavor, the lack of competent professional assistance and confusion caused by not using a defined process.”

Their situation is a bit atypical as well. “There’s a lack of communication about succession, no clearly defined objectives and only a vague idea of how the next generation should get involved,” Spafford says.

“In my workshops, people are often surprised that we don’t discuss trusts, wills, the estate tax and buy-sell agreements,” he says. “Instead, we talk about communication, family dynamics, leadership development and creating a bigger opportunity.

“These soft issues are much more difficult to learn, but without confronting the emotional stuff, we won’t achieve lasting change.”

Let the work begin.

ABOUT THE FARM JOURNAL LEGACY PROJECT

One after another, readers have reached out to say “thank you” since we launched the Farm Journal Legacy Project in 2008. That’s because the self-reliant qualities that make farmers the strong backbone of our food supply also make it difficult for them to turn over the management reins to the next generation.

The Farm Journal Legacy Project is a catalyst for the process to begin and is devoted to cultivating multigenerational success. A key part of that is providing producers with the tools to simplify the complex and daunting process of succession planning.

A grant from Pioneer Hi-Bred, a DuPont business, will make planning easier for farmers as agriculture takes on the largest transfer of wealth in history.

Even though 80% of farms plan to transfer control to the next generation, only 20% are fully confident in their succession plan. The startling distance between those numbers is at the heart of what motivates Farm Journal and Pioneer to take bold steps to close the gap. The Pioneer grant helps make the following efforts possible:

Extensive editorial coverage of succession planning throughout Farm Journal Media—in Farm Journal, Top Producer and Dairy Today magazines, on the “AgDay” and “U.S. Farm Report” TV shows and on www.agweb.com .

An online library of practical succession planning tools and resources you can use at the Legacy Project Web site, www.farmjournallegacyproject.com .

A monthly “Leave a Legacy” TV show on the “AgDay” national network.

Hands-on workshops led by Kevin Spafford, Farm Journal succession planning expert.

A Legacy Project workbook to help guide and organize your analysis, planning and succession steps.

A free weekly eNewsletter to help inspire and guide your operation’s succession planning moves. To sign up, go to www.farmjournallegacyproject.com .

—Charlene Finck, Editor, Farm Journal

Diamonds in the Rough

Fri, 23 Sep 2022 21:32:01 GMT

Bonus Content

DairyWorks

2010 Elite Producer Business Conference

Spanish translation

With today’s largely Hispanic work crews, finding a midlevel manager to lead the team is never easy. But finding an Anglo who speaks Spanish, understands Hispanic culture and exhibits leadership ability is a trifecta with odds longer than at any racetrack.

A better approach, says Tom Fuhrmann, a dairy management specialist with DairyWorks, Phoenix, Ariz., is to promote from within your existing milking or barn crew: “It is easier than finding an Anglo who can relate well to a Hispanic team.”

He says there are four leadership characteristics you should look for in a midlevel manager: integrity, ability to communicate succinctly, intelligence to solve problems and organizational ability.

Integrity. Integrity—a combination of character and values—is the most important factor in identifying a potential manager. As an owner, you will have to build a trusting relationship with the individual who manages a team of workers. He is the person who must implement your management philosophy with workers in the parlor and outside in the pens. And he has to be able to come to you when things go wrong.

“Similarly, workers choose whom they want to follow, and trust is the basis for why workers choose to follow a leader,” Fuhrmann says. “Trust only develops over time when others come to see their manager as credible, fair, just and responsible.

“You need to look for the individual who has influence over others on his crew. Who is the person who others rally around—who is the quarterback of the team? Who is the person others go to with a problem or ask to represent them to you with a complaint?”

Communication. “It helps if the person you select is bilingual. But just because an individual can speak English doesn’t mean he’s a leader,” Fuhrmann warns.

“A head miller, for example, has to train, correct and encourage workers. So a potential leader is one who shows he likes people, talks with ease, is serious when he needs to be and listens with respect,” he says. “Watch worker interaction: Who do most of your workers listen to and talk with when work-related issues surface?”

Once you select a middle manager, and as a condition of the promotion, insist that he or she learn English. This person will have to communicate with you, your veterinarian and outside vendors such as equipment dealers or suppliers.

Intelligence. “Like any other group, Hispanic workers will not trust someone to lead them who doesn’t have experience or know what he’s talking about,” Fuhrmann says. “Your leader needs to be someone who demonstrates competency.

“That means he is seen as knowing how to do things correctly. Because of his experience and intellect, he is not only technically competent (can find and fix a malfunctioning pulsator), he is also open-minded and accepts change (willing to try implementing a new milking routine).”

As an owner, you want your manager to understand why things must be done in a certain way.

“Knowing the why behind the what is a really important factor for a person in a leadership role,” Fuhrmann says.

Organization. A mid-level manager has to have the organizational ability to prioritize and get things done beyond the normal routine of milking, feeding and breeding. “If there’s a problem, such as a down cow in the parlor, can he get it resolved quickly while keeping the rest of the workers focused on milking?” Fuhrmann asks. “Most followers can’t handle the pressure; leaders thrive on it and view it as a challenge.”

Finally, in Hispanic culture, age and gender can be barriers to the members of a team accepting an individual as their leader. But individuals who possess leadership ability, integrity and job competence will in time gain the trust of their crews, Fuhrmann says.

2010 ELITE PRODUCER BUSINESS CONFERENCE

Dairy Today’s Elite Producer Business Conference, to be held Nov. 8 to 10 at the Bellagio in Las Vegas, offers a unique opportunity to learn from and network with top minds in the business.

Tom Fuhrmann (see story) will flesh out details on finding middle managers. His presentation is just one of a dozen that will bring you up to speed on the economic recovery, the 2012 farm bill debate and other issues key to dairy’s future. Among them:

Michael Swanson, chief ag economist for Wells Fargo Bank, will provide analysis of the economic recovery. Swanson has keynoted the conference every year since it started in 2002.

Jim Tillison of the National Milk Producers Federation (NMPF) and Jerry Slominski of the International Dairy Foods Association will debate the opportunities and challenges of NMPF’s Foundation for the Future program. This program would do away with dairy price supports and Milk Income Loss Contract payments and replace them with margin insurance with no milk production caps. It would also make dairy pricing more transparent, relying on what cheese processors actually pay for milk.

Tony Mendes, a California dairy producer, and Sue Taylor, vice president of dairy policy and procurement for Leprino Foods, will discuss California’s dairy future.

John Larsen of Safeway Foods, Rich Snyder of Dairy Farmers of America and consultant Paul Weitzel of Willard Bishop will discuss emerging trends related to the postrecession consumer. Once brand-conscious but now value and price driven, consumers’ needs and wants offer a new set of marketing challenges.

David White, senior director of issues management for the Ohio Farm Bureau, will discuss Ohio’s long battle with the Humane Society of the United States about animal care regulation and what it takes to defeat animal rights activists in your state.

Monte Hemenover, nationally known dairy consultant, will detail key aspects of keeping your region competitive not only within the country, but within the growing global dairy market.

Undercover Snoops

Fri, 23 Sep 2022 21:32:01 GMT

Bonus Content

Animal handling policy example:
English
Spanish

Report on Undercover Activists

The undercover taping of animal abuse at farms in Ohio and Pennsylvania earlier this year has been one of those proverbial wake-up calls.

Not only must dairy operations revisit their animal handling policies, it serves as a dire warning that employees might not be who they say they are. Take note: The undercover videographer who taped the alleged abuses in Pennsylvania was the same person who months later taped the Ohio incident.

A closer vetting of new hires is absolutely essential in protecting your dairy from a similar incident, says Eric Hobbs, an attorney with Michael Best & Friedrich LLP, based in Milwaukee, Wis. Hobbs specializes in labor and employment issues.

While the chances of actually hiring someone who is an undercover animal rights videographer are probably remote, delving into a job applicant’s previous work record and references is only sound business, Hobbs says.

“Absolutely check references. There are some shocking statistics on the high percentage of resumés and job applications that have puffery or outright lies about previous employment and education,” he says. “Checking references thoroughly is time-consuming. But you want to vet each applicant really well. It’s easier not to hire than it is to fire.”

Previous employers might give you only “name, rank and serial number”—that is, that the employee did indeed work for them, and start-to-quit dates. Many employers believe they cannot legally give you more, or decline to do so for fear they could be sued by a previous employee for giving a bad reference.

But if an employee was disruptive or had other issues, some previous employers may subtly signal that there were problems. If there were major problems—for example, if a former employee sexually assaulted a coworker on the job and there is a risk that he or she might do so again—the employer could be held legally liable in some states for not disclosing this information to you, Hobbs says.

During the employment interview, it is perfectly legal to ask whether the applicant is or ever was a member of an animal rights group. If the answer is yes, you can then ask how deeply involved the applicant is (or was) in the organization.

Mere membership in an animal rights group is not a “protected characteristic” under
employment law, as are race, gender, sexual orientation, religion, veteran status and union membership, Hobbs says. Sympathy with animal rights efforts, however, can be an outflow of a person’s religious convictions. But if you feel uncomfortable hiring an applicant who is sympathetic to animal rights causes and he or she has not tied that sympathy to a religious
conviction, you have every legal right not to hire the person.

At the same time, if a person denies ever being a member of an animal rights group and you hire that person and later learn otherwise, the lie is grounds for dismissal. “So it’s good to ask the question, because you are creating a record in the employment interview that you can use later
if you need to,” Hobbs says.

Hobbs also recommends having a written job application that every applicant completes. Again, asking whether the applicant is a member of an animal rights organization should be on the form. “Having something in the individual’s handwriting is even better than having a record of admission or denial during an interview,” Hobbs says.

A Google search of the applicant is also perfectly legitimate. In fact, Hobbs says, it could well be a good idea. “The Internet is a virtual gold mine for employers because it is a great way to find out more about a potential employee,” he says. “You also can require that the applicant tell you what name he or she goes by on Facebook and that applicants confirm you as a friend if you invite them.”

If you decide to do an Internet search of the applicant, “check the Facebook page immediately to ensure that the applicant doesn’t remove material he realizes all of a sudden it wouldn’t be good for you to see,” Hobbs says. “It’s amazing what people will say on Facebook.”

The downside to a Google or Facebook search is that you might learn things about the applicant that you do not want to know because it is not relevant to the job the person has applied for. A search might also reveal a protected characteristic of the applicant that you do not need to be aware of—such as membership in a religious organization, union or association of people with disabilities.

If you later discipline or terminate the person, he may claim that you discriminated against him based on his membership in the protected class you learned he was part of during the application process.

If you decide not to hire an applicant because he or she is, or might be, a member of an animal rights group, that is your right. Whether you should share that decision with neighbors or a trade association is another matter.

“If you’re literally just suspicious of the person but have no reliable basis in fact that you can point to for that suspicion, defamation could be a problem,” Hobbs says.

“But facts are facts,” adds David Crass, an attorney and colleague of Hobbs. “If in the interview or on the job application the person said he was not an animal rights supporter but his Facebook page says ‘yes,’ that information can be shared. For your protection, take a screen shot of the Facebook page and file it with the application.”

POLICY MANUAL MUST-HAVES

For both ethical and legal reasons, your employee manual should include a section on animal care and handling.

“Adopt a zero-tolerance policy on animal abuse,” says David Crass, an attorney with Michael Best & Friedrich, based in Madison, Wis. Also require that any abuse by other employees must be reported immediately to a senior manager.

“Then you need to train employees in appropriate animal handling techniques, and police employees on the policy,” he says.

If an employee is caught videotaping another employee abusing an animal without telling you about it, that employee has violated the policy because he or she did not immediately report the abuse. That failure could be cause for termination.

Personal cell phone and camera use should also be covered in the policy manual. There is no limit on what employers can prescribe, Crass says. You can prohibit any use of a personal cell phone, requiring employees to leave phones in their vehicle.

“In fact, you’re more likely to run afoul of the law if you don’t prohibit use, one of your employees talks and drives, and then causes an accident,” Crass says.

Some dairies provide two-way radios to their employees for on-farm communication. The employees simply check a radio out when they start their shift and return it when they’re done for the day.

Other operations have dairy-issued cell phones without camera or recording capability, and prohibit texting or talking while driving vehicles or operating equipment.

Rotary Robots

Fri, 23 Sep 2022 21:31:57 GMT

For producers with large herds, the dream of robotic attachers on rotary parlors is one step closer to reality.

DeLaval has introduced its prototype robotic rotary, a 24-stall herringbone configuration that can milk up to 800 cows 2X or 540 cows 3X. That capacity comes with a Cadillac version of the automatic milking rotary: the AMR.

“Dairy farmers have been asking for an automatic milking rotary for a long time. We developed the AMR with three key customer benefits in mind: profitability, farm management and flexibility,” says Andrew Turner, DeLaval vice president of capital goods.

Bonus Content

DeLaval AMR™-details on the world’s first automatic milking rotary unveiled

Diagram of DeLaval’s robotic rotary system

Since the AMR is still in development and must be tested commercially this year, the units are not yet for sale, nor have prices been determined. DeLaval officials will only say that the units will be sold at an economically attractive price. Commercial robotic rotaries should be available in 2012, Turner says.

The local labor supply will determine whether dairy producers choose robotic milking over conventional systems. “Not the price of labor but the quality of the work determines demand for robots,” asserts Joakim Rosengren, president and CEO of DeLaval.

“Whether in Europe, Russia, Australia, South America or North America, if there are no good milkers available, robots will take over the job,” he says.

In its current stage of development, there are two versions of the AMR, each with 24 stalls. The basic version has one robot for cleaning and prepping teats, one robot to attach the milker units and one robot for postmilking teat spraying. The higher-capacity version has two robots for prepping teats, two for attaching units and one for post-milking spraying.

With the basic version, one robot prepares all four teats while another robot attaches cups to all four teats. In the high-volume version, four robots work on four cows at the same time. Each robot prepares two teats and attaches cups to two teats. The rotary then moves forward, and the next robot preps and attaches the remaining teats. A fifth robot is used to disinfect all of the cow’s teats after milking is completed.

The basic version has a capacity of 50 cows per hour. This forces a larger herd to milk in groups, rather than allowing the cows to come to the parlor voluntarily.

Milking in groups would allow the high-capacity parlor to milk up to 800 cows 2X. Allowing cows to come voluntarily to the high-capacity AMR would lower the number of cows milked 2X to 700.

The cows walk onto the carousel as onto a traditional rotary. Each cow is identified through electronic ID, but if she is coming voluntarily rather than in a group, she can only enter the stall after a certain time has passed since the previous milking.

When a cow enters the stall, the parlor stops at the first robot position, where individual teats are washed and dried. The platform then moves forward to the next robot, where the individual teat cups are attached. As milking is completed, the cups are automatically removed and the teats are sprayed with teat dip as the cows leave the parlor.

The AMR monitors milk yield, somatic cell count and milk color (blood) for each quarter of each cow. However, unlike the stationary voluntary milk systems where cows enter individual stalls, the current AMR versions do not separate milk of inferior quality. The dairy producer must therefore be very keen on the health of the cows and milk questionable or treated cows separately.

“Not offering milk separation on the AMR is a choice we have made based on cost and efficiency,” says Jonas Hallman, DeLaval’s director of automatic milking systems. Technically, such a system is possible. “However, using the AMR for only a few cows would make it rather expensive, while it would limit capacity,” he says.

In addition, concentrate feeding during milking will not be an option with the current class of robotic rotaries. The reason: “Cows that eat move more,” Hallman says. As a result, teat preparation and teat cup attachment is that much more difficult and slower.

The first prototype robotic rotary parlor was built at DeLaval’s Hamra Farm, a test facility in Sweden, in 2008. A second prototype was installed at the FutureDairy research and test farm in New South Wales, Australia.

The main problem when developing the system was how to clean teats and attach units on a moving cow on a moving platform with a moving robot.

The solution is a sensor that registers the location of the cow. The sensor guides the robot arm toward the teat, helped by coordinates that are stored in the memory of the system. The exact position of the teat is then identified by a camera and laser. The system is suitable for all sizes of cows, DeLaval says.

One innovation of the robotic rotaries is that each robotic arm is equipped with two magnetic clips that each holds a teat cup. As a result, connecting two cups requires only one arm movement.

At the beginning of the project, DeLaval engineers toyed with the idea of working with an external parallel rotary and attaching the teat cups through the back legs of the cows. But this approach did not work very well.

As an alternative, an internal herringbone configuration was developed. The herringbone makes it possible to approach the cow from the side, like robots in conventional, single-box systems.

The downside is that the AMRs can’t be retrofitted onto existing rotary parlors that attach units between the two rear legs. But retrofits on herringbone parlors configured for inside-the-diameter attachment might be possible, depending on the dimensions of the parlor and the stalls. Due to the weight of the robotic attachers, a heavier suspension and rollers will likely be required.

However, DeLaval officials foresee the day, perhaps within a decade, that robotic milkers could be used in straight-line, parallel parlors. They say such parlors would simply give producers another milking system option.

The new AMR system is a collaboration between DeLaval and the Australian FutureDairy project, which includes Dairy Australia, Industry & Investment NSW, the University of Sydney, Dairy NSW and the Dairy Research Foundation.

Arizona Farm Groups Not Happy With New Immigration Law

Fri, 23 Sep 2022 21:31:48 GMT

At least three major Arizona agricultural groups aren’t pleased with the new immigration law the state passed last Friday.

“We’re pretty disappointed Arizona went to this extreme,” said Wendy Fink-Weber, director of communications for Western Growers Association, a trade organization with 2,500 members in California and Arizona. Its members grow, pack and ship about half of the nation’s fresh fruits, nuts and vegetables.

“The only good thing that may come out of this is that perhaps it will push the federal government and Congress to do something about an area of labor that needs to be addressed,” Fink-Weber said.

Fink-Weber said the produce industry has always been upfront and honest in acknowledging that many farm laborers are in the U.S. illegally, and too many have false documentation.

“We want a legal workforce,” she said.

Arizona Governor Jan Brewer signed the controversial immigration bill April 23, saying it will help the state solve a crisis that the federal government has refused to fix. The new law will require anyone whom police suspect of being in the country illegally to produce “an alien registration document,” such as a green card, or other proof of citizenship such as a passport or Arizona driver’s license.

The new law is “problematic” and “not the way to solve” the issues of immigration and border control, said Joe Sigg, director of government relations with the Arizona Farm Bureau.

“We rely heavily on immigrant labor in Arizona,” said Sigg. “We have to be able to recruit the labor,” but that may become more difficult with the anti-immigrant reputation Arizona could develop as a result of the legislation.

The uproar over the new law, which has drawn international attention and calls for boycotting business with Arizona, might “in a perverse way, encourage federal efforts on border security.” Sigg said.

“We need federal reform that takes care of borders, work visas and those here who are not properly documented,” he added.

Mike Billotte, vice president of government affairs for United Dairymen of Arizona (UDA), said the new law was “a Draconian measure” that won’t likely do much to move the federal government toward much-needed, comprehensive immigration reform anytime soon. “There is just too much political machinery” for that to happen, Billotte said.

UDA is a milk marketing cooperative that represents about 90% of Arizona’s milk production.

Billotte was also concerned that backlash from the new law “could have a far-reaching effect on the Arizona economy.”

Arizona’s new immigration law “is very punitive and will have an impact on the state’s labor force,” said Bob Grey, executive director of the Northeast Dairy Farmers Cooperative.

Whether the Arizona law will speed efforts at federal immigration and guest-worker reform is doubtful, Grey added. Key players in the U.S. Senate have predicted nothing will get done on the dual issues until after the 2012 Presidential election.

Undertaking federal immigration and guest-worker reform “is heavy political lifting,” Grey said.

Catherine Merlo is Western editor for Dairy Today. You can reach her at cmerlo@farmjournal.com .

Profit in the Details: Variation is a Warning

Fri, 23 Sep 2022 21:31:48 GMT

DAN LITTLE, DVM, manages DairyNet’s Dairy Solutions Center in Brookings, S.D.
You can contact him at dlittle@dairynetinc.com or visit www.dairynetinc.com .

Albert Einstein has often been quoted as saying, “The definition of insanity is doing the same thing over and over again and expecting different results.”

An application of this thought can be found in the relationship between dairy efficiency (DE) and somatic cell count (SCC) due to its extreme variability.

DE is calculated by dividing the amount of energy-corrected milk (ECM) by dry matter intake (DMI). The average DE of the herd in the chart for the month of January is 1.44 lb.

At first glance, it may appear that the SCC levels in this herd parallel the changes in DE. However, since an improvement in SCC results in a decreased value and an improvement in DE causes a
decrease in values, these relationships indicate that one variable does not cause the other. Process variation and procedural drift may be contributing to the poor results for both parameters.

Obviously, the SCC levels for this dairy are quite high, with an average of 465,000 cells/ml and a range of 330,000 to 595,000 cells/ml in the 31-day time frame. Similarly, DE has a low average of 1.44 lb., with a range of 1.3 to 1.66 lb.

Consider your own dairy operation: Which management factors might be common to feed efficiency, as well as milk quality? For optimal results, both areas of the operation require a similar approach to training and management, even though the processes and procedures involved are different.

Bonus Content

Consistency and Control

Control Chart

I often see evidence of training and evaluation shortcomings that impact multiple processes on a dairy. For example, variability in stall management and parlor procedures certainly has an impact on herd SCC. The same training factors that result in poor compliance for milk quality may have a similar effect on accuracy of feed mixing and delivery, variability in feed quality, and variation in transition and hospital pen management.

Controlling variation in any system requires that the employees clearly understand the goals of their dairy. Management personnel must train, evaluate and retrain employees until the goals and objectives of the dairy are being met on a consistent basis.

Which areas of management are creating “insanity” on your dairy? Take some time to consider alternative management approaches that may help to decrease the amount of variation in your operation.

Western Dairy Group Praises California Governor’s Veto of Card-Check Bill

Fri, 23 Sep 2022 21:31:43 GMT

Bill would have enabled unions to bypass elections by urging the majority of a grower’s workers to sign cards.

Source: Western United Dairymen

Western United Dairymen (WUD) last week praised Governor Jerry Brown for his veto of SB104, known as the card-check bill.

“We thank the Governor for his veto of SB102,” said WUD President Jamie Bledsoe. “Every member of Western United Dairymen recognizes the critical role that our talented workers play in producing the safest, most nutritious and highest quality milk in the world. The teams we work with on our family dairy farms are essential to the success of our dairies and critical to a bright future for locally grown California food within our great state. We thank the Governor for his vision in assuring that agricultural workers should be granted the promise of a labor process unfettered from bullying threats and intimidation.”

The bill would have enabled unions to bypass elections by urging the majority of a grower’s workers to sign cards, and would have essentially gutted portions of the state’s 1975 Agricultural Labor Relations Act, which Brown championed during his first term in the governor’s office.

Bledsoe also praised the grassroots efforts of WUD members who sent letters to Governor Brown urging a veto, and the ongoing efforts of Gary Conover, WUD’s director of government relations.

“Our members made their voices known and had a real impact on this decision,” said Bledsoe. “We are fortunate to have a legislative advocate like Gary Conover who is tireless in advocating for the needs of our members. This was truly a team effort and everyone deserves thanks for a job well done.”

Looking ahead, Bledsoe commented, “WUD is committed to continuing to work with labor, the Governor, his Secretary of Agriculture, and other interests to promote the interests and well-being of workers on California dairies.”

In his veto statement, Brown noted that he signed into law the nation’s first agricultural labor relations act, the ALRA. “The proponents of SB104 argue that ALRA no longer works and must be drastically changed, he said. “SB104 is indeed a drastic change and I appreciate the frustrations that have given rise to it. But, I am not yet convinced that the far reaching proposals of this bill—which alter in a significant way the guiding assumptions of the ALRA—are justified. Before restructuring California’s carefully crafted agricultural labor law, it is only right that the legislature consider legal provisions that more faithfully track its original framework. The process should include all those who are affected by the ALRA.”

Brown said he was “deeply committed to the success of the ALRA and stands ready to engage in whatever discussion—public and private—that will accomplish the appropriate changes. As at the beginning, all parties must be heard and, before any product emerges, a wide array of opinions and experiences should be fairly considered. Besides being personally involved, I will direct my Labor and Agricultural Secretaries to reach out to all those who can help us achieve a fair and just result.”

Cultivating a New Crop of Farmhands; Tougher Immigration Laws and a Shrinking Local Labor Pool have Farm Owners Hiring Guest Workers to Ensure the Harvest Gets Brought In

Fri, 23 Sep 2022 21:31:38 GMT

The coming of fall means apple-picking time at Lakeview Orchards.

It also means about 70 Jamaican workers will relocate to the hamlet of Burt to help bring in the harvest.

They are filling a critical labor void that has become so severe that some farms are actually cutting back on planting so they have less produce to harvest when autumn arrives.

“The big problem is the continuous, long-term uncertainty of it all,” said Marc Smith, an extension associate in the Dyson School of Applied Economics and Management at Cornell University. “At any given moment you could lose a large percent or even all of your work force.”

Finding workers has become the number one concern for many local farmers. Tougher immigration laws, local people gravitating to other work, and the lack of an effective guest worker program makes filling the fields with workers more difficult than it was in the past.

Dan Sievert, owner of Lakeview Orchards, used to hire migrant workers to harvest his crops. Now he relies on a guest worker program first outlined more than 50 years ago, when the men who normally did farm work were overseas for World War II.

“It’s like an insurance policy,” Sievert said of the cumbersome H-2A temporary worker visa process he must go through to hire guest workers. “I know that border patrol and immigration officers won’t be coming and taking my workers.”

About 200 H-2A workers have been approved to work in New York in each of the past five years, according to the U.S. Citizen and Immigration Services. The visiting workers do the work that many locals shun.

Western New York’s traditional crops like fruit, peppers and squash require a lot of man-hours to harvest, so if workers are not at the farms on time, farmers can lose thousands of dollars of crops in a matter of days.

“We are extremely labor-intensive and we have extremely limited time frames,” said Mark Henry, president of the New York State Vegetable Growers Association. “We cannot wait [for workers to show up]. Our season is not open-ended.”

Farms need skilled people willing to put in the long hours and to stay the whole season, which is difficult to find among an entirely domestic work force.

By hiring workers who have the agricultural H-2A visas, farmers can get a steady workforce and avoid the headache of finding and hiring foreign workers who have the proper documentation.

The H-2A visa has tight restrictions -- employees can only stay for a year and must work a specific job. This makes it unworkable for many dairy farmers, who don’t want to have to train a new crew each year, as well as for small vegetable farmers, who often need workers to perform more than one specific job.

Brant farmer Marty Rosiek said such restrictions and the required paperwork make the H-2A process too difficult for him to use to staff his small farm. In the past, Rosiek has had up to 12 workers on his 140-acre farm for the harvest. This year there were only five people, prompting him to seek creative solutions.

“We’ve got some Amish friends we want to work with,” said Rosiek, owner of MCR Farms. “I’ll definitely cut back the acreage.”

Next year he only plans to farm about 80 acres. He also is considering changing crops to something that can be harvested mechanically, like corn or soy beans.

Four Puerto Ricans are on the team that works at the W.D. Henry and Sons farm in Eden each season, Henry said. They’ve been coming back for 25 years and unlike some domestic farmhands, they want to work the hours.

“To have U.S. workers they don’t make the [whole] season because it’s just too hard of work and they decide to go do something else,” Sievert said. Some workers stick out the season, but if they don’t, trying to find another pair of hands mid-harvest can be difficult.

When it comes to foreign workers, employers now must shoulder the burden of proving their employees are legal, and the punishment that follows if they’re not has largely been shifted to employers.

“Documents come under greater scrutiny as we as employers are under more and more pressure to verify that our workers are legal or not,” said Sarah Noble-Moag, an owner of Noblehurst Farms, a Linwood dairy farm. “The paperwork has been a lot harder to keep up with. It’s not business-friendly.”

While foreign workers are more nervous about working because of the potentially harsh consequences, local workers show little interest in working the harvest, even in a down economy during which hundreds of applicants line up for other job openings.

“There’s a shortage of local labor,” Noble-Moag said. “As more and more people get away from the farm for jobs and opportunities, they look elsewhere.”

Dairy farms require year-round and around-the-clock work, said Paul Baker, executive director of Agriculture Affiliates. Many dairy farms have been able to fill day shifts, but are still lacking night-shift workers.

Since cows can be milked three times in a 24-hour period, the farm could lose out on a third of its profits without those night-shift workers. And the H-2A visa does not apply to the year-round needs of a dairy farm.

“Labor is the biggest threat to our business,” Noble-Moag said. “It hinders us in our ability to invest more capital into this business. If we don’t have the labor to support it, we’re not going to make those investments.”

If business goes well and Noblehurst’s owners consider expanding, they will consider parlors with mechanical milkers, she said. It’s a more expensive option, but it removes the need for so much labor.

The increased difficulty of finding workers for any farm job has driven farmers like Noble-Moag to visit Washington, D.C., to host visits by representatives and to worry about legislation.

A bill that recently left the House Judiciary Committee could make E-verify, a system used to ensure all employees are legal U.S. workers, mandatory for all employers. That adds to farmers’ anxiety, Smith said.

“That uncertainty has a price,” Smith said.

The price is filling out paperwork, as Sievert does each year, or going to Washington to lobby, as Noble-Moag’s family has done.

Statistics say that as many as 75 percent of farm workers do not have the documentation to work legally, Smith said. The impact on the farm industry of forcing these workers to leave is immeasurable.

“Especially when you’re dealing with weather and biology and time that’s crucial, you need to have people and skills available at the right time,” Smith said. “These people are decent and honest and hard-working and they show up to work.”

email: mtighe@buffnews.com