Breaking free from the chains of the past Where
truth moves faster than a Holstein calf No law
waiting on some printed page We're charting new
ground in the digital age From genomic codes
to robot facts We cut through the noise, no hold
them back not your daddy's dairy news tonight
we're sparking Welcome back to the Bullvine Podcast,
where we cut through the dairy industry noise
to get you the insights that actually matter
for your operation. We aren't here to sell you
a new additive or, you know, a shiny new piece
of iron. We are here to look at the numbers.
the hard numbers that define your livelihood.
And today, we're diving deep into a feature piece
about a number that, honestly, it might be quietly
killing your margins while you're busy delivering
bottles. Right. We all love the romance of the
local milk truck, the whole farm -to -table thing,
but sometimes the spreadsheet tells a very different
story than the heart. Exactly. We are looking
at a story coming out of the Isle of Man. It's
the end of a 75 -year legacy Kuhl's dairy. Now,
before you panic and think this is another doom
and gloom bankruptcy story, just stop. It's definitely
not a bankruptcy story. Not at all. No, it is
not. This is a story about choice. It's a story
about math. And ultimately, it is a story about
knowing exactly when to quit the retail game
to, well, to save the farm itself. Which is a
decision that I think a lot of producers, maybe
most producers, really struggle with. We are
wired to persevere, right? Absolutely. We're
wired to keep the legacy going, keep pushing
through. But in this case, the family behind
Kuhl's Dairy Juan and Kirstie Hargraves, they
made a strategic pivot. On January 31st, 2026,
they delivered their very last bottle of milk.
And this is happening right now. This isn't some
history lesson from the 1980s when the supermarkets
took over. This is fresh. And the reason we are
dedicating a whole deep dive to this is because
of the specific economic trap they identified.
We need to talk about the value added myth versus
the the brutal economic reality of what we're
calling the middle zone. I think we all have
this romanticized idea of value added processing.
You know, you see the milk check, you see the
price in the grocery store and you think, man,
if I could just capture that middle bit, I'd
be set. Of course, everyone thinks that. I admit,
I usually think more customers equals better.
If I can get into a thousand homes, surely that's
better than 500. It just feels right. And that
is exactly the assumption we are going to challenge
today. I'm going to argue that most farmers are
looking at the customer count, and that is absolutely
the wrong metric. The wrong metric. It's a vanity
metric. There is a ratio, a specific retail ratio,
that determines if you are making money or, you
know, just... spinning your wheels and burning
yourself out. Okay. I'm ready to have my assumptions
challenged because when you look at the details
of what Juan and Kirstie were dealing with, it
just, it sounds exhausting. Exhausting is an
understatement. Yeah. I mean, let's set the scene
regarding the lineage first because it really
raises the stakes here. Yeah. This wasn't some
new venture. No. We are talking about a business
that started with Leslie Coyle way back in what?
roughly 1942. Doorstep delivery started in the
1950s. This passed down through the generations,
Ian and Gary Coyle, and then eventually to Juan
and Kirstie. So you have 75 years of brand equity.
That is not something you walk away from lightly.
That's three generations of the milk is here
moment. Yeah, exactly. You're talking about grandmothers
who bought milk from the grandfather, and now
the grandkids are buying from the grandson. The
emotional weight of that is heavy. It's really
heavy. No, absolutely not. It's massive. But
listen to how Juan described the reality of their
life just before they closed the retail side.
He called it plate spinning. I can imagine. They
have six kids at home. They have a young worker
who is still learning the ropes, you know, needs
a lot of supervision. And they had absolutely
no budget for relief staff. That's the part that
hits home for me. That is the phrase that every
farmer understands in their bones. The no relief
staff struggle. Right. It's one thing to run
a dairy farm. We all know that's a 24 -7 job.
But when you add processing and delivery on top
of it, and you're the only one who really knows
how to do all of it. It's a recipe for disaster.
It is. You are essentially creating a prison
where you are both the warden and the inmate.
You can't leave. You can't get sick. You can't
take a day off. And the schedule he described
is just brutal. Finishing delivery rounds at
1 o 'clock in the morning. Milking starts at
5 a .m. So that's a four -hour window, theoretically,
for sleep. Theoretically. Yeah. You know you
aren't asleep the second your head hits the pillow.
You're wired. Oh, not a chance. Your mind is
racing. You're thinking about the invoices you
forgot to print or the funny noise the transmission
was making on the last hill? And that's if nothing
goes wrong. That's the best case scenario. That's
if the van starts in the cold. That's if the
bottling machine doesn't jam halfway through
a run. If you have a breakdown at midnight, that
four hours of sleep becomes zero hours of sleep,
and you're still getting up for milking at 5
a .m. And you can do that for a week, maybe a
month during planting or harvest, but you can't
do that for a decade. Your body and your mind
will just break. And the mental load. It's not
just the physical labor, is it? It's the customers
ringing the phone because their milk isn't on
the doorstep at exactly 7 .01 a .m. Oh, yeah.
The calls. It's the invoices piling up. It's
the farm assurance paperwork. One mentioned specifically
that the paperwork had become a massive thing
to undertake. It always is. And when you are
sleep deprived, that paperwork feels like climbing
a mountain. You're staring at some compliance
form at 2 in the afternoon, your eyes are burning,
and you just want to be out with the cows. But
there was a logistical wrinkle here, too, wasn't
there? It wasn't just that they were busy. The
setup itself, the physical layout, had some serious
friction. This is where it gets really interesting
from a systems perspective. A massive amount
of friction. This is a classic case of operational
complexity just sort of creeping in over time,
decision by decision. So they move the cows to
a new greenfield site. in 2015. Great for the
cows, you know, modern facilities, better for
welfare. Makes perfect sense. You want to upgrade
the herd's environment. But the processing plant,
it stayed at the old site. Oh, I see where this
is going. So you've got a separation of church
and state, but in this case, it's separation
of cow and bottle. You've just created a transportation
leg right inside your own operation, a daily
commute for the milk. Right, which is just another
point of failure, another cost center. You can
guess the workflow. They had to haul milk back
and forth. And get this, they retrofitted a DX
bulk tank onto an old grain trailer chassis.
A grain trailer chassis. That is the most farmer
-engineered solution I have ever heard in my
life. Isn't it? I can picture it perfectly. I
bet I know five guys who would do the exact same
thing. It probably worked great mechanically,
but it's just one more piece of iron to maintain.
Exactly. One more set of tires, one more hitch,
one more potential hydraulic leak at 10 o 'clock
at night. Exactly. Five days a week, hitching
up that grain trailer tank, hauling milk from
the new farm to the old processing site. That
is extra diesel. That is extra time. And most
importantly, that is extra risk. Talk about the
risk. Every time you move milk, you introduce
a variable. Temperature fluctuations, agitation,
contamination risk. You're taking this perfect
raw product, pumping it onto a trailer, driving
it down the road, and then pumping it off again.
Every pump is a potential problem. Every hose
is a sanitation challenge. And if you are finishing
rounds at 1 a .m. The absolute last thing you
want to do is haul a trailer across town. It
just it highlights the difficulty of finding
staff, too. Oh, for sure. You need a unicorn
employee. You really do. You need someone who
can milk a cow with a gentle hand. Operate a
pasteurizer without scorching the milk. Bottle
it without making a mess. A &D drive a delivery
route in the dark on icy roads. And fix the van
when it breaks down at the top of a hill. Right,
with a roll of duct tape and a pair of pliers.
Those people don't exist. Or if they do, you
can't afford them on the margins of a small delivery
route. You're looking for a COO, a mechanic,
a food scientist, and a laborer all rolled into
one paycheck. It's asking for the impossible.
So that is the human cost? Yeah. That is the
why. behind the burnout. But let's zoom out and
look at the industry structure because Cool's
Dairy wasn't just unlucky. They were stuck. They
were stuck in what we were calling the middle
zone. OK. This is crucial for anyone listening
who is maybe thinking about starting a creamery
or who is currently running one and feeling that
same pinch. I like this concept of the middle
zone. Break that down for us, because usually
we think of businesses as just small, medium
or large. Why is the middle so dangerous? Usually
the middle is safe. It's the compromise. In processing,
the middle is the kill zone. Think of it as a
spectrum of milk delivery. On one end, you have
the scale operators. Look at McQueen's Dairies
in Scotland. They're huge. 11 depots, 200 staff,
massive growth. They're a logistics company that
happens to sell milk. Precisely. They have economies
of scale. If a van breaks down, they have a fleet
manager and a spare van. If a driver calls in
sick, they have a roster of other drivers to
call. They have purchasing power on fuel, on
glass, on vehicles. They are buying bottles by
the shipping container, not by the pallet. Exactly.
Their unit cost just drops and drops because
their volume is massive. Yeah. Then go to the
complete opposite end of the spectrum, the micro
operators. The source mentions a guy named Gareth
Baird in Northern Ireland. Okay. He started with
zero employees. Zero. He delivers maybe 120 bottles
a night. Low overhead. Extremely low. Zero overhead,
practically. He's doing it himself in his own
vehicle. If he wants to stop for a week, he stops.
If he makes a dollar, it's a dollar in his pocket.
He doesn't have a payroll tax headache. He doesn't
have an HR department. He doesn't have a fleet
of vehicles to insure and maintain. So he's nimble.
He's flexible. He has no fixed costs tying him
down. So where does COIL sit in all this? They
are right in the dangerous middle. They were
milking 120 to 130 cows. They had a staff of
five, Juan, Kirstie, Mark, Brian, Lorna. They
were serving 850 households. But see, that sounds
like a solid business, though. 850 homes, that's
a lot of milk. That's a lot of community impact.
If you told me you had 850 customers, I'd say
you were winning. It sounds like a lot, but here
is the trap. They were too big to run on zero
overhead like Gareth Baird. They needed staff.
They needed a real bottling line. They needed
multiple vans. Okay. But they were too small
to utilize that expensive equipment efficiently.
They had the cost of the big guys, but the volume
of the small guys. So it's the uncanny valley
of business models. That's a great way to put
it. You have all the headaches of a corporation,
the HR, the compliance, the maintenance contracts,
and you have all the resource constraints of
a family farm. Yes. You have to buy the industrial
-grade pasteurizer, but you're only running it
for two hours a day. The rest of the time, it's
just sitting there depreciating. And that's a
killer. That idle time is invisible on a cash
flow statement, but it's eating you alive. Precisely.
And historically, this is where the industry
has collapsed. In the 1970s, UK milk delivery
was 99 % doorstep. 99. By the late 2010s, it
was down to 3%. That collapse didn't happen to
the McQueens of the world. They consolidated
and grew. It happened to the thousands and thousands
of coils dairies that couldn't bridge that gap
between family helper. And industrial logistics.
It's interesting because I think a lot of farmers,
myself included, we look at that middle ground
as the goal. Right. It seems like the sweet spot.
You think, I don't want to be a factory, but
I want to be bigger than a hobby. But what you're
saying is that specific size, 120 cows, 800 customers,
is actually the most fragile place to be. It's
quicksand. You're swimming in the deepest part
of the ocean with the smallest life vest. It
is the bleed out zone. You are working harder
than the big guys for less margin than the small
guys. And this brings us to the core metric,
the number that really defines this failure point,
the retail ratio. OK, let's unpack this ratio,
because as I said earlier, I look at 850 households
and I think, wow, that's a success. I'm doing
the math in my head. 850 stops, maybe two liters
per stop. That's a decent amount of milk flow.
850 households is a vanity metric. It feels good.
It looks busy. It makes for a good story in the
local paper. But it's not the real story. No.
You have to look at the milk flow relative to
your total production. At Quill's Dairy, 80 %
of their milk was going to the creamery, the
wholesale market. 80 %? Only about 20 % was going
to those 850 households. Oh, wait. Stop right
there. Only 20%. So for every five cans of milk
coming out of that parlor, only one was going.
into their own bottles. That's right. And the
other four were just leaving on a tanker truck
like a standard everyday farm. Correct. But here
is the kicker. And this is the most important
part of this whole deep dive. That 20 % of retail
milk had to carry 100 % of the fixed costs for
the processing plant. Ouch. Okay. When you put
it that way, the math gets ugly really, really
fast. It's brutal. You have a pasteurizer, a
bottler, the building itself, the floor drains,
the insurance, the vans, the weeges for the delivery
drivers. Yeah. And you are only pushing 20 %
of your potential volume through it. Think about
utilization. If you buy a combine and only cut
your own 100 acres with it, that's a very expensive
combine per acre. Right. You need custom work
to make it pay. It's the same with the bottling
line. 20 % utilization means each liter of milk
that goes through it carries five times the fixed
cost compared to a plant that's running at full
capacity. And the market doesn't care about your
utilization. You can't charge five times the
price for the milk just because you aren't running
your machine enough. Not a chance. The customer
pays for the milk, not for your inefficiency.
They don't care if your pasteurizer is sitting
there idle for 22 hours a day. That's your problem,
not theirs. Exactly. Let's look at the hard numbers
on the equipment. A basic, tiny -batch pasteurizer
for micro setup for the Gareth Baird -type operator
might be $14 ,000. Okay. Manageable? But Kuhl's
wasn't micro. They needed a real facility. We're
talking $62 ,000 to $350 ,000 for a proper setup.
And that's before the building. Plus the building.
Plus the installation. Plus the inevitable upgrades
the inspector demands when they show up. Oh,
you need a different kind of floor drain here.
That wall needs to be stainless steel. All of
that. So let's just take a hypothetical bottling
line. A modest one. Say it costs $150 ,000 and
it has a 12 -year life. Pruits standard. That
is roughly $12 ,500 a year in depreciation. That
is the silent killer. It's money you have to
set aside every single year just to replace the
machine when it dies. It's not profit. So if
they have 850 customers... Let me do some quick
farmer math here. Twelve thousand five hundred
divided by eight fifty. That's wow. That's almost
fifteen dollars per customer per year. Right.
Before you buy the glass bottle, before you pay
the driver, before you pay for the diesel, before
you pay yourself, you are starting fifteen dollars
in the hole per customer just on machine depreciation.
And that's if you actually set the money aside,
which let's be honest, most of us don't. Of course
not. We use that cash flow to pay bills. And
then 12 years later, when the machine finally
gives up the ghost, we panic because the bank
account is empty. We treat depreciation as profit,
which is the oldest sin in farming. That is the
definition of the trap. And here's the opportunity
cost aspect that really struck me. This is the
human element of the math. every hour Juan spent
nursing that old bottling machine, trying to
keep a 15 -year -old filler running at 1 o 'clock
in the morning, was an hour he was not spending
on the 80 % of the business that actually paid
the bills. The cows. The cows, the genetics,
the forage quality, the transition cow protocols,
the stuff that generates the wholesale check
that keeps the lights on. That is a profound
realization. I mean, it really is. If the wholesale
check is paying 80 % of the bills, but the retail
side is taking up 80 % of your attention and
your stress, your business is dangerously out
of alignment. You are neglecting the profit center
to subsidize the hobby. Oof. Subsidizing the
hobby. That is a tough pill to swallow, but that
is what the math says, isn't it? It is. If the
retail side isn't paying for its own replacement
parts, its own depreciation, then the cows are
subsidizing the bottles. You are essentially
taking money from the milk check to pay for the
privilege of being a milkman. You are paying
a fee to be tired. Paying a fee to be tired.
That's perfect. So surely there are people making
this work. It can't be impossible. We see local
dairies thriving. I see the trucks on the road.
Yeah, what's the secret sauce? What separates
the successes from the ones caught in this trap?
It's not impossible, but you have to get the
ratio right. You have to commit. Let's look at
a success story on the very same island, Cronk
Allen Farm. Okay, same island, same regulations,
same cost of living. What are they doing differently?
Carl Hudson runs Cronk Allen. He milks 40 cows,
a much smaller— 40 cows, okay. But here is the
difference. He sends 100 % of his milk. to retail
via nine delivery rounds. 100%. Ah, so he sized
the herd to the bottle, not the other way around.
Exactly. Nothing goes to the creamery. His equipment
is fully utilized because the entire farm's output
flows through it every single day. The revenue
from the milk supports the assets completely.
He doesn't have a wholesale side subsidizing
a retail side. He is one unified, vertically
integrated business. Correct. He's not a dairy
farm with a bottling side hustle. He is a bottling
plant that happens to own its own cows. That's
a great distinction. His 40 cows are employees
of the bottling plant, essentially. Every drop
they produce has a destination that pays the
premium. There's no waste. There's no dilution.
And then let's look at a parallel from North
America, because this isn't just a UK thing.
Clark Farms in New York. They were in a situation
very, very similar to Kuhl's. They were processing
about 25 % of their milk, roughly 3 ,000 gallons
a week. Which is a decent amount of milk. That's
no small operation. 3 ,000 gallons a week takes
real infrastructure. It's not something you do
in your garage. It is, but the remaining 75 %
was still being trucked off. They shut down their
creamery in January 2026, practically the same
week as Kuhl's. It's like there was something
in the water. So what was their logic? Was it
an old machine that broke down or something?
It was pure margin analysis. They just sat down
and did the hard math on the premium. They were
making an extra dollar, $15 to $2 .15 per gallon
on the retail milk. Which sounds good on paper.
A buck or two extra is a buck or two extra. It
does. But to get that premium, they calculated
they were putting in... 70 to 90 extra hours
a week? 90 hours a week for a couple of bucks
a gallon on a quarter of the herd? That is insanity.
That's slave labor. When they looked at the labor,
the stress, the management complexity, and the
fact that 75 % of the milk was leaving anyway,
the margin premium wasn't worth the life cost.
It just wasn't. It sounds like unpaid family
labor is the invisible line item on so many of
these P &Ls. It's the biggest subsidy in agriculture.
It is. If you actually had to cut a check to
a stranger to do those 90 hours, the business
would be insolvent instantly. You'd be bankrupt
in a month. 100%. If you can't afford to pay
someone else to do it, you aren't running a business.
You are buying yourself a low paying, high stress
job and a job that comes with a lot of risk.
These alternative models are popping up though,
right? It's not just doorstep delivery anymore.
I'm seeing a lot of these vending machines. I
know a few guys who swear by them. The vending
model is interesting. You could just put a little
shed at the end of the driveway, put a fancy
machine in it and collect the cash. Seems simple.
Vending is growing fast in the UK and we're seeing
it here now too. The beauty of it is the low
labor. The customer drives to you, they fill
their own bottle. I like that. No one AM delivery
rounds. No van maintenance. No worrying about
ice on the roads or a customer's dog chasing
you down the driveway. But the tradeoff is volume
and connection. Yeah. You don't have that doorstep
loyalty. You're not a service. You're a product.
Right. If it rains, people might not come. If
it's cold, they'll just grab milk at Tesco or
Walmart. Yeah. And you lose that whole community
service aspect. The Cools was so famous for checking
on the elderly, you know. being the eyes and
ears of the neighborhood. True. A vending machine
doesn't notice that Mrs. Gable hasn't picked
up her newspapers for three days. A vending machine
doesn't catch criminals, as the article pointed
out. Well, I'd argue catching criminals isn't
in my job description as a dairy farmer anyway.
But I get the point. You lose the brand stickiness.
A vending machine is a transaction. A milkman
is a relationship. Right. What about the community
-supported agriculture model, the CSA approach?
Oh, yeah, I've heard of these. Stroud Microdairy
was one, right? Exactly. This is where the community
prepays for shares in the dairy's output. It's
fantastic for cash flow. You get the money up
front, which is a farmer's dream. It stabilizes
the income, but... There's always a but. Governance.
Oh, count me out. That sounds like my personal
nightmare. I knew you'd say that. It involved
heavy community engagement. You have a board
of directors made up of your customers. You have
to give annual reports. You have to explain to
a committee why the milk yield is down this week.
Yeah, I would rather wrestle a fresh heifer than
sit in a board meeting explaining lactation curves
to a committee of suburbanites. Why is the milk
a little thin today? Well, Karen, it's because
of the heat stress index and a bad batch of silage.
I do not want to have that conversation. You
don't want to justify your management decisions
to people who have never worn muck boots. Never.
So every model has a cost. The coils model failed
because it was stuck in the middle. The Kronk
-Allen model works because it's 100 % committed.
The vending model works on low labor. The CSA
works on high engagement. You have to pick one.
You have to pick a lane. You can't be a little
bit of everything. You cannot be a full scale
wholesaler, a half scale retailer without bleeding
cash or sanity or both. Let's talk about the
future, though. Because we always hear that technology
is going to save us. I keep hearing about these
on -farm processing robots. Lilly has the orbiter,
right? Isn't that the ultimate solution? You
just plug it in and it bottles the milk for you.
It sounds like the dream, doesn't it? The Lilly
orbiter. Fully automated pasteurizing, bottling,
labeling. It connects directly to the milking
robot. You hook it up to the robot. You go to
sleep. You wake up in the morning to pallets
of bottled milk. It removes the human element
from the 1 a .m. shift. It solves the labor problem.
Here is the reality check. As of right now, there
are about five of these units operating in the
Netherlands and Belgium. Five. They're expanding
to Germany. So early days. Very early. But in
North America. Yeah. The webpage is live. Sure.
It looks pretty. There are some nice videos.
But there is no availability date. No pricing,
no support network. So it's vaporware for us
right now. It's a brochure, not a machine you
can actually buy and install. Essentially. I
mean, even the Lely Astronaut A5 next milking
robot isn't due until after 2026. If the orbiter
is behind that in the product pipeline, we could
be talking years, 2028, 2030. And if your bottling
line is 12 years old and rattling like a bag
of bolts today, you can't wait until 2028 for
a robot to save you. No. You'll be out of business
before. Before the technician even arrives to
pour the concrete pad for it. Exactly. And this
is a huge point for everyone listening. Don't
wait for technology to save a broken business
model. If your bottler is dying now, you have
to make a decision now with the options you have
now. Cools understood this. They exited on their
own terms while the farm was still healthy, rather
than waiting for a catastrophic breakdown to
force their hand. They controlled the landing.
That's a key point. They exited into a safety
net. Yes. The creamery, the local co -op, took
them back. They had a market for that 80%, and
they were able to put the other 20 % on that
same truck. And that's not guaranteed, is it,
in this market, especially for a smaller producer?
Oh, and looking at the market pressures, that
safety net might be getting holes in it. The
AHDB, that's the Agriculture and Horticulture
Development Board in the UK, is warning that
farm gate prices are under pressure into mid
-2026. We're feeling that here, too. Wholesale
volatility is real. Processors are looking to
cut costs, improve efficiency, not add small,
complex pickups from farms that just drop their
retail route. That's the scary part. It creates
a vicious cycle. As wholesale prices drop, the
temptation to go retail increases. You see the
milk check shrinking and you think, I need to
take control. I need to bottle it myself. The
co -op is screwing me. is a trap. It's a panic
move. If you jump into retail because you are
panicked about wholesale prices, you are making
an emotional decision, not a structural one.
And you're probably undercapitalized. You are.
And if you fall into that middle zone, you are
just increasing your costs while your core revenue
is already rake. You are doubling down on risk
when you can least afford it. You are adding
debt and labor to a situation that is already
cash poor. So don't pivot to retail out of desperation.
Pivot to retail only if you are ready to go all
in like Cronk Allen. Do it from a position of
strength, not weakness. Precisely. Now, I want
to hit on some contrarian takes. Things that
go against the grain of what you usually hear
in the industry coffee shops. My favorite part.
Stuff people whisper but don't say out loud.
Let's hear them. I love a good argument. First
one. Surge demand is a lie. A lie. Explain. Cool's
peaked at over 1 ,000 homes during COVID. Everyone
was locked down. Everyone wanted milk delivered
to their door. It felt like a boom. It felt like
the new normal. We all thought the world had
changed forever. Oh, yeah. We all remember the
panic buying. People were buying milk and toilet
paper like they were going out of style. They
wanted the security of the milkman. It felt like
a return to the 1950s. But it was a blip. It
dropped back to 850. The lesson here is never
invest based on the peak. If you saw that COVID
surge and went out and bought a bigger van or
a faster bottling line to handle that thousand
customer demand, you are now sitting on excess
capacity. You have to invest based on the plateau,
the baseline, not the spike. That's good advice
for any business, honestly. Trees don't grow
to the sky and consumer habits snap back faster
than rubber bands. As soon as the grocery stores
opened back up and felt safe, convenience won.
The milkman is great, but the supermarket is
easy and it's on the way home from work. Second
contrarian take. Genetics versus the bottle.
This is right up your alley. Oh, I have some
strong thoughts on this. Let's go. Most co -ops,
most processors pay premiums for butterfat and
protein. We spend decades, generations breeding
cows for high components. We look at sires. We
look at genomics. We feed for it. We chase that
A2A2. We chase the high butterfat. We look at
the bull proofs and what we want plus fat plus
protein. That is where the bonus check comes
from on the wholesale market. That is how you
make real money on the milk truck. But what happens
when you take that high component premium generating
milk and put it into a standard retail bottle?
You sell it for a flat price. A customer pays,
say, $2 for a quart of milk, whether it has 3
.5 % fat or 4 .5 % fat. They generally don't
read the label that closely. They see whole milk
and they grab it. Exactly. You are giving away
the premium for free. You're giving away your
genetic progress. If you are a high -component
herd, shifting to a flat -priced retail model
might actually lower your effective price per
pound of solids. The cheese plant pays you for
that extra protein. The doorstep customer probably
doesn't even notice it. Unless you have a truly
niche product. Right. That's the exception that
proves the rule. Look at Mark at Promise Valley
on Vancouver Island, who the article mentioned.
He has an A2A2 Guernsey herd. Now that is a specific
product. Guernsey's give that golden colored
milk, super high fat, A2A2. It is visibly different
in the glass. It tastes different. It has a story.
He processes it all on farm and it works. The
niche product warrants the retail effort because
the customer can see and taste the difference
and they'll pay a significant premium for it.
But if you are just putting standard Holstein
milk in a bottle, you might be better off. taking
the component check from the co -op, and focusing
on what you're good at, making high -quality
milk efficiently. That is a massive point. If
you are generic but doing it yourself, you are
working harder to give away your breeding advantage.
You're effectively devaluing your own genetic
progress. You spent 20 years breeding for protein,
and now you're selling it to people who don't
care and won't pay for it. Third take, and this
is a big one, price ceilings versus freedom.
Quills was on the Isle of Man. The government
sets the price. 90 pence per pint. They couldn't
raise prices to cover their rising fuel and labor
costs. Which is a complete nightmare. It's a
regulated utility at that point, not a business.
But here in North America, we have pricing freedom.
We can charge whatever we want. If I want to
charge $10 a gallon for my milk, I can. In theory.
But do you? Well, no. You have to stay competitive
with the grocery store. Or at least that's what
we tell ourselves. We look at Walmart's price
and say, I can't be double that. No one will
buy it. And there is the trap. If you only charge
a dollar more than the grocery store, are you
really covering that unpaid family labor we talked
about? Are you covering the depreciation on the
bottler, the insurance on the van? Probably not.
So pricing freedom is an illusion if your costs
are out of control or if you're too scared to
charge what your product is actually worth. You
end up self -regulating your price down to stay
competitive and you cannibalize your own margin.
You become your own worst regulator. You are
so scared to charge the real cost of the milk
that you end up subsidizing the customer with
your own sweat and your family's time. It's heavy
stuff. It really makes you rethink the whole
farm to table dream. It's not that it's a bad
dream. It's just that the math is unforgiving.
The math is neutral. It doesn't care about your
dreams. It doesn't care about your grandfather's
legacy. It only cares about the ratio. Is the
enterprise profitable or not? So let's boil this
down. I'm a farmer. I'm driving to the feed store
right now. Just finished listening to this. What
do I need to do? Give me the actionable drill
down. All right, hit me. What's the immediate
action? What do I do this week? This week, calculate
your unpaid labor subsidy. Okay, how do I do
that? Break it down. Sit down tonight with a
notepad. Look at the hours you and your family
spend on the retail side. Everything. Processing,
bottling, cleaning, delivering, invoicing, chasing
down payments. All of it. Then assign a real
market rate to that time. What would you have
to pay a stranger? $20 an hour. $25. Whatever
a reliable relief worker costs in your area.
That number is going to be scary big. I can tell
you that right now. Calculate it. Then look at
your retail profit and loss statement. If the
profit from the bottles cannot cover that hypothetical
labor cost, you are losing money. Period. You
are paying for the privilege of delivering milk.
You have to stop lying to yourself about the
profitability. If you wouldn't do that job for
a stranger for that wage, why are you doing it
for yourself? Wow. Okay. That's a hard look in
the mirror. What's the medium -term strategy,
say, three to six months out? Year eight audit.
This relates to the equipment life you mentioned
earlier. Yes. Most bottling lines, pasteurizers,
fillers. They have about a 12 -year effective
service life. Before maintenance costs just explode
and reliability tanks. Go out to the plant and
check the age on your key pieces of equipment.
If anything has passed year eight, you are officially
in the red zone. You need a plan. You can't just
cross your fingers and hope it keeps running.
You need to start planning the exit or the upgrade
and now W. Do not wait for the breakdown at two
in the morning. If you're at year nine, you have
three years to save the cash for a full replacement.
If that cash isn't already being set aside in
a separate account, you have a crisis coming.
You need to know if you are winding down this
enterprise or gearing up for a major reinvestment.
Got it. Don't let the machine decide your future.
You decide. So what's the long -term plan, one
to two years out? A 30 % threshold. This is that
retail ratio you talked about. Exactly. Look
at your growth plan for the farm. If you are
planning on adding cows, you are likely diluting
your retail ratio. So if adding cows pushes your
retail ratio below 30 percent, meaning less than
30 % of your total milk is going into your own
bottles, you are in the danger zone. You are
Coyle's dairy. You are drifting into inefficiency.
You have two clear choices at that point. Either
shrink the herd to match the retail demand and
go all in like Cronk Allen, or drop the retail
side completely to focus on running an efficient
wholesale herd like Coyle's and Clark Farms did.
Do not straddle the fence. Because the middle
of the road is where you get run over. The middle
is where you get crushed. You know, despite the
sadness of seeing a 75, year brand come to an
end, I actually find this story really encouraging.
How so? That's interesting. Because Coyle's Dairy
didn't crash and burn. They didn't lose the farm.
They didn't go bankrupt. They are still milking
120 cows tomorrow morning. Juan is still a farmer.
Kirstie is still running the business. They just
made a tough strategic decision to cut off the
limb that was threatening the body. They saved
the core business. That is the definition of
a success story in my book. Survival and adaptation.
It takes way more courage to stop something and
pivot than it does to just keep going blindly
down a path because of tradition. And being able
to see your kids. Being home for dinner. And
getting more than four hours of sleep a night.
Amen to that. That's worth more than any premium
on a bottle of milk. So check your ratio. Do
the hard math. Don't let sentimentality or pride
drive your business into the ground. This has
been another Bullvine podcast from the Bullvine
podcast. For more street talking industry analysis,
head to www .thebullvine .com. Subscribe wherever
you get your podcasts. We're out with new episodes
every day and upcoming topics will be. Well,
we're going to look at the hidden costs of transition
cow mismanagement. Another place where money
just silently leaks out of the bucket. Always
something to fix. Thanks for listening. See you
next time.