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 --> 00:01:03.229 we're sparking Welcome back to the Bullvine podcast, 00:01:03.590 --> 00:01:05.549 the only show cutting through the dairy industry 00:01:05.549 --> 00:01:08.189 noise to get you the insights that actually matter 00:01:08.189 --> 00:01:10.390 for your operation. And today we are jumping 00:01:10.390 --> 00:01:13.810 into a massive deep dive on a feature piece from 00:01:13.810 --> 00:01:17.010 the Bullvine called the traceability gap, dairy 00:01:17.010 --> 00:01:20.530 welfare scandals and brand risk. Yeah, it's a 00:01:20.530 --> 00:01:22.609 heavy one today. We talk a lot about milk checks 00:01:22.609 --> 00:01:25.310 on this show, usually arguing about feed costs, 00:01:25.530 --> 00:01:28.689 component pricing or. export markets. But today 00:01:28.689 --> 00:01:31.109 we're talking about how a single scandal two 00:01:31.109 --> 00:01:33.689 states away could wipe out your entire profit 00:01:33.689 --> 00:01:36.269 margin overnight. Right. It sounds dramatic. 00:01:36.349 --> 00:01:38.569 I know. Farmers hate drama. You just want to 00:01:38.569 --> 00:01:41.069 milk cows and pay the bills. But we are looking 00:01:41.069 --> 00:01:43.549 at a situation unfolding right now in New Mexico 00:01:43.549 --> 00:01:46.909 that puts a literal price tag on your farm's 00:01:46.909 --> 00:01:49.430 reputation. A massive price tag. Yeah. We are 00:01:49.430 --> 00:01:52.909 talking about a $494 ,000 risk for a standard 00:01:52.909 --> 00:01:55.530 1 ,000 cow herd. And while I want to emphasize 00:01:55.530 --> 00:01:58.010 that that is not hypothetical money, that isn't 00:01:58.010 --> 00:02:00.409 some potential market upside that you might capture 00:02:00.409 --> 00:02:02.609 if the stars align. That is your premium check. 00:02:02.769 --> 00:02:04.689 That's the difference between buying a new tractor 00:02:04.689 --> 00:02:07.569 and literally selling the farm. Exactly. Honestly, 00:02:07.750 --> 00:02:09.490 looking at the timeline and the details in this 00:02:09.490 --> 00:02:11.229 source material, it's the kind of thing that 00:02:11.229 --> 00:02:14.710 makes you want to... Check your own fences, check 00:02:14.710 --> 00:02:17.169 your own employee protocols, and then probably 00:02:17.169 --> 00:02:20.150 call your lawyer just to be safe. For sure. So 00:02:20.150 --> 00:02:22.669 today we are doing a deep dive into the Woodcrest 00:02:22.669 --> 00:02:25.889 Dairy Investigation in Roswell, New Mexico. We're 00:02:25.889 --> 00:02:28.250 going to unpack the resulting fallout for Fairlife 00:02:28.250 --> 00:02:30.650 and Select Milk producers, and we are going to 00:02:30.650 --> 00:02:33.310 expose what we're calling the traceability gap. 00:02:33.530 --> 00:02:36.490 The traceability gap. I like that term. It fits 00:02:36.490 --> 00:02:39.310 perfectly. Right. It's this invisible crack in 00:02:39.310 --> 00:02:41.810 the foundation that threatens every single farmer 00:02:41.810 --> 00:02:44.509 chasing a brand premium right now. It's a total 00:02:44.509 --> 00:02:46.889 mess. It really is. Well, let's set the context 00:02:46.889 --> 00:02:49.750 before we get into the nitty gritty. We are looking 00:02:49.750 --> 00:02:52.810 at a massive welfare scandal that has hit Woodcrest 00:02:52.810 --> 00:02:55.789 Dairy down in Roswell. Now, before we go one 00:02:55.789 --> 00:02:57.930 inch further, I have to make a very, very important 00:02:57.930 --> 00:03:00.310 clarification for everyone listening. Oh, yeah. 00:03:00.620 --> 00:03:03.379 The name. Yes, the name. We have a lot of genetics 00:03:03.379 --> 00:03:05.819 nerds in our audience. When we say Woodcrest 00:03:05.819 --> 00:03:07.539 Dairy, we are not talking about the legendary 00:03:07.539 --> 00:03:10.800 Woodcrest operation up in New York. Right. We 00:03:10.800 --> 00:03:12.379 are definitely not talking about the home of 00:03:12.379 --> 00:03:14.960 Woodcrest King Doc. Do not go dumping your semen 00:03:14.960 --> 00:03:17.479 tank. Do not panic sell your embryos. This is 00:03:17.479 --> 00:03:20.840 a completely separate, totally unrelated operation 00:03:20.840 --> 00:03:23.219 in the Southwest. No relation at all. Thank you 00:03:23.219 --> 00:03:25.620 for clarifying that. So we are in Roswell, New 00:03:25.620 --> 00:03:28.860 Mexico. Allegations of severe animal abuse were 00:03:28.860 --> 00:03:32.580 recorded between December 2024 and March 2025. 00:03:33.139 --> 00:03:35.379 And the details are, they're rough. They are. 00:03:35.479 --> 00:03:37.979 We are talking about workers striking cows with 00:03:37.979 --> 00:03:40.800 shovels, using heavy metal wrenches as weapons, 00:03:41.099 --> 00:03:44.479 forcing metal rods down throats, dragging newborn 00:03:44.479 --> 00:03:47.599 calves. The undercover footage was released publicly 00:03:47.599 --> 00:03:51.120 by ARM, the Animal Recovery Mission, and KOB 00:03:51.120 --> 00:03:55.740 TV just a few days ago on February 22, 2026. 00:03:56.120 --> 00:03:58.259 And look. Anyone who has been in the dairy industry 00:03:58.259 --> 00:04:01.039 for more than five minutes knows about ARM. They 00:04:01.039 --> 00:04:02.900 don't just, you know, fly a drone over the property 00:04:02.900 --> 00:04:04.580 and leave. They don't just take a blurry photo 00:04:04.580 --> 00:04:06.360 from the public road. No, they don't. They look 00:04:06.360 --> 00:04:08.699 for maximum damage. They embed themselves. That's 00:04:08.699 --> 00:04:11.419 right. They apply for jobs. They get hired. And 00:04:11.419 --> 00:04:14.419 usually the footage is incredibly hard to watch. 00:04:14.780 --> 00:04:16.759 I haven't watched every single second of this 00:04:16.759 --> 00:04:18.939 new release because, frankly, it makes me sick 00:04:18.939 --> 00:04:22.740 as a farmer. But the descriptions alone, shovels 00:04:22.740 --> 00:04:26.230 and wrenches, that's not farming. That's criminal. 00:04:26.370 --> 00:04:28.589 It is entirely criminal. And when that hits the 00:04:28.589 --> 00:04:31.589 evening news or hits social media feeds, consumers 00:04:31.589 --> 00:04:34.769 don't see one bad apple. They just see dairy 00:04:34.769 --> 00:04:37.990 farming. They see all of us. And the stakes here 00:04:37.990 --> 00:04:41.310 go way, way beyond the PR nightmare. It's a financial 00:04:41.310 --> 00:04:43.889 landmine for the producers. As we mentioned, 00:04:43.970 --> 00:04:47.709 the core threat here is the loss of brand premiums. 00:04:47.709 --> 00:04:50.050 Which, if you're in New Mexico or West Texas... 00:04:50.240 --> 00:04:52.300 is basically the whole ballgame. Yeah. If you 00:04:52.300 --> 00:04:54.699 are milking cows in that region, you know the 00:04:54.699 --> 00:04:57.160 struggle intimately. The basis is terrible. Yeah, 00:04:57.220 --> 00:04:59.439 the hauling costs alone. The hauling costs, you're 00:04:59.439 --> 00:05:01.600 far from the major population centers. You need 00:05:01.600 --> 00:05:04.420 that premium just to survive. Exactly. But here 00:05:04.420 --> 00:05:06.660 is where the controversy gets really sticky in 00:05:06.660 --> 00:05:09.079 the source material. Fairlife says Woodcrest 00:05:09.079 --> 00:05:10.980 wasn't a supplier during the time in question, 00:05:11.079 --> 00:05:14.060 but ARM says we saw the trucks. They claim they 00:05:14.060 --> 00:05:16.720 saw Ruan trucking pickups going straight from 00:05:16.720 --> 00:05:19.620 Woodcrest to the Coca -Cola bottling operations 00:05:19.620 --> 00:05:21.620 in Dexter. And then there's the issue of the 00:05:21.620 --> 00:05:24.300 cows themselves, which is fascinating. Right. 00:05:24.740 --> 00:05:28.000 Roughly 2 ,000 cows vanished from Woodcrest into 00:05:28.000 --> 00:05:30.379 the Select Milk network right before the video 00:05:30.379 --> 00:05:32.740 dropped. That is the part that really caught 00:05:32.740 --> 00:05:35.240 my eye. Yeah, that smells like a cover -up. Or 00:05:35.240 --> 00:05:38.139 at least a very well -timed chill game. You don't 00:05:38.139 --> 00:05:40.939 just move 2 ,000 head of cattle quietly unless 00:05:40.939 --> 00:05:43.279 you know a storm is coming. Let's unpack that 00:05:43.279 --> 00:05:45.879 because that is our first major segment of this 00:05:45.879 --> 00:05:49.560 deep dive, the ghost cows. This is problem identification 00:05:49.560 --> 00:05:52.259 number one for any farmer watching this supply 00:05:52.259 --> 00:05:54.759 chain. So walk us through the exact timeline 00:05:54.759 --> 00:05:56.980 because in these situations, the timing tells 00:05:56.980 --> 00:05:58.740 you everything you need to know about who knew 00:05:58.740 --> 00:06:01.540 what and when. Okay, here is the timeline straight 00:06:01.540 --> 00:06:04.810 from the investigation. ARM hires an operative. 00:06:04.970 --> 00:06:07.310 This person gets hired at Woodcrest as a milker, 00:06:07.370 --> 00:06:09.810 then actually gets promoted to the birthing and 00:06:09.810 --> 00:06:12.110 medical units. So they have full access? Full 00:06:12.110 --> 00:06:15.269 access. They are inside Woodcrest from December 00:06:15.269 --> 00:06:19.149 2024 to March 2025. They document all of this 00:06:19.149 --> 00:06:23.649 abuse. Then in May 2025, ARM presents these findings 00:06:23.649 --> 00:06:26.829 to six different government agencies. Six agencies. 00:06:26.829 --> 00:06:29.449 Yeah. The local sheriff, the New Mexico Livestock 00:06:29.449 --> 00:06:34.079 Board, the FDA, the USDA. Everybody. So the authority 00:06:34.079 --> 00:06:37.899 is definitively new in May 2025. Correct. And 00:06:37.899 --> 00:06:39.519 let's be real about how this industry works. 00:06:39.860 --> 00:06:42.360 News travels faster than a loose heifer. If the 00:06:42.360 --> 00:06:44.180 sheriff knows and the livestock board knows, 00:06:44.379 --> 00:06:46.639 the co -op field reps usually hear the whispers. 00:06:47.209 --> 00:06:49.670 But the public didn't know until February 2026. 00:06:49.949 --> 00:06:52.589 That is a nine -month gap. That is a lifetime 00:06:52.589 --> 00:06:54.170 in the dairy business. You can raise a whole 00:06:54.170 --> 00:06:56.910 crop in that time. Right. And in that nine -month 00:06:56.910 --> 00:06:59.490 window, between the formal investigation starting 00:06:59.490 --> 00:07:01.589 and the undercover video dropping on the news, 00:07:01.709 --> 00:07:05.230 something massive happens. KOB TV's investigation 00:07:05.230 --> 00:07:08.829 traces roughly 2 ,000 cows moving from Woodcrest 00:07:08.829 --> 00:07:11.970 in Roswell to Westland Dairy in Clovis, New Mexico. 00:07:12.149 --> 00:07:14.610 Westland Dairy. Now that name rings a very loud 00:07:14.610 --> 00:07:17.980 bell. It should. Westland is owned by Harry DeWitt. 00:07:18.060 --> 00:07:20.500 He's the CEO of Blue Sky Farms. He's a massive 00:07:20.500 --> 00:07:23.180 player in the region. But crucially for this 00:07:23.180 --> 00:07:26.100 specific story, he is the treasurer of Select 00:07:26.100 --> 00:07:28.620 Milk Producers. Okay, let's just pause right 00:07:28.620 --> 00:07:30.959 there and let that sink in for a second. Select 00:07:30.959 --> 00:07:33.339 Milk Producers is the co -op that helped launch 00:07:33.339 --> 00:07:37.019 Fairlife. They are the absolute backbone of that 00:07:37.019 --> 00:07:39.459 supply chain. Yes, they are. They're the ones 00:07:39.459 --> 00:07:42.139 promising the consumer extraordinary care. And 00:07:42.139 --> 00:07:45.370 the treasurer of that co -op buys the cows. from 00:07:45.370 --> 00:07:47.730 the exact farm that is about to be exposed for 00:07:47.730 --> 00:07:50.790 horrific abuse. That is the fact pattern established 00:07:50.790 --> 00:07:53.069 by the investigation. Now, to be fair, and we 00:07:53.069 --> 00:07:55.389 have to cover our legal basis here, just reporting 00:07:55.389 --> 00:07:58.050 what the sources say, DeWitt is not named as 00:07:58.050 --> 00:08:00.449 a defendant in the federal welfare lawsuit. There 00:08:00.449 --> 00:08:02.610 is no public evidence indicating he knew about 00:08:02.610 --> 00:08:04.910 the pending ARM investigation at the specific 00:08:04.910 --> 00:08:08.009 moment of the transaction. Sure, sure. Plausible 00:08:08.009 --> 00:08:10.009 deniability is a beautiful thing in the corporate 00:08:10.009 --> 00:08:12.430 world. But look at this from a practical farmer's 00:08:12.430 --> 00:08:15.290 perspective. Moving 2 ,000 cows is standard business? 00:08:15.449 --> 00:08:19.079 Yes. Entire herds get sold. All the time. But 00:08:19.079 --> 00:08:22.579 moving 2 ,000 head implies, what, about 50 cattle 00:08:22.579 --> 00:08:25.379 pots? Yeah. That is a massive logistical operation. 00:08:25.759 --> 00:08:27.759 You don't just do that on a whim on a Tuesday 00:08:27.759 --> 00:08:29.759 afternoon. No, you absolutely don't. And to move 00:08:29.759 --> 00:08:32.980 them from a farm that is about to get nuked by 00:08:32.980 --> 00:08:35.639 a national welfare scandal, moving them to a 00:08:35.639 --> 00:08:37.899 facility owned by a board member of the co -op 00:08:37.899 --> 00:08:41.159 that processes the high premium milk, that raises 00:08:41.159 --> 00:08:43.379 serious eyebrows. Yeah. If I saw my neighbor 00:08:43.379 --> 00:08:45.470 doing that. I'd have some major questions about 00:08:45.470 --> 00:08:47.649 what they knew. It certainly does raise questions, 00:08:47.710 --> 00:08:50.429 and the New Mexico Livestock Board records show 00:08:50.429 --> 00:08:53.870 that by early summer 2025, Woodcrest's pens were 00:08:53.870 --> 00:08:56.570 completely empty. The remaining animals were 00:08:56.570 --> 00:08:59.230 set to be sold. Basically, the farm dissolved 00:08:59.230 --> 00:09:01.990 into thin air. So the farm is gone. The physical 00:09:01.990 --> 00:09:04.529 entity known as Woodcrest effectively ceases 00:09:04.529 --> 00:09:07.149 to exist. The cows are sitting over at Westland. 00:09:07.490 --> 00:09:10.450 But the milk is where? That is the million -dollar 00:09:10.450 --> 00:09:14.450 question, or rather the $494 ,000 question. This 00:09:14.450 --> 00:09:17.169 brings us to the shell game concept. If the cows 00:09:17.169 --> 00:09:19.769 move to a new barn within the same exact co -op, 00:09:19.889 --> 00:09:22.789 is the milk suddenly clean? That's what I struggle 00:09:22.789 --> 00:09:25.110 with from a common -sense standpoint. If I have 00:09:25.110 --> 00:09:27.990 a cow that was allegedly abused on Farm A on 00:09:27.990 --> 00:09:31.029 Monday, and I load her onto a trailer and truck 00:09:31.029 --> 00:09:33.649 her to Farm B on Tuesday, and she gets milked 00:09:33.649 --> 00:09:37.049 on Wednesday, is that milk distinct? Does the 00:09:37.049 --> 00:09:39.809 consumer paying six bucks a bottle care that 00:09:39.809 --> 00:09:42.309 the GPS coordinates of the milking parlor changed? 00:09:42.629 --> 00:09:45.669 The industry seems to think so, or at least the 00:09:45.669 --> 00:09:48.029 supply chain relies on the fact that no one can 00:09:48.029 --> 00:09:50.649 technically prove otherwise. And this leads us 00:09:50.649 --> 00:09:52.850 directly into our second segment, the industry 00:09:52.850 --> 00:09:55.769 reality check. We really need to talk about the 00:09:55.769 --> 00:09:57.590 traceability gap. This is the part of the article 00:09:57.590 --> 00:09:59.629 that scares me the most. Because we all like 00:09:59.629 --> 00:10:01.289 to think we have great records on our farms. 00:10:01.350 --> 00:10:04.710 We have RFID tags. We have DHIA records. We have 00:10:04.710 --> 00:10:06.769 herd management software that tracks every time 00:10:06.769 --> 00:10:09.870 a cow sneezes. Right. We know her sire, her dam, 00:10:10.029 --> 00:10:12.330 her daily milk production, her fat and protein 00:10:12.330 --> 00:10:14.529 components. We track everything. We track cows. 00:10:14.649 --> 00:10:16.570 We do not track milk. That is the fundamental 00:10:16.570 --> 00:10:19.230 disconnect we are exposing here. New Mexico can 00:10:19.230 --> 00:10:21.809 track every single cow that left Woodcrest. The 00:10:21.809 --> 00:10:23.809 livestock board has the literal paper trail. 00:10:23.909 --> 00:10:25.750 They know exactly where those 2 ,000 animals 00:10:25.750 --> 00:10:28.960 went. Down to the ear tag. Exactly. But once 00:10:28.960 --> 00:10:31.360 the milk leaves your bulk tank and hits the co 00:10:31.360 --> 00:10:34.519 -op pool, the identity is entirely washed. It's 00:10:34.519 --> 00:10:36.159 like pouring a bucket of water into a swimming 00:10:36.159 --> 00:10:38.500 pool. Once it's in there, you can't get your 00:10:38.500 --> 00:10:40.519 specific bucket of water back out. It's just 00:10:40.519 --> 00:10:42.940 pool water now. That's a great analogy. And this 00:10:42.940 --> 00:10:45.259 is exactly where the conflict between Fairlife 00:10:45.259 --> 00:10:48.740 and ARM exists. Fairlife and Coca -Cola issued 00:10:48.740 --> 00:10:51.759 a very strong statement saying, Woodcrest was 00:10:51.759 --> 00:10:55.840 not a supplier in 2024 and 2025. Full stop. Which 00:10:55.840 --> 00:10:57.919 sounds definitive. If you're a consumer reading 00:10:57.919 --> 00:10:59.600 that, it sounds like they checked the accounting 00:10:59.600 --> 00:11:02.860 books and said, nope, no checks written to Woodcrest 00:11:02.860 --> 00:11:06.700 Dairy. But ARM says Woodcrest was tied to Coca 00:11:06.700 --> 00:11:09.899 -Cola's Dexter bottling operations via Ruan trucking 00:11:09.899 --> 00:11:12.559 pickups. They say they physically saw the trucks 00:11:12.559 --> 00:11:14.700 loading milk at the farm and driving directly 00:11:14.700 --> 00:11:18.279 to the plant. So corporate says trust us, but 00:11:18.279 --> 00:11:20.720 they literally have no paperwork to prove where 00:11:20.720 --> 00:11:23.559 the milk came from once it's pooled. Well, they 00:11:23.559 --> 00:11:26.220 might have paperwork saying we didn't. buy directly 00:11:26.220 --> 00:11:29.200 from the legal entity known as Woodcrest. But 00:11:29.200 --> 00:11:31.799 because of the pooling system, if Woodcrest Milk 00:11:31.799 --> 00:11:35.080 went into a select milk producer silo and then 00:11:35.080 --> 00:11:37.240 select milk producers send a tanker to the bottling 00:11:37.240 --> 00:11:40.960 plant, well, you see the issue. It's a gap, a 00:11:40.960 --> 00:11:43.679 massive gaping hole in the logic. And it is a 00:11:43.679 --> 00:11:46.460 regulatory loophole, too, which is wild when 00:11:46.460 --> 00:11:49.929 you dig into it. The FDA's FSMA food traceability 00:11:49.929 --> 00:11:51.950 rule, which everyone in the food industry was 00:11:51.950 --> 00:11:55.570 freaking out about, took effect on January 20th, 00:11:55.570 --> 00:11:58.990 2026, just last month. Right. The new traceability 00:11:58.990 --> 00:12:01.350 mandate. But it covers high risk foods. Stuff 00:12:01.350 --> 00:12:03.870 like romaine lettuce, cut fruit, soft cheeses, 00:12:03.950 --> 00:12:05.909 the stuff that gives people E. coli outbreaks. 00:12:06.110 --> 00:12:08.509 Right. Fluid milk is exempt. It is simply not 00:12:08.509 --> 00:12:11.230 on the food traceability list. Why is that? just 00:12:11.230 --> 00:12:13.250 because of pasteurization? Essentially, yes. 00:12:13.429 --> 00:12:16.350 The Pasteurized Milk Ordinance, the PMO, addresses 00:12:16.350 --> 00:12:19.350 the safety side. It kills the bacteria. So from 00:12:19.350 --> 00:12:21.350 a will -this -product -physically -harm -you 00:12:21.350 --> 00:12:23.929 perspective, the system works brilliantly. But 00:12:23.929 --> 00:12:26.350 the system was designed for food safety. It was 00:12:26.350 --> 00:12:28.169 not designed for brand integrity. Well, that 00:12:28.169 --> 00:12:30.480 makes total sense. It wasn't designed to answer 00:12:30.480 --> 00:12:33.000 the question, did the cow that made this milk 00:12:33.000 --> 00:12:35.620 get hit with a shovel? So we basically have a 00:12:35.620 --> 00:12:38.379 21st century marketing promise. We are out here 00:12:38.379 --> 00:12:40.879 selling extraordinary care, fair life, grass 00:12:40.879 --> 00:12:43.360 fed, animal welfare approved, whatever the label 00:12:43.360 --> 00:12:46.399 is. But we are running it on a 20th century supply 00:12:46.399 --> 00:12:48.659 chain infrastructure. We are promising Porsche 00:12:48.659 --> 00:12:51.620 performance with a mild tea engine under the 00:12:51.620 --> 00:12:53.899 hood. Precisely. The Innovation Center for U 00:12:53.899 --> 00:12:56.700 .S. Dairy tracks processor lots for product recalls. 00:12:56.759 --> 00:12:58.840 If there is a piece of plastic in the bottle, 00:12:58.919 --> 00:13:00.600 they can tell you which bottling plant it came 00:13:00.600 --> 00:13:03.340 from and on what day. But they cannot verify 00:13:03.340 --> 00:13:06.259 farm origin once it is pooled into those massive 00:13:06.259 --> 00:13:09.500 silos. So this reliance on voluntary self -reporting 00:13:09.500 --> 00:13:12.340 leaves the door wide open for massive liability. 00:13:12.860 --> 00:13:15.480 If a Fairlife bottle tests clean for safety, 00:13:15.939 --> 00:13:18.860 Great. But nobody knows whose cows actually produced 00:13:18.860 --> 00:13:20.940 it. And if you can't prove it wasn't the abused 00:13:20.940 --> 00:13:23.480 cows, then in the court of public opinion and 00:13:23.480 --> 00:13:25.460 potentially in a federal civil court, you lose. 00:13:25.639 --> 00:13:28.120 And that loss has a very specific number attached 00:13:28.120 --> 00:13:30.559 to it for the farmer. Which brings us to our 00:13:30.559 --> 00:13:33.080 third segment. Follow the money. We call this 00:13:33.080 --> 00:13:35.440 the premium cliff. Let's do the math on this. 00:13:35.639 --> 00:13:37.460 Because I think a lot of guys out there hear 00:13:37.460 --> 00:13:40.240 brand risk and think, oh, maybe a MyMilk check. 00:13:41.019 --> 00:13:44.200 drops a dime per hundredweight. Or maybe I lose 00:13:44.200 --> 00:13:47.240 my quality bonus for a month until the news cycle 00:13:47.240 --> 00:13:50.080 moves on. It is not a dime, and it's not a one 00:13:50.080 --> 00:13:52.460 -month penalty. Let's look at the breakdown from 00:13:52.460 --> 00:13:55.919 the analysis. Brand premiums, like what you get 00:13:55.919 --> 00:13:58.620 for supplying Fairlife or similar high -welfare, 00:13:58.639 --> 00:14:01.100 high -protein -value -added labels, typically 00:14:01.100 --> 00:14:04.600 run between $1 .50 and $2 .50 per hundredweight. 00:14:04.740 --> 00:14:07.639 And if you are farming in New Mexico, that premium 00:14:07.639 --> 00:14:10.690 is critical. It is life support. The New Mexico 00:14:10.690 --> 00:14:13.309 base price is consistently about $2 per hundredweight 00:14:13.309 --> 00:14:15.450 below the national average. Yeah, the basis down 00:14:15.450 --> 00:14:18.129 there is just brutal. Hauling costs, location, 00:14:18.529 --> 00:14:21.269 water issues. You are already starting in a hole 00:14:21.269 --> 00:14:23.509 before you even turn on the milking parlor. You're 00:14:23.509 --> 00:14:25.909 fighting a headwind every single day just to 00:14:25.909 --> 00:14:27.850 get to zero. So let's run the numbers on a 1 00:14:27.850 --> 00:14:30.389 ,000 cow herd, producing the state average of 00:14:30.389 --> 00:14:35.299 about 24 ,717 pounds per cow per year. A $2 premium 00:14:35.299 --> 00:14:39.720 is exactly $494 ,340 per year. Half a million 00:14:39.720 --> 00:14:41.539 dollars. Half a million dollars. That is the 00:14:41.539 --> 00:14:44.799 premium alone. In New Mexico, that premium isn't 00:14:44.799 --> 00:14:47.679 bonus money. That isn't buy a new boat money 00:14:47.679 --> 00:14:49.940 or go on vacation money. That is the only margin 00:14:49.940 --> 00:14:52.720 they have. If you lose that $2, you are essentially 00:14:52.720 --> 00:14:55.879 milking cows for the privilege of losing money 00:14:55.879 --> 00:14:57.820 every day. Let's scale it for different operations. 00:14:58.519 --> 00:15:02.980 If you have 500 cows, that loss is $247 ,000. 00:15:03.240 --> 00:15:05.740 That's a new tractor, gone, just drove it straight 00:15:05.740 --> 00:15:09.379 off a cliff. If you have 2 ,500 cows, which is 00:15:09.379 --> 00:15:12.259 a very common size in that specific region, you 00:15:12.259 --> 00:15:15.580 are looking at a loss of $1 .2 million. That 00:15:15.580 --> 00:15:18.879 is your entire operating margin. And the really 00:15:18.879 --> 00:15:21.860 scary part is, if a scandal hits the supply chain 00:15:21.860 --> 00:15:25.259 and consumer trust tanks, the brand premium evaporates 00:15:25.259 --> 00:15:28.940 first. The base price remains, sure, but you 00:15:28.940 --> 00:15:30.960 can't survive on the base price in that market. 00:15:31.159 --> 00:15:33.759 We have an article on The Bullvine titled Exposing 00:15:33.759 --> 00:15:36.799 Dairy's Biggest Lie. Management can't save you. 00:15:36.879 --> 00:15:39.419 This is exactly what we mean. I read that piece. 00:15:39.539 --> 00:15:42.950 It's spot on. You can be the absolute best manager 00:15:42.950 --> 00:15:45.350 in the world. You can have your somatic cell 00:15:45.350 --> 00:15:47.610 count down to practically nothing. You can have 00:15:47.610 --> 00:15:49.649 your reproductive program dialed in perfectly. 00:15:49.929 --> 00:15:53.610 But if you lose a $2 premium because of a structural 00:15:53.610 --> 00:15:56.629 failure in your co -op, you cannot manage your 00:15:56.629 --> 00:15:59.669 way out of that hole. You can't efficiency your 00:15:59.669 --> 00:16:02.350 way out of a half million dollar cut. It's mathematically 00:16:02.350 --> 00:16:05.629 impossible. Unless you figure out how to feed 00:16:05.629 --> 00:16:09.840 your cows thin air, you are done. Now, let's 00:16:09.840 --> 00:16:11.759 look at the entity standing right in the middle 00:16:11.759 --> 00:16:14.480 of this storm. Select milk producers. This is 00:16:14.480 --> 00:16:17.620 our fourth segment, case studies. or what I'm 00:16:17.620 --> 00:16:20.220 calling select milk's double trouble. Yeah, if 00:16:20.220 --> 00:16:22.159 you are a select member right now, you have to 00:16:22.159 --> 00:16:24.100 be asking some really hard questions at the next 00:16:24.100 --> 00:16:26.139 district meeting because they are fighting a 00:16:26.139 --> 00:16:28.720 war on two fronts in the exact same federal district 00:16:28.720 --> 00:16:30.860 court. Front number one is the welfare issue, 00:16:31.000 --> 00:16:33.299 the Woodcrest and Fairlife class action suit 00:16:33.299 --> 00:16:35.759 in the Central District of California. We know 00:16:35.759 --> 00:16:38.000 Fairlife settled a very similar suit back in 00:16:38.000 --> 00:16:41.059 2022 for $21 million regarding their extraordinary 00:16:41.059 --> 00:16:44.740 care marketing claims. $21 million. That's a 00:16:44.740 --> 00:16:47.240 lot of milk checks. And remember, that settlement 00:16:47.240 --> 00:16:49.700 didn't even include an admission of guilt. That 00:16:49.700 --> 00:16:51.759 was just the cost to make the lawsuit go away. 00:16:51.940 --> 00:16:55.179 It is. But front number two might be even more 00:16:55.179 --> 00:16:57.220 aggravating for the average farmer trying to 00:16:57.220 --> 00:17:00.580 make a living. This is the antitrust case. Athart 00:17:00.580 --> 00:17:04.990 Dairy Farms LLC versus DFA and Select Milk. I've 00:17:04.990 --> 00:17:06.470 been following this one closely. This is the 00:17:06.470 --> 00:17:09.769 big price fixing allegation. Correct. The allegation 00:17:09.769 --> 00:17:11.670 in the source material is that they conspired 00:17:11.670 --> 00:17:14.470 to suppress milk prices in the Southwest from 00:17:14.470 --> 00:17:18.849 January 2015 all the way to June 2025. Basically, 00:17:18.869 --> 00:17:21.029 the claim is that they used the Greater Southwest 00:17:21.029 --> 00:17:23.869 Agency, which is a joint marketing entity, to 00:17:23.869 --> 00:17:26.329 artificially hold down farmer pay. Basically 00:17:26.329 --> 00:17:28.609 saying, we won't bid on your milk if you don't 00:17:28.609 --> 00:17:30.609 bid on mine. It completely destroys competition 00:17:30.609 --> 00:17:33.170 in the region. And they settled. Preliminary 00:17:33.170 --> 00:17:35.569 approval for the settlement came in summer 2025. 00:17:36.329 --> 00:17:40.769 $34 .4 million total, $9 .9 million from Select, 00:17:40.990 --> 00:17:44.769 and $24 .5 million from DFA. And of course, no 00:17:44.769 --> 00:17:47.150 admission of liability, right? Standard procedure, 00:17:47.589 --> 00:17:50.509 no admission. But look at the practical result. 00:17:50.789 --> 00:17:53.809 The Greater Southwest Agency was dissolved. Wait, 00:17:53.849 --> 00:17:56.460 so let me get this straight. My co -op... is 00:17:56.460 --> 00:17:59.119 paying millions of dollars to settle price -fixing 00:17:59.119 --> 00:18:01.519 claims money that allegedly came out of my pocket 00:18:01.519 --> 00:18:04.039 in the first place by suppressing my milk price, 00:18:04.180 --> 00:18:06.839 and at the exact same time, they are dealing 00:18:06.839 --> 00:18:09.420 with animal abuse allegations that threaten my 00:18:09.420 --> 00:18:12.180 brand premium. That is the reality outlined in 00:18:12.180 --> 00:18:14.660 the documents. And let's compare the actual value 00:18:14.660 --> 00:18:17.160 here for the producer. The antitrust settlement 00:18:17.160 --> 00:18:20.059 covers about 8 ,000 producers. If you do the 00:18:20.059 --> 00:18:23.019 math on that 34 million, after the lawyers take 00:18:23.019 --> 00:18:26.579 their cut, That nets a farmer about $4 ,300. 00:18:26.920 --> 00:18:30.220 It's a one -time payment. $4 ,300. That buys 00:18:30.220 --> 00:18:32.859 what? A couple pallets of calf milk replacer? 00:18:32.960 --> 00:18:35.140 Maybe a used pickup truck if you're really lucky 00:18:35.140 --> 00:18:37.940 and it has 200 ,000 miles on it? Compare that 00:18:37.940 --> 00:18:42.480 to the welfare scandal risk. $494 ,000 per year. 00:18:42.839 --> 00:18:46.240 The priorities seem completely backwards. The 00:18:46.240 --> 00:18:48.680 co -op is fighting to settle a past wrong for 00:18:48.680 --> 00:18:51.000 pennies on the dollar, while a structural risk 00:18:51.000 --> 00:18:53.700 that could cost members millions is blowing up 00:18:53.700 --> 00:18:55.680 in real time. It really makes you wonder about 00:18:55.680 --> 00:18:58.400 governance. Who is steering the ship? If you 00:18:58.400 --> 00:19:00.579 are spending all your executive time fighting 00:19:00.579 --> 00:19:03.079 antitrust lawyers, are you actually watching 00:19:03.079 --> 00:19:05.180 the gates to make sure a guy like the Woodcrest 00:19:05.180 --> 00:19:07.519 operator isn't torching the brand reputation? 00:19:08.019 --> 00:19:10.180 It brings us to the corporate defense mechanisms. 00:19:10.910 --> 00:19:15.170 Fair life claims zero tolerance for abuse. Select 00:19:15.170 --> 00:19:18.009 milk claims the highest standards in the industry. 00:19:18.250 --> 00:19:20.549 Words. They're just words on a page. I see those 00:19:20.549 --> 00:19:22.750 banners at every single trade show I go to. World 00:19:22.750 --> 00:19:25.529 -class care. Highest standards. Quality assured. 00:19:25.910 --> 00:19:28.450 They are words. And our analysis argues that 00:19:28.450 --> 00:19:30.490 without the data, without actual traceability, 00:19:30.730 --> 00:19:33.250 they are empty phrases. And this leads to our 00:19:33.250 --> 00:19:35.910 future implications and contrarian takes segment. 00:19:36.109 --> 00:19:38.509 Lay it on me. I'm ready for the hot take. The 00:19:38.509 --> 00:19:41.609 brand contamination clause, or rather, the reality 00:19:41.609 --> 00:19:43.990 of brand contamination, even if it's not strictly 00:19:43.990 --> 00:19:46.509 written in your contract. You might be the best 00:19:46.509 --> 00:19:49.009 farmer in the world. Your cows might be living 00:19:49.009 --> 00:19:52.130 in absolute luxury. You might know every single 00:19:52.130 --> 00:19:55.150 one of them by name. But if your milk is pooled 00:19:55.150 --> 00:19:57.650 with a woodcrest, you share the penalty. It's 00:19:57.650 --> 00:20:01.059 guilt by association. And in a co -op... I mean, 00:20:01.079 --> 00:20:03.380 that is built into the model. We share the profits. 00:20:03.440 --> 00:20:05.839 We share the losses. But usually we think of 00:20:05.839 --> 00:20:08.259 losses as, you know, the cheese market went down 00:20:08.259 --> 00:20:10.759 or exports slowed. We don't think of losses as 00:20:10.759 --> 00:20:13.039 my neighbor is a criminal and now nobody wants 00:20:13.039 --> 00:20:15.640 to buy my milk. But that is the new reality of 00:20:15.640 --> 00:20:19.119 consumer brands. If the consumer cannot distinguish 00:20:19.119 --> 00:20:22.259 your good milk from the bad milk, all milk in 00:20:22.259 --> 00:20:24.420 that bottle is considered bad milk. And it's 00:20:24.420 --> 00:20:27.269 unfair. It is incredibly unfair to the 98 guys 00:20:27.269 --> 00:20:29.430 in the co -op doing everything exactly right. 00:20:29.569 --> 00:20:31.849 But fairness doesn't pay the feed bills. No, 00:20:31.869 --> 00:20:33.289 it doesn't. And this leads to the inevitable 00:20:33.289 --> 00:20:35.450 shift in the industry. If the dairy industry 00:20:35.450 --> 00:20:37.789 doesn't fix the traceability gap voluntarily, 00:20:38.269 --> 00:20:40.910 trial lawyers absolutely will. Oh, absolutely 00:20:40.910 --> 00:20:43.190 they will. They smell blood in the water. They 00:20:43.190 --> 00:20:45.349 know the co -ops have deep pockets and terrible 00:20:45.349 --> 00:20:48.220 tracking. We are seeing this already. The amended 00:20:48.220 --> 00:20:50.680 complaints in the Fairlife case are specifically 00:20:50.680 --> 00:20:53.880 targeting the marketing claims. They are saying 00:20:53.880 --> 00:20:57.799 you promised extraordinary care. You cannot mathematically 00:20:57.799 --> 00:21:01.160 prove extraordinary care because you cannot trace 00:21:01.160 --> 00:21:04.740 the fluid milk back to the specific farm. Therefore, 00:21:05.019 --> 00:21:07.880 you are lying to the consumer. And that is a 00:21:07.880 --> 00:21:10.599 winning argument in court. or at the very least, 00:21:10.619 --> 00:21:12.640 an incredibly expensive one to defend against. 00:21:12.880 --> 00:21:15.140 If we look north, we look at Canada's dairy trace 00:21:15.140 --> 00:21:17.619 program. They track animals from birth to disposal. 00:21:17.859 --> 00:21:20.400 It is a mandatory national program. The U .S. 00:21:20.400 --> 00:21:22.759 is lagging so far behind on this. We love our 00:21:22.759 --> 00:21:24.579 independence here. We hate the government knowing 00:21:24.579 --> 00:21:26.839 where our cows are. I get it. I don't want the 00:21:26.839 --> 00:21:29.160 government on my farm either. But the tradeoff 00:21:29.160 --> 00:21:31.859 is we are flying blind when it comes to defending 00:21:31.859 --> 00:21:34.579 our premium products. Reference our recent article, 00:21:34.839 --> 00:21:37.660 Transform Your Dairy Before Consolidation Decides 00:21:37.660 --> 00:21:40.279 For You. This is exactly that scenario playing 00:21:40.279 --> 00:21:42.960 out. If you don't build the system yourself, 00:21:43.259 --> 00:21:45.839 the system will be imposed on you, likely by 00:21:45.839 --> 00:21:48.440 a federal court order or a panicked processor. 00:21:48.720 --> 00:21:51.339 It won't be the USDA making the rule. It will 00:21:51.339 --> 00:21:55.079 be Walmart or Coca -Cola or a judge. They will 00:21:55.079 --> 00:21:57.299 just step in and say, if you can't trace it from 00:21:57.299 --> 00:21:59.859 the parlor to the bottle, we won't buy it. Boom. 00:21:59.960 --> 00:22:02.950 Done. So we've painted a pretty grim picture 00:22:02.950 --> 00:22:05.289 today. We've got ghost cows moving in the night. 00:22:05.390 --> 00:22:07.910 We've got a half million dollar premium risk 00:22:07.910 --> 00:22:10.930 hanging over your head. And we've got co -ops 00:22:10.930 --> 00:22:13.150 fighting legal battles on every front. It's heavy. 00:22:13.250 --> 00:22:15.549 It's a lot to process. But we are the bullvine. 00:22:15.670 --> 00:22:17.609 We don't just sit here and complain. We give 00:22:17.609 --> 00:22:20.650 you a roadmap. So let's pivot to our actionable 00:22:20.650 --> 00:22:23.349 insights. A farmer just finished milking. They're 00:22:23.349 --> 00:22:25.990 driving to the feed store. The radio is on. What 00:22:25.990 --> 00:22:27.730 are the three things they need to remember from 00:22:27.730 --> 00:22:29.549 today? What do they actually need to do? All 00:22:29.549 --> 00:22:31.900 right. Let's break it down into immediate, medium, 00:22:32.079 --> 00:22:34.400 and long -term strategies. Start with this week. 00:22:34.700 --> 00:22:36.799 What can I do today when I get back to the farm 00:22:36.799 --> 00:22:39.519 office? Immediate action this week. Audit your 00:22:39.519 --> 00:22:41.180 audit. Audit your audit. I like the sound of 00:22:41.180 --> 00:22:43.819 that. Pick up the phone. Call your co -op representative. 00:22:44.220 --> 00:22:46.500 Don't email them. Emails just get ignored or 00:22:46.500 --> 00:22:48.519 forwarded to the legal department. Call them 00:22:48.519 --> 00:22:51.700 on the phone. And ask three very specific questions. 00:22:52.019 --> 00:22:55.259 Number one, who selects the third -party welfare 00:22:55.259 --> 00:22:58.309 auditor? Is it the co -op picking their buddy 00:22:58.309 --> 00:23:01.549 or is it truly an independent organization? That's 00:23:01.549 --> 00:23:03.670 a key distinction. If you hire the guy grading 00:23:03.670 --> 00:23:06.029 your test, you're always going to get an A. Exactly. 00:23:06.250 --> 00:23:09.529 Number two, how often are these audits actually 00:23:09.529 --> 00:23:12.549 conducted? Is it once every three years? Once 00:23:12.549 --> 00:23:15.089 a year? Are they surprise audits or are they 00:23:15.089 --> 00:23:17.130 scheduled weeks in advance? If they are scheduled, 00:23:17.309 --> 00:23:19.569 they are a pageant. Everyone cleans up for the 00:23:19.569 --> 00:23:22.029 pageant. You sweep the alleys. You hide the broken 00:23:22.029 --> 00:23:24.069 equipment. They absolutely need to be surprise 00:23:24.069 --> 00:23:26.339 audits to mean anything. And question number 00:23:26.339 --> 00:23:29.319 three. Can I see the most recent audit summary 00:23:29.319 --> 00:23:34.740 for every farm in my pool? Ooh. That last one 00:23:34.740 --> 00:23:36.940 is the kicker. That's going to make some field 00:23:36.940 --> 00:23:39.759 reps very uncomfortable. It is. They will probably 00:23:39.759 --> 00:23:42.599 say no. They will say it's a privacy issue. But 00:23:42.599 --> 00:23:45.920 if they won't answer, you are flying blind. You 00:23:45.920 --> 00:23:47.980 have a right to know if your half million dollar 00:23:47.980 --> 00:23:50.099 premium is being risked by the guy down the road 00:23:50.099 --> 00:23:53.359 who still uses a wrench to move cows. Push for 00:23:53.359 --> 00:23:55.539 that answer. Okay, I love that. Now, what about 00:23:55.539 --> 00:23:58.960 the medium term, say the next three to six months? 00:23:59.220 --> 00:24:02.019 Medium term strategy. Stress test your contracts. 00:24:02.299 --> 00:24:05.000 Dig out your actual marketing agreement. Blow 00:24:05.000 --> 00:24:07.579 the dust off it. You are looking for something 00:24:07.579 --> 00:24:11.599 very specific in the fine print. Brand contamination 00:24:11.599 --> 00:24:14.740 clauses. What does that look like in plain English? 00:24:15.279 --> 00:24:17.700 You need to see if the contract specifies what 00:24:17.700 --> 00:24:19.880 happens to your premium if another farm in your 00:24:19.880 --> 00:24:22.480 pool is investigated. Most contracts probably 00:24:22.480 --> 00:24:24.819 don't have this explicitly stated. Most don't. 00:24:24.819 --> 00:24:26.980 Which means it's entirely open for interpretation, 00:24:27.180 --> 00:24:29.180 and usually in corporate law, the interpretation 00:24:29.180 --> 00:24:31.960 goes against the farmer. If that language isn't 00:24:31.960 --> 00:24:33.980 there protecting you, you are carrying a massive 00:24:33.980 --> 00:24:35.839 financial risk that you haven't priced into your 00:24:35.839 --> 00:24:38.119 operation. Consult an ag attorney. Seriously. 00:24:38.460 --> 00:24:41.380 Spend the $500 to get a professional legal opinion 00:24:41.380 --> 00:24:44.720 on your exposure. That is money well spent. And 00:24:44.720 --> 00:24:47.220 long -term. What are we looking at one to two 00:24:47.220 --> 00:24:50.359 years out? Long -term positioning. Push for infrastructure. 00:24:50.819 --> 00:24:53.660 This is the political play. You need to lobby 00:24:53.660 --> 00:24:56.740 your co -op board for true farm -to -bottle traceability. 00:24:57.079 --> 00:25:00.380 Look, it costs money. I know that. Nobody wants 00:25:00.380 --> 00:25:02.220 another deduction on the bottom of the milk check. 00:25:02.319 --> 00:25:04.640 We have enough deductions already. But look at 00:25:04.640 --> 00:25:07.039 the math we just did today. Voluntary infrastructure 00:25:07.039 --> 00:25:09.779 programs are cheaper than class action settlements. 00:25:10.660 --> 00:25:12.619 And they are definitely cheaper than losing a 00:25:12.619 --> 00:25:15.200 $2 brand premium forever. It's a simple trade 00:25:15.200 --> 00:25:17.400 -off for your business model, traceability costs 00:25:17.400 --> 00:25:20.740 versus litigation risk. Exactly. You can pay 00:25:20.740 --> 00:25:22.640 a little bit now to build a software and tracking 00:25:22.640 --> 00:25:25.220 system that proves you're clean, or you can pay 00:25:25.220 --> 00:25:26.980 a whole lot later when the class action suit 00:25:26.980 --> 00:25:29.779 settles and the brand dies. Think of it as insurance. 00:25:30.019 --> 00:25:32.460 You buy fire insurance for the milking parlor. 00:25:32.539 --> 00:25:35.339 You need brand insurance for the milk. Powerful 00:25:35.339 --> 00:25:38.019 stuff. The Woodcrest situation is a warning shot 00:25:38.019 --> 00:25:40.480 across the bow for the whole industry. The cows 00:25:40.480 --> 00:25:42.619 are gone, the farm is closed, but the gap in 00:25:42.619 --> 00:25:45.359 the system remains wide open. And until that 00:25:45.359 --> 00:25:48.400 gap is closed, your premium is just a handshake 00:25:48.400 --> 00:25:51.380 deal waiting to be broken by a bad actor. That 00:25:51.380 --> 00:25:53.960 brings us to the end of this deep dive. The cows 00:25:53.960 --> 00:25:56.460 are milked, the truth is out, and it's up to 00:25:56.460 --> 00:25:58.799 you to check your contracts. Subscribe wherever 00:25:58.799 --> 00:26:01.700 you get your podcasts. And seriously, go to www 00:26:01.700 --> 00:26:05.359 .thebullvine .com. Read the full articles on 00:26:05.359 --> 00:26:07.599 the American dairy heist and Locked from the 00:26:07.599 --> 00:26:10.319 Inside. We go into even more detail on the legal 00:26:10.319 --> 00:26:12.839 filings and the structural economics there. We'll 00:26:12.839 --> 00:26:14.779 catch you tomorrow with another deep dive into 00:26:14.779 --> 00:26:17.180 the dairy markets. Signing off from the Bullvine, 00:26:17.319 --> 00:26:19.519 stay profitable. And stay safe out there.