MidWest Tour Day 10

Garden City & Salina Kansas; Joplin Missouri...

America’s Dairy Industry: The Good, the Bad & the Muddy

By: Julia Scott, Leah Grace, Erica Sayles, Genna Wright, and Daniel Van Noy

Garden City, Kansas

Introduction

Kyle Averoff with Dr. Swanton
Kyle Averoff (left), Clarence Swanton (right).

Leaving the hotel at 7:00am, it was an early start to the day as the 2018 Midwest Crop tour headed to Royal Farms Dairy in Garden City, Kansas. The first stop of the day was a dairy farm milking in a 20 year old double 60 parallel parlour in Southwestern Kansas. Upon arrival, our group was greeted by Kyle Averhoff, the general manager. Kyle is one of 6 part owners of the operation. Like many enthusiastic and passionate dairy farmers, Kyle grew up on a 150 head dairy farm 600 miles south of Garden City. He has a undergraduate degree in Animal Science, and a master’s degree in Agricultural Business and Nutrition. The dairy operation began in 2000 and Kyle joined the partnership in 2003. Royal Farms Dairy has a footprint of 300 acres and is currently milking 6700 cows in an open lot housing system with a total of 14000 animals. In 2014, they also purchased a 2600 cow facility much like the one they currently operate, just down the road.

open cattle feedlot with cows
Displayed above is an open lot housing system.

With such a large operation, it was interesting to see the supreme ethics that are present on the farm. Kyle mentioned that their philosophy was, “we like to make money but we LOVE to milk cows.” Kyle continued by saying, “reversing the order ends in failure.” They share this philosophy with their 85 full-time employees.

After Kyle had sufficiently provided details pertaining to the farming operation and his role in it, he began to teach us about business principles and the best management practices.

Employee satisfaction and empowerment is paramount to an organization's success.

Royal Farms’ approach to staff management and the importance of employee relationships intrigued the students. Kyle emphasized the importance of good ethics - especially pertaining to the staff training and compensation. Some of the ways they work to achieve this is through providing education and training to perform medical tasks on farm. This is accomplished alongside a veterinarian who visits one day a month to teach the employees about animal health and how to perform medical procedures. Management also speaks both english and spanish to accommodate employee preferences. The package that the standard employees receive includes a retirement plan, health benefits and a salary of around $50,000 USD a year.  Proof that the employee cultures integrate well is through the performance of their cows. They offer internships annually to give young people with an interest in agriculture an opportunity to learn about the dairy industry and also, provide them with experience in the industry.

Royal Farms Dairy utilizes the cooperative model to network and market their milk.

The cooperative that they are apart of distributes their milk to several different types of processing plants. This ensures they will always have somewhere to ship their milk in case there is an issue with a processing plant. In this way, access to several buyers adds stability to their market. With that said, Kyle also expressed the importance of networking in the Agricultural Industry. Being involved in their cooperative opens the door to new connections and greater opportunities. Their profit is based off of a four class program. Class 1 represents the jug (fluid milk) market, which requires the least amount of processing and is declining in consumption. Class 2 is the softs/ice cream, Class 3 is cheese, and Class 4 is butter/powder, which is increasing in exports.

stainless steel tank trailers for transporting milk
Pictured above is one of the trailers
that the milk is transported in

The price of Class 1 is determined by the highest price in Class 3 or 4 plus a premium. Royal Farms Dairy ships 25% of their production as Class 1, 15% as Class 2, 40% as Class 3 and 20% as Class 4. The prices they have been receiving range between $14 USD per 100 lbs to $23 USD per 100 lbs. Their cattle produce 78 lbs of energy corrected milk per head per day. This is based off of purebred Holsteins only being milked twice a day; however, Kyle projects that milking 3 times a day would increase production to 85 lbs/ head/ day. In this market, they can’t justify a large renovation to install a rotary parlour, and it would pose logistical issues if they tried. Marketed milk price is based on solids, Royal Farms Dairy currently yields 3.9% fat, and 3.1% protein. Each day they ship 10 truckloads of milk at 50,000lbs each, for a total of 500,000 lbs. The cooperative owns the trailers that are directly loaded on farm, and is responsible for organizing contract trucking.

Kyle and his team have adopted useful and innovative breeding techniques to increase the profitability of their operation.

Ultimately Royal Farms Dairy is breeding to improve the next generation of cattle. To do this, they are taking advantage of sexed semen to sire heifer calves and sustain their profitable milking herds.. Kyle informed the class that Holstein bull calves are not valuable to sell because they don’t gain the same amount of weight as a beef calf. To improve their performance and increase their value, they are breeding some of their older cows to Simmentals. This is an interesting way to maximize their profit as Simmental sired calves bring $200 USD more per head. Their strategy for this is to breed older cows to beef to get another lactation and to breed their heifers to sexed semen because their heifers are the holders of the best genetics on the farm. All of their breeding cows are bred through artificial insemination and 5% of their heifers are bred using a clean up bull.

Royal Farms Dairy’s outlook on Animal Welfare.

frontend loader moving corn silage in a bunker silo
Shown above is a bunker silo that holds corn silage

An interesting comparison that Kyle made was his analogy explaining animal welfare. He mentioned that you could go into any hospital and make the care of the patients seem unethical - especially if it was deliberate. This can be compared to a farming operation similar to any caretaking setup. One negative perspective of a organization cannot accurately represent the fundamental principles of the operation. Kyle firmly believes that it is their duty to provide every animal with exceptional medical treatment, and they commit to this through their cattle management practices.

The weak link in the American Dairy Industry.

In Canada, there are many programs to help entrepreneurs start a farming operation. In the Canadian supply managed system, farmers can have confidence in the continued support during the growth of their farm. Similarly, in the United States there are programs that will assist dairy startups; however, once they grow to a herd size of over 200, government assistance diminishes. Another issue in the U.S dairy industry is the rapid consolidation in their market. This makes it difficult for smaller dairy operations to compete in the industry and deteriorates rural communities. With that said, Kyle expressed his opinion on supply management and indicated that not only would it be difficult to implement the system, but also expressed that he doesn't want it.

“Let us run it” – Kyle Averhoff

The unique part of the partnership under Kyle’s management is the autonomy he has to run the farm the way he believes will be successful. This was the driving factor for Kyle to become a partner, as he wanted a familiar setup to a family run farm. With this freedom, he recognized that regular vet visits are impractical and pushed to have all his employees trained to perform the necessary medical procedures to limit vet costs. Another way the farm minimizes costs is by grinding their own corn and producing the majority of their own feed. In addition, they use their own manure to fertilize their crops through their centre pivot irrigation system. It’s obvious that Kyle is a natural leader and maintains a great relationship with his employees by being involved in day to day operations. Part of their every day routine includes cleaning pens, vacuuming slabs, as well as working the pen ground. 

Conclusion

In today’s society it is important to have effective communication between producers and consumers. As a producer, Kyle was open to share his experiences with us and believes that other farmers should do the same. Kyle discussed the importance of continuing to develop a successful farming operation by embracing new technologies and continuing to expand. He hopes that expansion expresses potential for business opportunities to the next generation, and enhances the possibility that they could manage the farm. We are very grateful that we had the opportunity to learn from Kyle. He openly shared his perspective and provided insight into both the positive and negative aspects of the dairy industry in the United States.

The Land Institute

Salina, Kansas

Introduction

tour bus stuck in the ditch on a newly graded dirt road, with the help of a tractor pulling it out
As shown in the picture our bus being pulled out of
a ditch by the lovely people at Royal Farms

After stopping at Royal Farms Dairy, our class was scheduled to travel to The Land Institute in Salina, Kansas. Unfortunately, we were unable to attend this location, due to muddy conditions and slick roads as we were leaving Royal Farms Dairy. While driving North from the farm, the bus slid off the road into a shallow ditch. Thankfully no one was injured, and tractors were not far away for assistance (Thanks to Royal Farms Dairy for pulling us out of a sticky situation).

After conducting some research on The Land Institute, we have been able to prepare a brief overview of what this non-profit organization is working towards. The Land Institute is a science based research organization that actively breeds new cultivars from wild perennial ancestors of common annual row crops. Their goal is to fundamentally alter the current destructive practices of agriculture, and foster an agricultural environment that’s more consistent with a natural environment. They hope to do this by selectively breeding genes that code for perennialism into common annual crops. The Land Institute envisions an agricultural landscape that outcompetes monoculture, and replaces it with polyculture. Like the natural environment, polyculture incorporates a selected array of perennials which operate mutualistically. Specialized plants have the capacity to exploit niches and provide unique ecosystem services. Properly structured polyculture should improve soil retention, decrease nutrient loss, improve yields, and decrease reliance on external inputs.

The Land Institute is a non-profit organization, so to fund their research, they rely on funding and assistance from private partners located worldwide. Partners also provide insight, data, and land to support the research. The Land Institute’s goal is to ensure the sustainability of global food supply and natural ecosystems.

More information can be found at: https://landinstitute.org/about-us/