Guests: Jim Ostrom, MilkSource, with locations in Wisconsin, Michigan and MissouriPat Maddox, RuAnn Genetics and Maddox Dairy in CaliforniaJonathan Lamb, Oakfield Corners Dairy and Lamb Farms in New York & Ohio Co-host: Brian Garrison, Balchem Animal Nutrition & Health We are so excited to come to you from the World Dairy Expo today. We are happy to be back at World Dairy Expo in Madison in 2021. We are also doing things a little different today and are welcoming three icons in the dairy industry to sit at the pub table with us – and not virtually.
Guests:
Jim Ostrom, MilkSource, with locations in Wisconsin, Michigan and Missouri
Pat Maddox, RuAnn Genetics and Maddox Dairy in California
Jonathan Lamb, Oakfield Corners Dairy and Lamb Farms in New York & Ohio
Co-host: Brian Garrison, Balchem Animal Nutrition & Health
We are so excited to come to you from the World Dairy Expo today. We are happy to be back at World Dairy Expo in Madison in 2021. We are also doing things a little different today and are welcoming three icons in the dairy industry to sit at the pub table with us – and not virtually.
To kick things off Pat Maddox discussed his genetic and commercial business and how they go hand-in-hand for the number one goal of increasing the genetics in the herd for better production, better productive life, and better health. The second goal is meeting the needs of the market and demand. This entails breeding for high indexes, breeding for show and breeding for AI. (6:07)
The producers weighed in on the discussion of the evolution of breeding for the “big cows” trait. Now in the showring and in production, it is important that the cattle be good first and not just big. The production must be considered as well. (6:54)
Jim Ostrom discussed dairy strength improvements versus big and big bones. Dairy strength is hard to physically see on an animal but when they have it they have better balance. He also discussed the improvements in mammary systems in the industry. (8:27)
Jonathan Lamb discussed improvements into the industry due to genomics. He explained that the commercial herd and the showring cattle don’t always line up on the productivity scale. Sometimes the old show cattle struggle to get pregnant and have different health traits. It’s important for showring animals to translate back to that productive commercial herd. Genomics could help breed some desirable traits into the commercial herd as well. (11:56)
Jim Ostrom discussed the importance of communication with consumers. Whether you have 50 or 50,000 social media followers all producers need to tell their story. Producers need to communicate animal care, animal health, soil erosion, sustainability, etc. Occasionally we have to be aggressive on the national stage when things are being said about our industry that are not true. (10:31)
Pat Maddox discusses his use of outsourcing in his operation to improve efficiencies. His operation outsources Human Resources and Nutrition. They use internal veterinarians because of the amount of need for veterinarians in their operations. (28:44)
Jonathan Lamb talks about establishing a culture about animal care among employees so it is a trickle-down effect. If the employees know the importance of what should and shouldn’t be done, then they will feel comfortable reporting bad behavior to those in charge. And the managers have to follow through and terminate bad actors on their farms, so it is not an ongoing issue. (30:55)
Pat Maddox discusses the role innovation plays in the industry like embryo transfer and genetics as well as biosolids. The co-op their operation belongs to is focusing on butter powder and other powder mixes that can be exported to feed the world. (41:47)
As a reminder, we will continue breaking down the new 2021 8th Revised Edition of the Nutrient Requirements of Animals in podcasts releasing over the coming weeks. Be sure to subscribe so you don’t miss any of the new episodes. If you’d like to pre-order a copy and receive a 25% discount, visit Balchem.com/realscience and click on the NRC series for a link and the discount code.
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This podcast is sponsored by Balchem Animal Nutrition and Health.
Scott Sorrell (00:06):
Good evening everyone. And welcome to the Real Science Exchange. The pub cast where leading scientists and industry professionals meet over a few drinks to discuss the latest ideas and trends in animal nutrition. We're very excited today to be broadcasting here from the World Dairy Expo. Last year, we were unfortunately not able to be here. And so we're very happy to be here live and in-person. Speaking of live and in person, we typically do these remotely, and so our YouTube viewers will be used to seeing us all on little screens separately, but I'm happy to be here with some some icons of the industry live and in person here today. My name is Scott Sorrell and I'll be your host today. The three guests that we have here, we'll start off with Jim Ostrom. Jim is a partner at MilkSource, and they have locations in Michigan, Wisconsin, and Missouri. I then have Pat Maddox here. He's a owner of RuAnn Genetics and the Maddox Dairy in California. And over here to my left is Jonathan Lamb with the Oakfield Corners Dairy in New York. My cohost- he's currently- we're recording this between the Brown Swiss show and the Red and White show. And so he's got his last cow in the ring- he'll be coming here in a little bit. Why don't we start with you, Jim, give us a little bit of background on your dairy and the show stream.
Jim Ostrom (01:27):
It's first of all, it's a pleasure to be here at World Dairy Expo after missing a year. I've been here every year since I was 16., and it broke my heart last year not to be here. MilkSource- we're in Wisconsin, Michigan, Missouri, Kansas. And we have large dairy farms, but we also have a very boutique cheese business. And so it seems strange that a large dairyman is in a small cheese business, but we felt that value added branding would be best for us to compete with- as opposed to commercial cheese, where you're dealing with multinationals. And, and so that's kind of the nutshell of our business. And again, what thrilled to be at World Dairy Expo.
Scott Sorrell (02:14):
Yeah absolutely, Ill second that. Pat how about you? Tell us a little about your business.
Pat Maddox (03:42):
Yes, our family has a diversified farming operation: 8,000 acres and that includes almonds and wine grapes and the dairy. And we'd like to be diversified in our dairy as well. And one of those aspects is the showing, the show side. So, but we sell semen and sell embryos, and we like to participate in the shows and be competitive.
Scott Sorrel (02:37):
Yeah, excellent. Im going to want to circle back on that genetic business here in a little bit. And then over here to my left- I feel like you’re over there by yourself. You’ll have Brian here in a moment, but why don you give us a little bit of background, Jonathan of you and your operation.
Jonathan Lamb (02:50):
We actually have three facilities where we milk cows in New York, and one in Ohio. And like the other gentlemen to my right, we have an aspect of our businesses that deals with genetics, both showing dairy cattle and producing bulls for AI.
Scott Sorrell (03:07):
And what part of Ohio? I grew up in Ohio so I’m a little partial.
Jonathan Lamb (03:05):
Near VanWert- Convoy. Not too far from Fort Wayne, Indiana. We're only a mile from the Indiana border.
Scott Sorrell (03:11):
Yeah. Excellent. I grew up in Preble County, Ohio, which is also on the Indiana border, just south of you. Excellent. Jim, you talked to me earlier today and we were talking about, I mentioned your hobby and you said, no, it's not a hobby, it's a passion. Why don't you tell me a little bit about that and how you got involved in showing cattle?
Jim Ostrom (03:31):
I got involved showing cattle when I bought a heifer 15 years ago and I couldn't stop. And we’re showing 26 head this week in four different breeds. We have a very specific facility in Kokona where we raise 50 or 60 very, well, we'd like to think are elite show cattle. It's a passion for us. We love cows. We spend our weekends and vacations hopefully going to cow shows and compete. It's the, my daughters one day asked me why we, why I do it. And I, I said because the, first of all these beautiful animals that have been bred for generations for this purpose… it just, they're just stunning. And to go out at world dairy expo and see the caliber that's there, and then to be able to compete some days, with the very elite, it's just awesome.
Scott Sorrell (04:26):
Yeah. Awesome. So how have you been doing so far this week?
Jim Ostrom (04:30):
We're doing all right. We have a first, a second, a second, and some heifers that are you know three or four fifth place. And we're excited for a red show tomorrow, and a black and white show of course on Saturday.
Scott Sorrell (04:41):
Yeah. Yeah. Excellent. Jonathan, what about you? How's the World Dairy Expo been going for you so far this week?
Jonathan Lamb (06:13):
Yeah, that's good. I, I concur. It's great to be back here. I really missed it last year. The World Dairy Expo has kind of the pomp and circumstance, and the excitement, and the comradery with the other exhibitors that are really looking for, The aspect of our show program, my wife, Alicia, and I, it's kind of grown organically. We both grew up in 4-H and junior Holstein. And after college, we both kind of wanted to dip our toe into it a little bit. And, and like Jim, it just, once you get one, you get a second and then you again, it organically just grows over the years and it gets bigger and bigger to now where we have our own, our own barn, where we keep those special kinds of cows to get the care that they need you know, on a 365 day basis to be able to make it here. and hopefully look their best on show day.
Scott Sorrell (05:33):
Excellent. Excellent. Pat said, I said we're going to talk a little bit about your genetics business: why don’t you tell us a little bit more about that.
Pat Maddox (05:40):
Yeah. We've always pushed at that, not only for our own herd, but also you know, certainly selling bulls for natural service, selling semen, selling embryos to most of our neighbors, but now it's spread out to a little wider area. And so we've always done our own thing and, and appreciated good cows. And other people appreciate them with them. And so we have a demand and we like to meet that demand.
Scott Sorrell (06:04):
Yeah. Are there any synergies between your genetics business and your commercial business?
Pat Maddox (06:09):
Oh, definitely. I mean, the main thing is your number one goal is to increase the genetics in your herd for better production, better productive life, better health. And so that's the main goal- number one goal. Secondary goal is to meet, meet the needs of your market, you know. What they demand, what they would like. And part of it is breeding for show. Part of it is breeding for high indexes and breeding for AI. So it's just- but number one is for your own, your own inside growth and inside improvement.
Scott Sorrell (06:38):
Yeah. So I guess one question I'd have for all of you is what kind of changes have you seen in the animal phenotype over the years? And how has that changed? And then how do you see those changing going forward? And I'll just kind of step out and I'd like to see you guys have a discussion on that.
Jonathan Lamb (06:54):
I’ll start out there. I mean, I, I really think that the show ring has embraced a moderating stature over the past handful of years. And, you know, when I was younger and first getting into it, you know, they needed to be big, and they also needed to be good, but now they needed to be good before they needed to be big. And I really see that as a positive change. And in some cases, being too big can work against you in the show ring. And so I think that's been, that's been really fun to see that evolution. Yeah.
Scott Sorrell (07:22):
Do you see that going forward as well, continuing? Or have we kind of, are we at where we need to be?
Jonathan Lamb (07:27):
Well, no. I mean, I think we'll continue to see that. And just because the cow is big doesn't mean they won't do well. But they, they definitely need to be balanced. And then “balance” is a word that is sometimes- it gets overused. But it's pretty appropriate, because if a cow doesn't have all the attributes we're looking for, and as Jim said, it's so competitive. They have to be on their A-game and they have to be good pretty much everywhere. And that's what makes it exciting. So
Scott Sorrell (07:52):
Gentlemen, you concur with those?
Pat Maddox (07:55):
Yeah, definitely. You know, we, we had this cow that was nominate All American back in like 1967, and it was cause she was a huge cow! But she was 61 ¾ inches. Now the two year olds are over 61 ¾ inches. But because of her size, she was a low milk producer, maybe 11-12,000, a milk and a tough breeder. For being a huge cow at that time And so I think we did go, you know, too extreme to some. And now verybody's talking about balance and breeding, keeping it nice, nice where they're at now.
Jim Ostrom (08:28):
You know, I think for me, it's dairy strength has prevailed versus big and big bones. And dairy strength is a little one hard for a lot of people to see it in animal. But when they have it, and they have balance they will do well. And it's something that we breed for. Mammary systems in the industry have improved dramatically. And when I was in the Jersey show yesterday in the junior three-year-old class, it was stunning. The quality of udders in that show ring from top to bottom, I just simply couldn't find one you wouldn't take home from a mammary system perspective. And I know the Holstein show will be very much like that, also.
Scott Sorrell (09:14):
I had a question teed up for Brian, because I know Brian's been a judge here at World Dairy Expo before. And what I wanted to know was, and I'll ask you guys the question, how do the traits that you see in the cattle that you have in the show ring, how does that translate to your commercial herds?
Pat Maddox (9:30):
Well I think Jim started and had a good point, is the udders. I want, number one thing on the dairy is we want good udders. You know, you never see hardly any, you know, bad udder in the herd anymore. You know, and same thing, feet, legs, udders, dairy strength: those what you want in your milking herd. And the same traits, you know, that you you're breeding for longevity, for health and for easy keeping.
Scott Sorrell (9:54):
So you can see it translating quite well then.
Jim Ostrom (9:56):
And Jonathan pointed out earlier that we don't need massive cows. We need 58 inch commercial cows that can move around really well. They don't have to look like they're going to go off to world dairy expo to be a truly profitable, successful animal. Three lactations, four lactations and an animal that's thriving all the way. And that is one nice thing about genomics is that we're able to select for so many traits that are beneficial that way.
Scott Sorrell (10:28):
Yeah. I was going to dig into that later. Jonathan, I was wondering- yeah, go ahead.
Jonathan Lamb (10:28):
Yes. I mean, not just throw in there. Jim had mentioned genomics, but one of the things that gets me excited about the future is you know, with the advent of genomics back in 2008, these cows that are more commercial cows can really milk at high levels as young two year olds, get pregnant while doing it, stay in the herd, and to be honest, some, some past show cattle, we struggled to get pregnant. We, you know, maybe we struggled with some of those health traits and over time we're seeing where we started being able to be successful with breeding some health traits into those pedigrees, still having them be competitive at a very top level. And that's something that we strive for in our own breeding program, because, you know, we want them to look good and we want them to compete, but we also want them to have some of those same genetic attributes that make other commercial cattle really successful. And in some of the best cattle today do that. And we hope to continue to propagate those genetics.
Scott Sorrell (11:28):
Yeah, that's a good point. I was wondering, is there any traits that you see in the your commercial herd that's consistent among some of your top producers that you think may be, needs to find its way into the selection criteria for your show cattle?
Jonathan Lamb (11:39):
That's a good question. One of the challenges is that we can, we've started to be able to make two-year-olds that consistently make, you know, 120 pounds of milk at 90 days in milk and get pregnant while doing that. And that's really something. I mean, it's, it's something to be celebrated. But the challenge is that we need to have a little bit of style bred into those pedigrees, a little bit of flash and, you know, like silky thin hided you know, a little bit of more dairy bone. And so some of those genomic pedigrees will give you those looks, where they may be not as silky and thin hided- they don't have that style, that general appearance, that show ring appearance that we're looking for. So, you know, we're trying to kind of bring those two attributes together.
Scott Sorrell (12:25):
Yeah. You know, one thing I was thinking about as I preparing for this is that a show like this gives us an opportunity to interface with our consumers, right? And so I'm wondering if, is that something that you guys intentionally think about? Or are there ways that maybe we can leverage an event like this right. Let's face it. Sometimes there's some false stuff out there that people are spreading around to the consumers that just simply incorrect. What can we do, or relative to shows like this, or perhaps anything else to help project the proper image for our industry, or a correct image?
Jim Ostrom (13:00):
I believe strongly that no matter where your station is in the dairy industry, whatever your role- we all have an obligation to do some communicating. And if you have 50 followers on social media or 50,000, we've all got to do it. And we've got to tell our story- we have to communicate how we care for our animals, how we nurture the land, how we care about things like animal care, animal health, soil erosion, sustainability. Because you know, Cory Booker and AOC have an agenda, and that agenda could be devastating to the industry. And too, quite frankly, consumers that consume high quality dairy protein. And we have to stand up and we have to communicate, we have to do it in a productive manner. And occasionally, we have to be aggressive on the national stage. When some things are said about our industry that are not true.
Pat Maddox (13:57):
Absolutely. Yeah, totally agree. You know, that's something like he said all how often it's every day for us, every employee I'm watching how they're treating the animals, how they care for now. Cow comfort and care- it’s like number one, all day, 24-7. And to have all your employees, you know, that's your main training, buy into it the whole time. And I, like Jim said, we have a great story to tell. I think, you know, we're portrayed poorly, and is based more on size instead of, you know, actually how good a job or taking care of the animals.
Scott Sorrell (14:27):
Yeah, absolutely.
Jonathan Lamb (14:29):
Yeah. Yeah. I concur, I think we really need to make sure how much we care for our animals and our passion for the animals, and the industry, comes across to the consumer and telling that story is really, really, important.
Scott Sorrell (14:41):
Yeah. I think passion is the word, right? I mean, every dairyman I've ever met has had a passion for the industry and for their animals. Jim, just to kind of build on something that you said. You know, no matter what we're doing on social media just kind of reminded me of something that we're doing here and not to toot our own horn, but I will just a little bit. We have something we call the real faces of dairy. We have a Facebook page. And what we do is ask dairy farmers and dairy families to put pictures out there showing the true face of dairy. And so I think somebody said, we've got like 10,000 pictures out there. We've got 75,000 followers on that page. So, so for anybody listening to this, go to Real Faces of Dairy on Facebook and follow us, please. If we can transition, maybe talking a little bit more about your commercial herd. Jonathan, why don't we swing over to you. Why don’t you give us a little more background on your commercial herd, and what are some of the challenges you're dealing with today?
Jonathan Lamb (15:35):
Yeah. So a little bit about our commercial herd we milk- cause I said in three facilities in New York, one in Ohio. We just recently put in a 72 cell Dairy Pro-Q Robotic Rotary. So that transitions to one of the challenges is you know, not only getting qualified people to help, but doing that in an economical manner. And we're really, really lucky. We have a very qualified and dedicated and passionate team that worked with us. And I always tell people that any successes we've enjoyed, I really, because of some of the team members we put together in anything that we've done, that they really deserve all the credit for. So labor is always a challenge. I think it's going to continue to be there though. And people can't out a way to navigate that aren't going to be in the industry very long, right?
Jonathan Lamb (16:25):
Because that challenge has always been there. Environmental challenges, I think the same thing for us, it's, you know, it's a challenge, but it's not an insurmountable challenge. One issue that I think about college kids coming out of school, now they have to deal with, that at least my generation didn't, is how, where are you going to market your milk? If you choose to be aggressive, if you choose to expand, you know, you'd have to make sure you have a market for your milk. And in some cases, that can be really difficult. So at least in my area, I would say that's one of the bigger challenges nowadays in terms of-. Again, if you were a young kid coming out, looking to get us started in the dairy industry, or to take your home farm and try to grow that, you really better, that's probably one of the first questions is, do you have a decent market for your milk.
Scott Sorrell (17:14):
Yeah, that's a great point. Put a pin in that- I want to circle back on that just a bit. Jim, you'd talked about it, and Jonathan had brought up the importance of team during our discussions earlier, and you had mentioned culture. Tell us a little bit about that in the importance of culture and the role that that plays in your business.
Jim Ostrom (17:31):
Well, about 15 years ago, John and Todd and myself -our three partners- looked at each other one day and said, we aren't making all the decisions anymore. We had outgrown that. And we started focusing right then on culture. How can we build this organization? And people committed to our values: our animal care values, our environmental values, our company’s property on how we treat it. And I summed up culture with one word- it's the word respect. Respect for the land and respect for our community, respect for animals, and fundamentally, respect for each other. And our culture that we focus on is are you investing in yourself every day, a small amount, to improve. And over the course of a lifetime, you will be stunned with what you can accomplish. And I think we all know people, maybe from high school that gave up, right? They stopped trying and they show up for work, but they stopped trying, right? Right. And we have people that were essentially entry-level workers 15 or 20 years ago, and now have risen where they're managing a team of 80 people and thriving. And it's all about the culture of investing in yourself to learn more about what you're doing, and learn how to lead people and organize work and inspire people to do those things.
Scott Sorrell (18:55):
Yeah. Jim that's great advice, and I appreciate that. Pat, we are in a changing dairy environment these days. Dairies are getting bigger, and that presents a whole new set of opportunities and challenges. Give me some idea of how you guys are handling challenges today, but more importantly, what are some of the things you're planning for in the future? And what do you see some of the opportunities and challenges being?
Pat Maddox (19:22):
Yeah, I mean, as far as I mean the challenges, especially in California now is drought and forage quality and water. You know, everybody's talking about water, water, and labor. And you know on labor, we're always trying to be like, you know, you try to build a good team, but you want to be the kind of place where workers want to come to, you know? And so and out there, it's not our issue yet because it was a lot of field workers that they're seasonal, but they were looking for something for 12 months a year, so we can pull from those. But you want to build that team, build that strength. But so I mean, labor will be an issue, but one of the big challenges is environmental, regulations, permitting and stuff like that. And so it's just you know, just trying to survive and go through those regulations are a big issue. So those are the main issues: water, environment, and labor.
Scott Sorrell (20:13):
Yeah. Do you see any significant challenges to being able to continue operations in California? I know it's kind of a volatile situation sometimes out there with regulations and water? Do you see about maybe moving?
Pat Maddox (20:26):
Yeah. I don't see it as ever be having a sunset, you know. Certainly it'd be more difficult, and operating costs go up because of it, but I don't ever see it being, being phased out to that extent.
Scott Sorrell (20:37):
Yeah. Okay. Very well. Jonathan want to talk a little bit about dairy size? Is there an optimal size for a certain site? Any thoughts?
Jonathan Lamb (20:47):
Yeah, of course there is optimal size for a site. There's been a lot of talk over that over the years. I remember at one point in time, it was 500 cows and you were bringing in a full trailer load of feed and shipping out a full truck load of milk. And then, you know, maybe that number has gone up. And, and I think that the optimal size depends a lot on the area you're operating in. What environmentally you can do, how you can bring forages out, and then get manure out. So I'm not sure there's an optimal size. And I think that, you know, we like to benchmark a lot and look at figures, and it's been, it's been one from what I have seen, is a lot of times the larger you are, you’re able to drive costs out of, out of the system. Now our area in the Northeast, you know, we would struggle with dairies getting too big in terms of bringing forages in and getting the manure out. So that's, what's limiting our size and being able to do that in a responsible manner.
Scott Sorrell (21:44):
Yeah. So DMI has put forth that we want to be zero net carbon neutral by 2050. What do you see as maybe some challenges related to that ,and maybe what are some opportunities related to that?
Jonathan Lamb (21:56):
Well, it's certainly not anything that we can ignore because you know, it's here. And so we want to be part of the conversation, not necessarily react to it. So it does feel like, at least in our operations, that's in the early stages, but we're having all of those, all of those discussions. And again, I think as we move forward, just trying to be part of that conversation so that those regulations aren't going to thrust upon us is our take.
Scott Sorrell (22:23):
Yeah, yeah. Gentleman, any thought to the whole area of sustainability and what that means for the industry and how we interface with customers?
Pat Maddox (22:35):
Just in the the last couple of years we’ve been putting a big investment in that side of it, not only a solar that takes care of about 80% of my energy needs, but also putting in the methane digester that, you know, I think going forward to have might be our main cashflow over the next, you know, 10, 15 years is maybe from the, you know, agreement using the methane, and greenhouse gases, and biosolids, and there's definitely opportunity there for, you know, to diversify and other diversification of the dairy and that being an income stream instead of a negative.
Jim Ostrom (23:06):
You know, I've got a concern about you know, the calculation on how neutral- carbon neutral is calculated. And the biggest concern I have is that many producers, and I'm one of them, have outsourced the digesters on two of our enterprises. So somebody else is getting that carbon credit. They own it. Now we get a royalty. It's probably not as lucrative as if it would have been if we invested the money. But I would want to push for is if you have a digester on your farm for net neutrality, zero carbon, it should be able to be counted. If not, it's going to force a whole bunch of producers into an industry that they may not be ready for. And let's face it, dairy cow, dairy farms, crop farming- they’re all very specific levels of expertise that's required. And a digester is another level or another area of expertise that would be required. Not every organization should be or could be successful in that arena. So on a farm, we could, we should have digesters, but we may, we may need to be able count that carbon improvement going forward.
Scott Sorrell (24:18):
Yeah. Now is there an optimal size or mass to having it an area to be able to justify digesters?
Jim Ostrom (24:27):
Well, I think there's absolutely a size or scale that's required. And I think it's changing with technology. I think the biggest challenge the industry is having is there's a bit of a gold rush going on in digesters. And the biggest deals are happening because they’re probably the most lucrative, and some of the medium-sized ones that while there's deals signed, they're not breaking ground, or if they broke ground, they're kind of sitting. And there's some problems with the capacity to build all those.
Pat Maddox (24:54):
Yeah. I've seen some areas in California where they're taking a dairy areas where they're clustering the dairies and are piping them so they can use, but can take three or four dairies together to maximize it and make it more efficient for that reason. So,
Scott Sorrell (25:06):
Yeah. So gentlemen, I'm sure you've seen your dairies have grown a lot. You've gone from single-site dairies, smaller dairies. Now your multi-site dairies. What are some of the challenges with decision-making that has come with that, right? There was at one point in time, you guys making all the decisions, you were the janitor, you were the, you know, everything. And now you've got people managing different aspects of the business. How do you operate as a CEO?
Jim Ostrom (25:37):
For me, it's about empowerment and engagement. And if the people that are making those decisions are highly engaged, generally speaking, they're going to make the right decision. I have a very strict rule and that is we have to allow for mistakes, but we cannot allow sloppy management. We can not tolerate it. And there's a very distinct difference. And sometimes you have to point them out to people. A mistake is a piece of equipment hitting a gate. It's a mistake. A piece of equipment hitting a gate all the time is sloppy. And it's, it really is that fundamental. And if they're making- if they care a lot, if people care a lot, they'll make good decisions. The other thing that's occurred to me is we're in this battle of non-feed- or getting our non-feed costs really, truly minimized. And we're chasing pennies now looking for a lower cost business model. And so around that is purchasing. I used to make every purchasing, or most purchasing decisions, you know. What's the price per ton? What are you paying for several different items? And how does it pencil out? And now there's so many other people making those decisions and we need them to care a lot.
Scott Sorrell (26:50):
Yeah, absolutely. Jonathan, what level of decision do you like to be involved with? And then at what point do you decide that you're going to give that to somebody else?
Jonathan Lamb (27:00):
So I mean, we, we try to stay pretty high level. Except on two of the dairies, my brother and I manage, you know, kind of the day-to-day operations for the most part. And then the other dairies, we hire managers. And the two words that I thought of that Jim had already said are empowerment and mistakes. So they, they need to be empowered to make those decisions, and we don't we don't really have across farm protocols. Whether it be for officing protocols or vaccination protocols, we empower the managers to make those decisions and we have to allow them to make mistakes, but we also are going to grade them based on results. And so if they're not hitting some targets that we're happy with, then we're going to have a discussion about that. And at times he might have to make some changes. Right. And so if that, if, whether it's a manager or an employee can’t figure out a way not to be sloppy- to use Jim Jim's word- then you either need to guide them or coach them back so they see that or else eventually, you know, that could lead to turnover.
Scott Sorrell (28:01):
Yeah. Good comments, gentlemen. We've got our co-host has just arrived fresh from the show ring, Mr. Brian Garrison. Welcome. Thanks for joining us.
Jonathan Lamb (28:14):
We were hoping for a purple one up here.
Brian Garrison (28:16)
The best I can do was eighth this time.
Scott Sorrell (28:19):
Yeah. This time. Well, that was the question we were going to ask. Was it the cow or the person leading?
Brian Garrison (28:24)
It was the cow.
Scott Sorrell (28:26)
Very good. Brian, you missed a great discussion so far, but glad to have you here.
Brian Garrison (28:32):
Well thanks for you guys being part of this.
Scott Sorrell (28:33):
So pat, can you talk a little bit about- we were talking about internal employees, and how we make decisions, and when we delegate. What kind of outside resources do you employ?
Pat Maddox (28:44):
Yeah, not many. We are, we're large enough as a company, we do have a human resources manager that takes a load off of the managers and stuff. But he's covering four different companies, 250 employees. So we're able to do that, and then he resources out when he needs help. And so that's three of my sisters, our CFO, and he's the human resources that, that really takes a load off of us on the low level.
Scott Sorrell (29:08):
Yeah. Do you have internal veterinarians and nutritionists? Or do you, are you outsourcing those services?
Pat Maddox (29:14):
Yeah, we outsource a nutritionist, but we do have our own internal veterinarians. Because with the embryos and preg checking and we have all, everything else is internal. So yeah, nutritionist is outsourced.
Scott Sorrell (29:25):
Yeah. So in our business, we deal a lot with nutritionists. What criteria goes into selecting a good nutritionist?
Pat Maddox (29:33):
Well, it's not only knowledge, but it's gotta be somebody that you have the same mindset with. You have the same ideal, you get along with because you got to work with them on a lot of things. And so it's a, you know, it's a variety of things. But it's, you know, you gotta like to have somebody that's a well connected and is not only up to date with the new technology, but is well-grounded. And, but you've got to get along with them and have the same mindset, same ideas.
Scott Sorrell (29:58):
Yeah. Jim, same question for you. What criteria do you use when selecting a nutritionist?
Jim Ostrom (30:01):
Well, so you're out, you're outside of my pay grade here. I'm on the other side of the wall. I'm on the business side, but I can tell you how we operate. And we have people- John Foster’s on the livestock side, business partner and a gentleman named Eric Onnin, and they are very laser focused. One thing I will say is we have seen some, we brought some new nutritionists into different facilities and that brought some new perspectives, and I think it's been a net gain for us. Better components, better milk price. It's pretty hard to gauge how we're doing on feed costs in a rising feed environment relative to, you know, let's call it the control scenario. But in general, I think we're ahead by making some changes. Okay,
Scott Sorrell (30:54):
Jonathan?
Jonathan Lamb (30:56):
Yeah, I agree. They have to share your culture. A nutritionist has to share your culture. They have to be able to challenge us. They have to be able to tell us when they think we're doing something wrong, or we could be better in an area, and they need to bring fresh ideas and perspectives to us. They need to be well-respected in the industry so that they have those connections where they pick up on things. They need to be astute enough to learn what could be valuable to us and bring it to us. And, and obviously they, I mean, to start out with, they need to be professional. We have, we have meetings and, and a lot of times we'll ask them to run a nutritional meeting and they need to be bring things to us that we find to value.
Scott Sorrell (31:33):
Yeah. Great comments guys. One thing I kind of wanted to dig into was animal welfare and, you know, it's very important to our consumer. I think it's a problem. I think it's something we have to manage around- kind of like to get your perspectives. And Jonathan, I'll start with you. How do you manage animal welfare at your facilities?
Jonathan Lamb (31:52):
Well, I mean, you have to establish that culture, that, that we care about our animals. And that culture trickles down. And once everybody realizes that, I can't say that we necessarily have to let people go, but they will know that that is certainly out there. And that is one of the few things that you can be caught doing one time and be let go on the spot. And there's not many things that we won't let people go without warnings and without behavior correction. But there's zero tolerance for misbehavior with animals. And so once that culture is set and everybody understands that, we typically don't see it as an issue. And nowadays there's cameras in areas. And once again, once you set that culture, if somebody witnesses something that they don't think is right, they'll come to you. And if it's caught on a camera, you can see it. If not, you know, it ends up being one person's word against another person's word, but you just go and have a conversation with that person and say, listen, if we catch you doing something like this again, you know, there's, there's going to be no room for discussion. You're going to be dismissed. And we have those same conversations with our managers. And for us, once that culture is set, hopefully it's not going to be an ongoing issue.
Scott Sorrell (33:04):
Yeah. Great comments. And, and echo something I heard from Jim earlier. So I think, I think you can as best you can manage animal welfare from your own personal employee's perspective, but how do you safeguard against sabotage from outside entities? And I think we've had that happen before, right?
Jim Ostrom (33:22):
You know, for me, it's, it's really about the culture of the team. So I think about this very often, and I think our organization needs to talk about it all the time. And we have to have a culture that's so strong that they would overwhelm a bad actor. Somebody that is either really frustrated at two in the morning or somebody that maybe came to the farm with ill intent. And if our culture is strong enough, we should be able to force that behavior out of the organization. And that's what, that's what I stay focused on.
Scott Sorrell (33:54):
Pat, any thoughts on that I'd like to share?
Pat Maddox (33:58):
Yeah. Same thing as I mentioned earlier, It’s just an everyday thing, every employee thing. And like Johnathan said, you know, you're putting it across right if you have someone coming to you telling us, Hey, I'm not sure this guy is treating animals nice. And you know, you have that culture down through everybody. And if they're concerned, then you know, then you know you're on the right path, you know, as far as for cow treatment and cow care. But it goes beyond that, too. You know like, Hey, you know, it gets hot and then make sure that their cows are in the shade, plenty of water, you know, and feed- quality feed anyway. So it goes beyond that too. So just make sure everybody knows, Hey, every animal counts and we care about everyone. So yeah.
Scott Sorrell (34:34):
Yeah. Great input guys. I'm going to ask you now to bring out your crystal balls, kind of look into the future. What does the next one to two decades look like for your farms? Jonathan, you want to start?
Jonathan Lamb (34:47):
Yeah. So I mean, for the way that we operate I mentioned we just put a new parlor in. I've got a young children at home- five and seven years old. So we're not necessarily looking to expand unless something makes sense for our business. And so that's kind of where we are, you know. We monitor our financial numbers close enough that we need to make sure we're staying competitive. And we have expanded over the years, but it needs to make business sense for us personally. And maybe our family's life goals are at a point where we're going to slow down and enjoy our family a little bit. Which might seem funny to some, after just going through an expansion. But you know, I really enjoy being around cows. I enjoy putting my boots on, getting a little manure on my clothes sometimes and- or all the time really. And so that's an aspect that I don't want to lose because that's part of what I really enjoy.
Scott Sorrell (35:47):
Thanks for that. Gentlemen?
Pat Maddox (35:50):
Yeah. Yeah. I mean like John- we just recently, we're going through a remodel to put in a new parlors, new equipment. We have the same, that focus: the next two decades. And so not only new, clean equipment, but also better, more comfort for the cows that are cool, cool areas. And also you know, everything's set up so we can also be environmentally friendly and everything's going to be, you want to be a carbon neutral and, and not only be a way on the, on the business, but, you know, be at a, a benefit. So we're, that's what, we're everything we're gearing toward is for a cow comfort and environmentally friendly. And, and that's our plan for the next 20 years.
Scott Sorrell (36:34):
Jim -do you have any thoughts on that?
Jim Ostrom (36:36):
I think about the future a lot. I see our consolidation of our industry occurring at an increasing rate and that to me screams get ready for narrow margins. Sometimes inverted, sometimes absolutely brutal for long periods of time. And so our organization, we're focused on getting leveraged low, interest rates in my opinion are going up. So leverage and interest rates and compressing margins is an intersection that nobody needs or wants to be at. The other thing, back to our business, is I challenge our leadership team to focus on what changes we need to make today to be better tomorrow. We're at war against our non feed costs. How can we get a penny out of it, or 10 cents out of it? And I also tell the team regularly that our future is laughing at us. They're laughing at the way, we're doing things today. And I know that because we laugh at the way we did things years ago. And we've got to get on with getting to that future state, the way we're going to be operating our dairies faster.
Brian Garrison 37:38):
Yeah. With these three gentlemen, we're here to show they're active in that aspect, and I'm sure you've already covered that in our podcast today. But they've also got their dairy business. But in each one of those, and in each of their own way, they've supported a lot of youth. They've had different programs. Jim, Pat and Jonathan have had programs at their farms. They've had incentives at sales that they've had that encourage new people to get involved in showing cows. And myself, I didn't grow up on dairy. I started showing cows, but it's become my livelihood. And so, I think each one of these guys has affected the future, and I get a little bit passionate about it, but they have reached out to a lot of young folks and I think have influenced a lot of new people to our industry. So thanks for that guys.
Scott Sorrell (38:31):
Yeah. Nice comment, Brian. Brian, you've spent quite a bit of your career in the genetics business. So as you look into your crystal ball, what's going to become of the primary breeds, if anything, right? Are we going to evolve toward what the poultry industry and the swine industry have done? What's your crystal ball look like?
Brian Garrison (38:52):
I think there's, maybe to echo Jim's comments about some consolidation, I think, you know, in terms of the breeds and the future of some of those breeds and how, especially in terms of identified cattle, I think there's going to be more of that consolidation. I think, you know, the technology, in terms of genomics and those things have helped to identify some of the positives for different breeds. You started talking about A2 to A2 milk and, you know, some, you know, different caseins in milk. And, you know, a lot of those things, you know, technology has helped us to identify some of those. And I think some of the different breeds are, are looking to how they can best take advantage of those. And I think, I think it's important for us as an industry to, you know, to keep an open mind to some of those things and how we can best utilize those in the future.
Scott Sorrell (39:37):
Yeah. Hm. Good comments. Jim, gonna ask you, you talked a little bit before about your small boutique cheese business. What role do you see integration, both backward and forward integration, playing in the evolution of the dairy industry in the next one to two decades?
Jim Ostrom (39:56):
Well, I've spent most of my career trying to be integrated. And I'm still trying. We're in boutique branded cheese. It is very difficult to succeed in, and I've been in it for seven years and the last 36 months is the first time I felt like I was qualified to be there. And it is difficult. It is it's a set of knowledge and skill that is different than the skill and knowledge that we have for milking cows. And to be two things that are truly great at is really not, it's a unicorn, it really doesn't exist. And so you have to have some fundamental advantages in what you're doing. Scale matters, and in boutique cheese, you just can't sell enough of it unless you've got something that you can scale out to absorb your overhead. So I'm a little more pessimistic about integration than I was 15, 20 years ago.
Jim Ostrom (40:57):
On the other side, I think there's some incredible integration that's occurred in the example of Select Milk and what they did with FairLife. Now they've sold it, but they have some production contracts. But they pulled off in a miracle really. It's incredible what they did by developing this great brand. And, you know, we're a member of Select, and we felt like we were owners of that integration. And I encourage the bigger organizations to really look to innovation so that they can come up with some products, some innovation in our industry so they can carve out some value for producers. And they, Select Milk did that terrifically.
Scott Sorrell (41:41):
That's an excellent comment. Pat, what role do you see innovation playing in the future of the dairy industry?
Pat Maddox (41:47):
Yeah, in all aspects. I mean, it's going to be not only on embryo transfer and all that, and our genetics and all that, but certainly on the breed side and that is how we're going to use like the bioenergy and the methane, biosolids all those uses for that. I know as far as dairy product side, we belong to a co-op, but they're trying to be on the front edge, too. Recently putting in, they're going to put in a UHT plant. So we're more of a butter powder type co-op, but all types of powders, mixes. And so that powder aspect goes into all different things and you know, trying to get the, trying to feed the world. So they're exporting powder all over the world in all different forms and all different types and so, but yeah.
Scott Sorrell (42:31):
All right. It was kind of getting to the close here and kind of wanting to wrap up. I’d kind of like to get your guys' view. What does the future dairy looked like. 2050: What does that dairy look like? What size is it? Where's it located? Is it located in the United States? Is it located, you know, in China? You know, what's the technology look like. I know that's a big question, but I'll let you guys just kind of riff with that. Jonathan, would you like to start with that? Maybe we should have thrown that the Brian Wright, the newcomer, but Jonathan, go ahead.
Jonathan Lamb (43:01):
Again, more of the same, right? They're going to get bigger and they're going to continue to consolidate, they're going to be in areas of the country that's not as prone to environmental challenges. Maybe doesn't have a land pressure, that type of thing. I, you, you asked if it, if we're going to be bringing milk in from China or foreign entities, I think from a food safety standpoint, and boy, if our politicians let that happen, it's a major, major failure. I mean, we really need to keep that food production domestic because you know, when that pandemic hit, you know, it was bread, toilet, paper and milk and those essential items. I mean, it kind of really reinforced how important we are and what we do. So you know, you can travel around the country and you can see where dairies are really rapidly expanding into mega-dairies. And in, in some cases, it's, for me, it's a little bit sad to see because, you know, the, the kind of the mom and pop dairies are going away a little bit, but that's, you know, Hey, that's just the way it is. And that's the way it's been. And there's going to be more of that in the future, and where I am, they'll still be dairies. But as we've seen milk traveling and milk products traveling, a lot of times they're going to get produced in areas of the country where it's a little bit easier to do that from an environmental standpoint, you know, price of land standpoint bringing, bringing feed in and, and shipping milk out. Yeah.
Scott Sorrell (44:30):
Brian, anything to add to that?
Brian Garrison (44:32):
Jonathan, I mean summed it up pretty, pretty well. You know, you know, the scale is going to be part of it. These three are, are somewhat unique in that they have been able to build internal businesses within. I think there's still going to be a place for that. You know, the genetics business, you know, different, you know, cheese, you know, different types of things that they've all three been successful at. But I see kind of that combination continue on a bigger scale actually.
Scott Sorrell (45:01)
Yep. Comments, anything to add gentlemen,
Jim Ostrom (45:04):
For me, it, the, the future is going to be owned by the people with the lowest cost of production. And there are massive organizations that are taking shape. They're going to have the lowest cost of production. They're doing it in places where they can get massive scale. And I think that most people would assume that I'm a proponent of scale, and I am just to get costs down, but there are some diseconomies of scale that go on with our size. So a big feed area has some diseconomies of scale. The payloader has got to drive further, right? Well, a bigger organization has the same types of diseconomies of scale. And that is a fairly elaborate accounting department, right? Mom's not doing the books anymore. I'm a diseconomy of scale. I'm not out doing the work right, where I'm, we're hiring somebody to do that, and I'm, I'm working on other things. And so the, the organizations, the family farms that are going to be successful in the future are going to have that very low cost advantage. No matter what they're doing, they better be low cost.
Pat Maddox (46:05):
Yeah. I agree. It's gotta be big enough to be efficient, but I think there's a limit, too. You see that some of the cows, as far as, as far as distance, the cow has to travel to give milk. And so I see even over an operation can be big, but it might have, you know, different pods in an operation. Even though, you know, like you said, a feed area can be more efficient or the office or the management, but as far as how far the cow comfort and how far are they going to walk and how far they can handle it, I think there are limits. So I think something in that 2 to 3000, it depends how their housed, as far as how far they got to walk- it makes a difference.
Scott Sorrell (46:42):
Yeah. Thank you for that, Pat. Gentlemen, anything that we've missed that you think the audience needs to know and needs to hear about from you guys today?
Jonathan Lamb (46:49):
But just along that, those, those same comments is that, you know, if I look and compare our operation from 20 to 30 years ago, I would say we, you know, we kind of were probably more low- what I would call- low input, low output. So right now, those like really, really large series out in the west, a lot of times I see them being low input, low output. And we in the Northeast have had to transition to being able to be more efficient by getting high output from our cows. And, and that’s part of- that's why I'm passionate about genetics. And in particular, Holsteins. Because we've been able to breed those kinds of cows that can make a lot of solids per cow, per day. So in the future, I think those guys that have started out by driving costs out by being efficient, they're going to, in 50 years, they're going to need to be able to transition, to continue to be low cost, but figure out a way to be high output at the same time.
Scott Sorrell (47:45):
Yeah. Great comments, gentlemen, that's going to be last call. I'm going to ask you to give a couple pieces of advice for new young dairy farmers just coming into the business- the next generation and Brian, we're going to start with you.
Brian Garrison (48:00):
Don't be afraid to ask questions. You know, go up to the Jonathan Lambs, the Pat Maddoxs, the Jim Ostroms of the world. And, you know, don't be afraid to ask questions because there's guys like them that are out there that are willing to share, you know, just like they have today, share their ideas, their inputs. And don't be afraid to get different opinions on things and drive on. Yup.
Scott Sorrell (48:20):
Good. Excellent.
Jonathan Lamb (48:25):
There's a lot of opportunity for young people in this business that have the interest and the passion and the ability to learn from their mistakes. And so I still, I still think that that those types of people, there's a lot of roles for them in the future. And you know, I would encourage those people- again, ask those questions, get better, learn, but then don't lose your passion. You know, the day you lose your passion, it's time to do something different.
Scott Sorrell (48:53):
Yeah. Well said, okay.
Pat Maddox (48:56):
Yeah. That's what I'd tell young people. I said, really I'm still learning. You never stop learning. You talk, you discuss, even sit downs like this. You never stopped learning, no matter how old you are, you know, whether it's through the media or meetings or in person. And I tell everybody, from being from California, I said, come to Woodbury X, this is the Superbowl of dairy. You see so much here, you learn so much here and no matter where you're at, in the dairy industry or not, they come here and they're always fascinated. And so I always tell people, tell everybody to come. It's a great event. Thank you.
Scott Sorrell (49:25):
Thank you.
Jim Ostrom (49:30):
You know, I, I reach out to let's say, early teens and tell them what a great industry this is. Because I think it really has a great future. We're not going to make water bottles. How boring could that be, right. But we are working with great animals that are dynamic, and who doesn't love a cow. I mean, they're just terrific. But on the other hand I think we have to look at the younger people coming in our industry and we have, we have to make sure they're engaged so they don't pick a different business. I was, silly story, but I was at a county fair where the county fair rules were overwhelming a young lady and they wanted to send her home because she had some ringworm on an animal, and they wanted to send her home, right? And I thought, you know, maybe she's going to pick dance and not dairy cows. We've got to think about those things when we're talking with young people about how we can get them really engaged, enthused about our business. And that's what I, back to World Dairy Expo, what I love is all the young people, the Holstein junior show and the kids out in there, they are falling in love with this business. And many of them will be our leaders. And someday, some kid out there that may be 12 or 13, we might be working for him someday, or her. Probably her.
Scott Sorrell (50:45):
Yeah, absolutely. Without a doubt, our universities, there's far more females in dairy science than there are males today. Gentlemen, this has been excellent. I have absolutely enjoyed this, exceeded expectations. I've had a lot of fun. So I want to thank you for that. Also, I want to thank our loyal listeners and I hope you had as much fun as I've had. I hope you've learned something as a reminder, want to tell you guys that recently we had a series of webinars on the new dairy NRC. We're going to be having those in podcast form. So go to balchem.com/realscience to go out there and see the new podcasts when they arrive, and also take a look at the past the webinars. You can receive a 25% discount on the new dairy NRC if you go to balchem.com/realscience, click on the dairy NRC. If you like, what you heard, please remember to hit the five-star rating on your way out. Don't forget to request your Real Science Exchange T-Shirt. You just need to like or subscribe to the Real Science Exchange and send us a screenshot, along with your address and shirt size to anh.marketing@balchem.com. Folks, really glad having you here today and looking forward to seeing you here next time at the Real Science Exchange, where it's always happy hour and you're always among friends.