WEBVTT 00:00:11.720 --> 00:00:15.060 Breaking free from the chains of the past Where 00:00:15.060 --> 00:00:18.820 truth moves faster than a Holstein calf No law 00:00:18.820 --> 00:00:21.660 waiting on some printed page We're charting new 00:00:21.660 --> 00:00:25.300 ground in the digital age From genomic codes 00:00:25.300 --> 00:00:29.120 to robot facts We cut through the noise, no hold 00:00:29.280 --> 00:00:32.460 them back not your daddy's dairy news tonight 00:00:32.460 --> 00:01:03.649 we're sparking Welcome to the Bullvine Podcast, 00:01:04.129 --> 00:01:06.989 where we challenge conventional wisdom and deliver 00:01:06.989 --> 00:01:09.750 the insights that matter most to dairy industry 00:01:09.750 --> 00:01:12.890 professionals. I'm your host, and today we're 00:01:12.890 --> 00:01:14.989 diving deep into one of the most controversial 00:01:14.989 --> 00:01:18.969 topics shaping our industry right now. You've 00:01:18.969 --> 00:01:20.950 probably heard the narrative countless times 00:01:20.950 --> 00:01:23.329 at producer meetings and industry conferences. 00:01:23.969 --> 00:01:27.150 Illegal immigration killed the family dairy farm. 00:01:27.599 --> 00:01:29.700 But what if I told you that everything you've 00:01:29.700 --> 00:01:32.200 heard about this topic is completely backwards? 00:01:32.959 --> 00:01:36.359 What if the real story behind dairy's great consolidation 00:01:36.359 --> 00:01:39.939 has nothing to do with immigration and everything 00:01:39.939 --> 00:01:44.019 to do with cold, hard economics? In today's episode, 00:01:44.180 --> 00:01:46.560 we're examining the forces that have led to the 00:01:46.560 --> 00:01:50.040 loss of over 15 ,000 dairy farms in just five 00:01:50.040 --> 00:01:53.099 years, while milk production has actually increased. 00:01:53.359 --> 00:01:56.180 We'll explore why farms with 2 ,000 cows or more 00:01:56.480 --> 00:01:59.659 operate at nearly $10 per 100 weight less than 00:01:59.659 --> 00:02:02.319 their smaller counterparts, and why this cost 00:02:02.319 --> 00:02:05.900 gap, not labor policy, is the real driver of 00:02:05.900 --> 00:02:09.300 consolidation. This isn't about politics. This 00:02:09.300 --> 00:02:11.500 is about understanding the economic fundamentals 00:02:11.500 --> 00:02:14.819 that determine who survives and who gets consolidated 00:02:14.819 --> 00:02:18.300 in modern dairy farming. So grab your coffee, 00:02:18.379 --> 00:02:20.780 and let's get into the data that's reshaping 00:02:20.780 --> 00:02:22.800 everything we thought we knew about our industry. 00:02:24.120 --> 00:02:26.659 Welcome back to the Bullvine podcast, the show 00:02:26.659 --> 00:02:28.900 that digs deep into the topics that matter to 00:02:28.900 --> 00:02:31.120 dairy producers. That's right. Today, we're tackling 00:02:31.120 --> 00:02:33.680 a really interesting feature article from the 00:02:33.680 --> 00:02:35.560 Bullvine that's got everyone talking. We're going 00:02:35.560 --> 00:02:38.620 to break it all down. This deep dive is all about 00:02:38.620 --> 00:02:42.300 dairy's great consolidation beyond the blame 00:02:42.300 --> 00:02:45.319 game. It challenges a, well, a very common narrative 00:02:45.319 --> 00:02:47.759 you might have heard. indeed the one that often 00:02:47.759 --> 00:02:50.300 blames immigration for the loss of family farms. 00:02:50.500 --> 00:02:54.300 It's a powerful, frequently repeated story when 00:02:54.300 --> 00:02:57.060 we see such rapid change in the industry. But 00:02:57.060 --> 00:02:59.960 what does the data in this report actually reveal? 00:03:01.000 --> 00:03:04.080 about that belief. Let's unpack this. Okay. So 00:03:04.080 --> 00:03:06.599 the article immediately challenges that common 00:03:06.599 --> 00:03:08.180 narrative. You know, the one saying immigrant 00:03:08.180 --> 00:03:10.740 workers are destroying the dairy industry. Yeah, 00:03:10.759 --> 00:03:12.000 I've definitely heard that one floating around. 00:03:12.199 --> 00:03:14.659 But what's fascinating here is how the data from 00:03:14.659 --> 00:03:16.979 the Great Consolidation Report completely flips 00:03:16.979 --> 00:03:19.719 that script. It's counterintuitive for many, 00:03:19.800 --> 00:03:22.280 maybe, but the analysis shows immigrant workers 00:03:22.280 --> 00:03:24.580 are not destroying dairy. They are absolutely 00:03:24.580 --> 00:03:27.620 essential to its survival. Essential is a... 00:03:27.849 --> 00:03:30.469 strong word. The article highlights they produce, 00:03:30.590 --> 00:03:32.930 what, like 79 % of America's milk supply? Is 00:03:32.930 --> 00:03:35.270 that right? Yes, 79%. It's the vast majority. 00:03:35.770 --> 00:03:39.930 And the economic modeling from Texas A &M paints 00:03:39.930 --> 00:03:42.289 a pretty dire picture if that workforce were 00:03:42.289 --> 00:03:45.069 to just disappear. Right. It projects milk prices 00:03:45.069 --> 00:03:48.490 spiking by, what was it, 90 .4 %? Yeah, 90 .4%. 00:03:48.490 --> 00:03:52.110 And the entire industry losing about $32 .1 billion. 00:03:52.569 --> 00:03:55.389 So it shows an industry that isn't being killed 00:03:55.389 --> 00:03:58.020 by immigration, but is, you know, profoundly 00:03:58.020 --> 00:04:00.639 dependent on it just to function. This truly 00:04:00.639 --> 00:04:02.599 flips the script on the blame game. Okay. So 00:04:02.599 --> 00:04:04.500 while we're clearing that up, we still have to 00:04:04.500 --> 00:04:08.120 face the raw numbers on farm loss because they 00:04:08.120 --> 00:04:11.099 are, well, they're brutal. The USDA census data 00:04:11.099 --> 00:04:15.340 shows we lost 15 ,866 dairy farms just between 00:04:15.340 --> 00:04:19.019 2017 and 2022. Yeah. That's more than three operations 00:04:19.019 --> 00:04:20.920 closing every single day. These are tough numbers 00:04:20.920 --> 00:04:22.819 and it's visible, right? You see those for sale 00:04:22.819 --> 00:04:25.000 signs where dairies used to be, but here's the 00:04:25.000 --> 00:04:26.970 twist. What happened to total milk production 00:04:26.970 --> 00:04:29.329 during that same time? You'd think it would drop, 00:04:29.389 --> 00:04:31.509 wouldn't you, with all those farms closing? Logically, 00:04:31.509 --> 00:04:34.449 yes. But no. Total milk production actually increased 00:04:34.449 --> 00:04:38.689 by 5%. It went from 215 .5 billion pounds in 00:04:38.689 --> 00:04:43.870 2017 up to 226 .4 billion pounds in 2022. Fewer 00:04:43.870 --> 00:04:47.250 farms, more milk. Fewer farms, more milk. That 00:04:47.250 --> 00:04:49.629 tells you very clearly that some operations have 00:04:49.629 --> 00:04:52.250 figured out how to operate at a... well, a massive 00:04:52.250 --> 00:04:54.910 scale. They've cracked the code on efficiency. 00:04:55.310 --> 00:04:57.329 And the geography is fascinating, too. You know, 00:04:57.329 --> 00:04:59.089 traditional states like Wisconsin, Pennsylvania, 00:04:59.209 --> 00:05:02.509 New York, they saw significant farm losses. We're 00:05:02.509 --> 00:05:06.230 talking 2 ,740 in Wisconsin alone. Right. Big 00:05:06.230 --> 00:05:09.300 numbers. Pennsylvania lost 1 ,570. New York, 00:05:09.399 --> 00:05:13.139 1260. But then states like Texas, Idaho and New 00:05:13.139 --> 00:05:15.439 Mexico are seeing significant investment in new 00:05:15.439 --> 00:05:17.819 facilities. Big ones. Exactly. This isn't random. 00:05:17.879 --> 00:05:20.220 It's strategic capital following the most profitable 00:05:20.220 --> 00:05:22.639 opportunities. It's not about chasing cheaper 00:05:22.639 --> 00:05:24.939 labor primarily, but about pure economies of 00:05:24.939 --> 00:05:27.939 scale. As one banker friend quoted in the article 00:05:27.939 --> 00:05:29.980 put it, the middle is disappearing. You're either 00:05:29.980 --> 00:05:31.740 getting really big or you're getting out. Getting 00:05:31.740 --> 00:05:33.759 bigger, getting out. Yeah. And the USDA census 00:05:33.759 --> 00:05:36.019 data backs this up with a huge structural shift. 00:05:36.120 --> 00:05:40.220 Farms with under 100 cows down 42%. 42%. Then 00:05:40.220 --> 00:05:46.680 100, 499 cows down 33 .6%. Even the 500, 999 00:05:46.680 --> 00:05:50.560 cow farms saw a 35 .1 % drop. And the 1 ,000, 00:05:50.680 --> 00:05:54.579 2 ,000, 499 cow farms were down 10%. So losses 00:05:54.579 --> 00:05:57.060 across... Almost all size categories. But, and 00:05:57.060 --> 00:05:59.600 here's the kicker, farms with 2 ,500 cows or 00:05:59.600 --> 00:06:02.420 more actually grew. They grew by 16 .8%, going 00:06:02.420 --> 00:06:07.379 from 714 farms to 834. Okay. And now, those 2 00:06:07.379 --> 00:06:10.899 ,500 plus cow operations produce 46 % of all 00:06:10.899 --> 00:06:13.740 U .S. milk. Almost half. That data just lays 00:06:13.740 --> 00:06:16.220 bare the starkness of this fundamental restructuring. 00:06:16.319 --> 00:06:20.180 It feels like a profound and... Pretty aggressive 00:06:20.180 --> 00:06:22.600 transformation. It really is. So we've debunked 00:06:22.600 --> 00:06:24.120 the immigration myths. We've seen the numbers 00:06:24.120 --> 00:06:26.399 on farm loss and production. What's the real 00:06:26.399 --> 00:06:28.500 economic engine behind this consolidation? What 00:06:28.500 --> 00:06:29.959 does the report say is the core driver? That's 00:06:29.959 --> 00:06:32.339 the critical question, right? And the USDA Economic 00:06:32.339 --> 00:06:34.660 Research Service analysis on production costs 00:06:34.660 --> 00:06:36.699 is incredibly revealing here. What did they find? 00:06:36.759 --> 00:06:38.519 What are the numbers? Well, they found that farms 00:06:38.519 --> 00:06:41.620 with 2 ,000 plus cows averaged $23 .06 per hundred 00:06:41.620 --> 00:06:44.139 weight in production costs. Okay, $23 .06 for 00:06:44.139 --> 00:06:46.149 the big guys. Right. Now compare that to farms 00:06:46.149 --> 00:06:50.449 with 100, 199 cows. Their costs, $32 .83 per 00:06:50.449 --> 00:06:53.550 hundredweight. Wow, that's nearly a $10 per hundredweight 00:06:53.550 --> 00:06:56.269 difference. A huge competitive gap, almost 10 00:06:56.269 --> 00:06:59.189 bucks. In real world terms, just thinking about 00:06:59.189 --> 00:07:02.490 150 cow operation, that means about a $27 ,000 00:07:02.490 --> 00:07:05.250 a year disadvantage compared to their larger 00:07:05.250 --> 00:07:08.850 neighbors. Yeah, or $135 ,000 over five years. 00:07:08.910 --> 00:07:11.949 It adds up fast. And that has nothing to do with 00:07:11.949 --> 00:07:14.540 labor costs, right? This isn't about wages. Absolutely 00:07:14.540 --> 00:07:16.980 nothing. This is purely operational economics. 00:07:17.399 --> 00:07:20.379 But here's the real eye -opener, Sarah. When 00:07:20.379 --> 00:07:23.199 you dig into the non -feed costs, you know, equipment, 00:07:23.360 --> 00:07:26.500 repairs, utilities, capital, compliance, the 00:07:26.500 --> 00:07:28.839 difference is staggering. While the difference 00:07:28.839 --> 00:07:31.680 in feed costs was about $2 .50 per hundredweight 00:07:31.680 --> 00:07:34.560 between those groups, the gap in non -feed expenses 00:07:34.560 --> 00:07:38.540 was a staggering $19 .59 per hundredweight. $19 00:07:38.540 --> 00:07:41.519 .59. Almost $20. That's almost eight times the 00:07:41.519 --> 00:07:43.699 difference compared to feed costs. Why is that 00:07:43.699 --> 00:07:45.899 so critical? It's critical because for smaller 00:07:45.899 --> 00:07:49.259 herds, those under 1 ,000 cows, those non -feed 00:07:49.259 --> 00:07:51.560 costs actually exceed their feed costs. More 00:07:51.560 --> 00:07:54.319 than feed. Yeah. All those fixed expenses, the 00:07:54.319 --> 00:07:57.519 barn, the parlor, the machinery, they get spread 00:07:57.519 --> 00:07:59.579 across much, much larger volumes on the mega 00:07:59.579 --> 00:08:02.480 dairies, diluting the cost per unit. Right. Makes 00:08:02.480 --> 00:08:04.579 sense. So their biggest expense pressure isn't 00:08:04.579 --> 00:08:06.360 what goes into the cow. It's everything else 00:08:06.360 --> 00:08:08.639 around it. This is a structural disadvantage. 00:08:09.339 --> 00:08:12.579 As Dr. Mark Stevenson at the University of Wisconsin 00:08:12.579 --> 00:08:15.379 puts it, the economics are pretty unforgiving. 00:08:15.759 --> 00:08:18.079 Unforgiving. He says when your fixed costs are 00:08:18.079 --> 00:08:20.220 higher than your variable costs, you're in a 00:08:20.220 --> 00:08:22.819 structurally disadvantaged position. in a commodity 00:08:22.819 --> 00:08:25.980 market. That really paints a tough picture, a 00:08:25.980 --> 00:08:28.620 structurally disadvantaged position. It does. 00:08:28.720 --> 00:08:31.259 It makes it incredibly hard to compete on price 00:08:31.259 --> 00:08:34.320 alone if you're not at scale. Let's circle back 00:08:34.320 --> 00:08:37.159 to labor then, but reframing it, like we discussed, 00:08:37.220 --> 00:08:39.940 as an essential force, not the problem. What's 00:08:39.940 --> 00:08:42.639 the reality of dairy labor today, according to 00:08:42.639 --> 00:08:44.440 the article? Well, it's interesting. Immigrant 00:08:44.440 --> 00:08:47.460 workers make up 51 % of the total dairy workforce. 00:08:47.899 --> 00:08:51.139 About half. Right. But critically, they produce 00:08:51.139 --> 00:08:54.519 79 percent of the nation's milk supply. 79 percent. 00:08:54.559 --> 00:08:56.620 So that tells you they are disproportionately 00:08:56.620 --> 00:08:59.279 on the larger, more productive farms. Exactly. 00:08:59.379 --> 00:09:01.639 And the article stresses this isn't really about 00:09:01.639 --> 00:09:03.820 suppressing wages. It's about availability and 00:09:03.820 --> 00:09:06.519 willingness. There's a story about one Vermont 00:09:06.519 --> 00:09:08.960 farmer. Yeah. Received only two applications 00:09:08.960 --> 00:09:12.299 from native born workers in 20 years. Two compared 00:09:12.299 --> 00:09:15.879 to 150 immigrants who applied. Two versus 150. 00:09:16.200 --> 00:09:17.960 That says a lot, doesn't it? It really does. 00:09:18.139 --> 00:09:20.500 And wages have also gone up substantially. The 00:09:20.500 --> 00:09:23.240 median advertised wage for meat and dairy workers 00:09:23.240 --> 00:09:26.840 jumped, what, 33 .7 % between 2019 and 2022? 00:09:27.299 --> 00:09:29.159 Yeah, far faster than the national median. So 00:09:29.159 --> 00:09:33.179 labor is now a pretty big chunk of costs, 18 00:09:33.179 --> 00:09:36.139 % to 25 % of total operating costs, the article 00:09:36.139 --> 00:09:38.539 says. Definitely not cheap labor anymore, if 00:09:38.539 --> 00:09:40.610 it ever truly was. But the real problem, the 00:09:40.610 --> 00:09:42.909 real Achilles heel here, is the legal status 00:09:42.909 --> 00:09:45.269 and the uncertainty around it. Oh, so? Well, 00:09:45.309 --> 00:09:47.309 the H -2A guest worker program, it's designed 00:09:47.309 --> 00:09:49.269 for seasonal work, you know, like picking apples 00:09:49.269 --> 00:09:51.409 or harvesting vegetables. Right, not year -round 00:09:51.409 --> 00:09:55.090 dairy. Exactly. Dairy farming is 365 days a year. 00:09:55.740 --> 00:09:59.279 That Texas A &M study from 2015, the one modeling 00:09:59.279 --> 00:10:02.139 the loss of this workforce, it's alarming. What 00:10:02.139 --> 00:10:04.639 were those projections again? 2 .1 million fewer 00:10:04.639 --> 00:10:09.019 dairy cows, 48 .4 billion pounds less milk, and 00:10:09.019 --> 00:10:11.919 over 7 ,000 dairy farms forced to close. Just 00:10:11.919 --> 00:10:14.799 gone. That's catastrophic. And even if you only 00:10:14.799 --> 00:10:16.980 had a 50 % reduction in that workforce, it would 00:10:16.980 --> 00:10:19.919 still spike milk prices 45 .2 % and cost the 00:10:19.919 --> 00:10:23.000 economy $16 billion. Wow. There's a quote from 00:10:23.000 --> 00:10:26.320 a larb scale producer in Idaho. He said, if this 00:10:26.320 --> 00:10:28.440 workforce vanished tomorrow, we'd have dead cows 00:10:28.440 --> 00:10:30.980 within 48 hours because there's literally nobody 00:10:30.980 --> 00:10:33.500 else to milk them. Dead cows within 48 hours. 00:10:33.580 --> 00:10:36.519 That puts a fine point on the severity, doesn't 00:10:36.519 --> 00:10:38.000 it? It really does. It highlights the vulnerability. 00:10:38.480 --> 00:10:40.259 Okay. What about technology? How does that fit 00:10:40.259 --> 00:10:41.980 into the consolidation picture? We hear a lot 00:10:41.980 --> 00:10:44.350 about robots. Yeah, it's what researchers call 00:10:44.350 --> 00:10:46.049 the technological treadmill. You know, you have 00:10:46.049 --> 00:10:48.409 to keep adopting new tech just to stay competitive. 00:10:48.490 --> 00:10:51.570 Take Delaval VMS robotic milking systems. Great 00:10:51.570 --> 00:10:55.309 tech. But expensive, right? Very. Over $200 ,000 00:10:55.309 --> 00:10:59.809 per unit. But they can slash direct milking labor 00:10:59.809 --> 00:11:03.610 by up to 60%. So these efficiency gains come 00:11:03.610 --> 00:11:06.389 with huge capital requirements. Which means primarily 00:11:06.389 --> 00:11:08.870 bigger operations can afford them. Precisely. 00:11:09.200 --> 00:11:11.679 They often use technology to optimize productivity, 00:11:12.000 --> 00:11:14.159 maybe not necessarily replace immigrant workers 00:11:14.159 --> 00:11:17.240 entirely, but certainly to manage more cows with 00:11:17.240 --> 00:11:20.299 the same or fewer people. So only well -capitalized 00:11:20.299 --> 00:11:22.700 operations can really afford these big investments, 00:11:22.879 --> 00:11:25.279 which just widens that competitive gap we talked 00:11:25.279 --> 00:11:27.320 about. Exactly. What else is driving this? The 00:11:27.320 --> 00:11:28.679 article mentioned something called processor 00:11:28.679 --> 00:11:31.559 pull. Yes, that's another huge factor. There's 00:11:31.559 --> 00:11:33.759 been massive consolidation downstream, too, not 00:11:33.759 --> 00:11:35.440 just at the farm level. How much consolidation 00:11:35.440 --> 00:11:37.639 are we talking? Just three major cooperatives. 00:11:38.200 --> 00:11:41.019 Dairy Farmers of America, Lando Lakes, California 00:11:41.019 --> 00:11:44.820 Dairies, they now handle over 80 % of the nation's 00:11:44.820 --> 00:11:47.659 milk marketing. 80 %? Just three co -ops? Yeah. 00:11:47.759 --> 00:11:49.960 And these big processors, they're building these 00:11:49.960 --> 00:11:53.960 new, huge plants. Efficient, but they need massive, 00:11:54.000 --> 00:11:56.919 consistent volumes of milk to run properly. Makes 00:11:56.919 --> 00:11:58.799 sense. There's a quote from a DFA representative 00:11:58.799 --> 00:12:01.080 who basically admitted, we're building plants 00:12:01.080 --> 00:12:03.820 that need four to five million pounds per day. 00:12:04.490 --> 00:12:07.690 We can't deal with 200 small farms. We need 10 00:12:07.690 --> 00:12:10.049 large ones. 10 large ones instead of 200 small 00:12:10.049 --> 00:12:13.350 ones. That creates powerful incentives for consolidation 00:12:13.350 --> 00:12:15.830 right at the farm level, doesn't it? Absolutely. 00:12:15.889 --> 00:12:19.149 If your processor needs huge volumes, you either 00:12:19.149 --> 00:12:22.340 get huge or you risk losing your market. It's 00:12:22.340 --> 00:12:24.740 interesting to compare this to how other major 00:12:24.740 --> 00:12:27.059 dairy countries handle these kinds of pressures. 00:12:27.200 --> 00:12:30.240 Are we unique? We kind of are. Canada has supply 00:12:30.240 --> 00:12:32.220 management, right? New Zealand has its strong 00:12:32.220 --> 00:12:35.000 cooperative processing model with Fonterra. The 00:12:35.000 --> 00:12:38.100 EU provides a lot more direct support. Denmark 00:12:38.100 --> 00:12:40.259 and the Netherlands are investing heavily in 00:12:40.259 --> 00:12:43.309 automation and environmental tech. So our approach, 00:12:43.490 --> 00:12:46.149 relying heavily on immigrant labor, but with 00:12:46.149 --> 00:12:48.690 all this policy uncertainty. Yeah, it's unique 00:12:48.690 --> 00:12:51.049 among developed dairy economies, and you could 00:12:51.049 --> 00:12:54.210 argue, maybe more risky long -term. And the environmental 00:12:54.210 --> 00:12:56.389 sustainability angle, too. How does that play 00:12:56.389 --> 00:12:59.690 in it? It's increasingly important. Large -scale 00:12:59.690 --> 00:13:01.850 operations might have advantages with things 00:13:01.850 --> 00:13:04.509 like advanced manure management or energy efficiency 00:13:04.509 --> 00:13:07.049 tech, just because they can spread those big 00:13:07.049 --> 00:13:10.049 investment costs over more cows. Right. Economies 00:13:10.049 --> 00:13:12.100 of scale again. But then again, there's also 00:13:12.100 --> 00:13:14.320 this growing consumer demand for sustainable 00:13:14.320 --> 00:13:17.259 products, which often favors smaller, maybe more 00:13:17.259 --> 00:13:20.500 transparent operations or creates niche markets. 00:13:21.019 --> 00:13:24.500 Plus, climate change itself, heat stress, extreme 00:13:24.500 --> 00:13:27.159 weather that test resilience in ways that might 00:13:27.159 --> 00:13:29.600 favor larger operations with better infrastructure. 00:13:30.509 --> 00:13:32.730 It's complex. It definitely sounds like a lot 00:13:32.730 --> 00:13:35.629 of interlocking pressures. So after digging through 00:13:35.629 --> 00:13:37.690 all that information, what's the key takeaway 00:13:37.690 --> 00:13:40.049 for a farmer listening today? How can they actually 00:13:40.049 --> 00:13:42.629 apply this knowledge from the article to their 00:13:42.629 --> 00:13:44.610 own operation? Yeah, that's the crucial part. 00:13:44.690 --> 00:13:46.289 And the article does a good job breaking down 00:13:46.289 --> 00:13:48.610 some clear action insights based on operation 00:13:48.610 --> 00:13:51.190 size. It recognizes it's not a one -size -fits 00:13:51.190 --> 00:13:53.169 -all situation. Okay, let's start with the smaller 00:13:53.169 --> 00:13:56.190 guys, maybe 100, 500 cows. What's the immediate 00:13:56.190 --> 00:13:59.279 advice for them? For that 100 -500 cow group, 00:13:59.419 --> 00:14:02.899 the advice is really immediate focus on maximizing 00:14:02.899 --> 00:14:05.639 milk quality premiums. There's often money left 00:14:05.639 --> 00:14:07.879 on the table there. Good point. Then explore 00:14:07.879 --> 00:14:10.659 value -added opportunities and do it within the 00:14:10.659 --> 00:14:13.299 next 18 months, not thinking five years down 00:14:13.299 --> 00:14:16.279 the road. Things are moving too fast. Value -added 00:14:16.279 --> 00:14:18.980 like what? Direct marketing? Jeez. Could be. 00:14:19.500 --> 00:14:22.220 Or consider cooperative processing partnerships 00:14:22.220 --> 00:14:24.700 to gain some scale benefits. And importantly, 00:14:24.879 --> 00:14:27.259 seriously evaluate the economics of an organic 00:14:27.259 --> 00:14:30.379 transition. Organic? Why specifically organic? 00:14:30.799 --> 00:14:32.879 Well, the article mentions a 300 -cow Vermont 00:14:32.879 --> 00:14:34.940 operation that transitioned. They were getting 00:14:34.940 --> 00:14:38.879 $45 per hundredweight. $45? Yeah. While their 00:14:38.879 --> 00:14:40.639 conventional neighbors were struggling down at 00:14:40.639 --> 00:14:43.539 $21. The math can be pretty compelling depending 00:14:43.539 --> 00:14:45.659 on your situation. That's a massive difference. 00:14:45.980 --> 00:14:48.879 Okay, what about that middle ground, maybe 502 00:14:48.879 --> 00:14:51.840 ,000 cow operations? The article called that 00:14:51.840 --> 00:14:54.200 the challenging middle. Yes, the challenging 00:14:54.200 --> 00:14:56.899 middle ground. For them, the advice is selective 00:14:56.899 --> 00:14:59.840 automation. Focus on feeding and monitoring systems 00:14:59.840 --> 00:15:01.879 first. That often gives the biggest bang for 00:15:01.879 --> 00:15:03.940 your buck initially. Okay, selective automation. 00:15:04.570 --> 00:15:06.870 What else? Strengthen your processor relationships 00:15:06.870 --> 00:15:10.009 now. While you still have options, solidify those 00:15:10.009 --> 00:15:13.169 connections. Carefully weigh geographic expansion 00:15:13.169 --> 00:15:15.629 versus intensifying locally. That depends a lot 00:15:15.629 --> 00:15:19.210 on land costs and local resources. And crucially, 00:15:19.289 --> 00:15:21.649 develop immigration compliance programs immediately. 00:15:21.809 --> 00:15:23.990 Don't wait. Get ahead of the uncertainty there. 00:15:24.169 --> 00:15:27.649 Makes sense. And for the big players, the 2000 00:15:27.649 --> 00:15:31.129 plus cow operations, what's the advice to stay 00:15:31.129 --> 00:15:33.730 ahead? They seem to be winning, but they can't 00:15:33.730 --> 00:15:36.529 rest, right? Absolutely not. For them, it's accelerate 00:15:36.529 --> 00:15:39.509 technology adoption across all systems. Milking, 00:15:39.529 --> 00:15:42.850 feeding, management, data analysis. Diversify 00:15:42.850 --> 00:15:45.429 processing relationships to reduce risk. Don't 00:15:45.429 --> 00:15:47.789 become dependent on just one buyer, even at that 00:15:47.789 --> 00:15:50.549 scale. Good point. Invest heavily in labor retention 00:15:50.549 --> 00:15:53.230 programs because turnover is incredibly costly 00:15:53.230 --> 00:15:55.389 when you're that big. And seriously, consider 00:15:55.389 --> 00:15:57.190 vertical integration opportunities controlling 00:15:57.190 --> 00:15:59.669 more of your supply chain to manage risk. Looking 00:15:59.669 --> 00:16:02.009 ahead then, the article paints this picture of 00:16:02.009 --> 00:16:04.269 the industry not just consolidating, but really 00:16:04.269 --> 00:16:07.490 splitting. Exactly. It projects this continued 00:16:07.490 --> 00:16:10.549 bifurcation, this split into two distinct businesses. 00:16:11.009 --> 00:16:15.000 On one hand, you'll have these high -volume tech 00:16:15.000 --> 00:16:17.519 -heavy, professionally managed operations, almost 00:16:17.519 --> 00:16:19.799 like manufacturing milk. Milk factories, basically. 00:16:19.799 --> 00:16:22.039 In a sense, yeah. And on the other hand, you'll 00:16:22.039 --> 00:16:25.600 have value -added, locally -focused, relationship 00:16:25.600 --> 00:16:28.480 -based operations, more like artisanal production, 00:16:28.820 --> 00:16:31.759 focusing on a specific consumer. And that middle 00:16:31.759 --> 00:16:33.779 ground just gets squeezed harder and harder. 00:16:33.980 --> 00:16:36.159 It becomes increasingly untenable. And again, 00:16:36.200 --> 00:16:38.080 not because of immigration, but because of those 00:16:38.080 --> 00:16:40.559 fundamental economics of scale and that heavy 00:16:40.559 --> 00:16:43.899 fixed -cost burden for smaller operations. So 00:16:43.899 --> 00:16:45.879 the core message we've pulled out of this deep 00:16:45.879 --> 00:16:48.659 dive is pretty clear. Immigrant workers didn't 00:16:48.659 --> 00:16:50.940 kill the traditional American dairy farm. If 00:16:50.940 --> 00:16:52.639 anything, they've been keeping the lights on. 00:16:52.720 --> 00:16:54.539 Absolutely. Keeping the lights on while these 00:16:54.539 --> 00:16:57.539 powerful economic forces are really determining 00:16:57.539 --> 00:17:00.320 who survives consolidation. And the real threat 00:17:00.320 --> 00:17:02.860 isn't their presence. It's the profound economic 00:17:02.860 --> 00:17:05.740 and operational risk if that essential workforce 00:17:05.740 --> 00:17:08.119 were suddenly removed. That's the vulnerability. 00:17:08.519 --> 00:17:10.839 That's the key vulnerability and maybe the one 00:17:10.839 --> 00:17:13.779 that needs more focus. It really does shift the 00:17:13.779 --> 00:17:15.940 whole perspective, doesn't it? So the question 00:17:15.940 --> 00:17:18.539 for you listening isn't if consolidation will 00:17:18.539 --> 00:17:21.359 continue. No, that seems pretty certain. It's 00:17:21.359 --> 00:17:23.819 whether you'll be a consolidator or get consolidated. 00:17:24.440 --> 00:17:27.299 That's the blunt reality the article lays bare. 00:17:27.559 --> 00:17:30.119 The story of Derry's future is going to be about 00:17:30.119 --> 00:17:33.710 adaptation, not blame. So we really encourage 00:17:33.710 --> 00:17:36.210 you to reflect on your own operation in light 00:17:36.210 --> 00:17:38.329 of this. How have your cost structure changed? 00:17:38.509 --> 00:17:41.589 Are you seeing these non -feed costs rise? What 00:17:41.589 --> 00:17:43.470 are the real labor challenges you're facing? 00:17:43.690 --> 00:17:45.950 And what are sustainable solutions? What tech 00:17:45.950 --> 00:17:48.289 investments actually make sense for you? And 00:17:48.289 --> 00:17:50.190 how are you preparing for continued consolidation 00:17:50.190 --> 00:17:52.730 in your area? These aren't easy questions for 00:17:52.730 --> 00:17:54.690 sure. No, definitely not. But they're definitely 00:17:54.690 --> 00:17:56.470 the right ones to be asking right now. Great 00:17:56.470 --> 00:17:59.380 points. And that's all the time we have for today's 00:17:59.380 --> 00:18:01.799 Deep Dive. For more articles and insights, be 00:18:01.799 --> 00:18:06.299 sure to visit www .thebullvine .com. Don't forget 00:18:06.299 --> 00:18:08.220 to subscribe wherever you get your podcasts. 00:18:08.680 --> 00:18:28.130 Thanks for listening. are the ones positioning 00:18:28.130 --> 00:18:30.609 themselves to write the next chapter of American 00:18:30.609 --> 00:18:34.470 dairy farming. Remember, while everyone else 00:18:34.470 --> 00:18:37.509 is fighting yesterday's battles, the smart money 00:18:37.509 --> 00:18:40.130 is already preparing for tomorrow's opportunities. 00:18:41.029 --> 00:18:43.309 The question isn't whether consolidation will 00:18:43.309 --> 00:18:45.950 continue, it's whether you'll be a consolidator 00:18:45.950 --> 00:18:49.230 or get consolidated. Want to dive deeper into 00:18:49.230 --> 00:18:52.650 this analysis? Head over to www .thebullvine 00:18:52.650 --> 00:18:55.210 .com where you'll find the full article, complete 00:18:55.210 --> 00:18:58.480 with tables, data sources, and practical strategies 00:18:58.480 --> 00:19:01.140 for different operation sizes. And don't forget 00:19:01.140 --> 00:19:03.660 to subscribe to the Bullvine Podcast wherever 00:19:03.660 --> 00:19:06.380 you get your podcasts, because the future of 00:19:06.380 --> 00:19:08.759 dairy farming won't be determined by who we blame 00:19:08.759 --> 00:19:12.160 for the past, but by who's smart enough to adapt 00:19:12.160 --> 00:19:16.400 to what's actually happening. This has been the 00:19:16.400 --> 00:19:19.099 Bullvine Podcast. Keep challenging conventional 00:19:19.099 --> 00:19:22.460 wisdom, keep asking the tough questions, and 00:19:22.460 --> 00:19:25.140 keep building the future of dairy. We'll see 00:19:25.140 --> 00:19:25.619 you next time.