New York Dairy Farmer Says Investing in His Employees Pays Dividends
John Mueller isn’t exactly the picture of high-tech, state of- the-art dairying as he walks across the parking lot of one of his operations. But the bib overalls he’s wearing and the cell phone he’s noticeably NOT carrying are the only old-school ways Mueller incorporates into managing the 75 employees and 3,900 cows on his three dairies in New York.
[To learn more about John Mueller, watch U.S. Farm Report tomorrow morning. You can watch on your phone using this link to the MyFarmTV App]
At a time when many large dairies are struggling to make ends meet—beset with the challenges of keeping employees and agonizing over every penny in this down market—the Muellers are in a category of their own. Their innovative employment policies that go well beyond family keep turnover low and employee satisfaction high. Their attention to ledger detail means they can survive even this environment without the help of any government safety net at all. Those attributes are even more critical today, when the vast majority of dairy farmers are 45 years old and older.
A large generational shift is looming across the milk shed, and for a growing number of dairy farmers, such as 52-year-old Mueller, that shift will incorporate non-family members into the next generation of ownership. Mueller is a shining example of what it takes to empower employees, prepare them for ownership and increase profitability on the dairy farm. The Mueller family got its start in dairying in 1957, when John’s dad, George Mueller, spent summers on his uncles’ farms in upstate New York and got the itch for dairying. After four years at Cornell University, he started raising heifers for beef, cash grains and vegetables. During a price downturn, George realized he was selling the heifers for the same price he had bought them, so in 1960, he decided to start milking cows. “At that time he was milking 80 cows when everyone else was milking 15,” John says of his dad.
When John came back to the farm after his own college career, the family was milking 500 cows. In 2003, they merged with their neighbors Kevin and Barb Nedrow, and were milking 1,500 cows and farming around 2,500 acres. Today, the Muellers and their partners milk 3,900 cows on three dairies and farm just under 10,000 acres of corn, alfalfa, wheat and soybeans.
“When my dad started the farm, early on he started working with his employees on junior partnership-type arrangements,” Mueller says. Today that has developed into their cow equity program and an opportunity for employees to become members of the partnership. Every employee has the opportunity to purchase cows that will become part of the milking string. Those animals are then leased back to the farm at $50 per month. The employees have the option to sell the cow’s offspring or have it raised on the farm for $2 per day. Tucker Coryn, the herd manager at Mueller’s Willow Bend Farm, is a prime example of how workers benefit from such a program. Coryn started buying cows in 2010, he says.
“I started with eight springers [I bought] at $1,600 apiece,” he says. Knowing he wanted to be involved in the dairy industry and not coming from a dairy background, Coryn joined Willow Bend Farm first as a summer intern and then full-time employee after graduating from college. Coryn says Mueller’s cow equity program was integral in allowing him to build his own equity—equity he is now using to purchase his own farm. “I finally found a farm I was interested in buying, so I went to John and told him I was going to need to sell him my cows back,” Coryn says. “I told him I needed the money for a down payment on my own farm. He said, ‘That’s awesome,’ and had me a check by the end of the week. Even if I had my money in the stock market I couldn’t get $40,000 as fast as John had it to me.”
Cow ownership programs such as the Muellers’ were pioneered in New York but are becoming more prevalent elsewhere, according to Jim Salfer with the University of Minnesota Extension. “It’s still not real common, but this is clearly becoming more popular in the Midwest, and I would argue it is becoming more widely discussed and considered on large dairies across the country,” he says. The program also creates loyalty in the team. “They can’t help but do a good job feeding their cow as good as everyone else’s cow,” Mueller says. “They have more invested and more incentive to do things right and not take shortcuts.” According to Salfer, a lot of young people want to be farmers, and a program such as this is a great way for them to get a foot into what can be a very tough business to enter. “It’s really fun to watch people grow and become successful while they’re helping you grow and be successful,” Mueller says.
The dairies are owned by an LLC and when an employee reaches a certain level of cow investment, he or she has the opportunity to seek partnership through the board of managers. Salfer says non-family ownership agreements offer a variety of benefits for the owner and the new partner. The transition part is easy, he says. A good accountant or succession consultant can do the paperwork; the hard part is getting the relationship right. “It’s really important the management philosophy of the older generation and the new partner are exactly the same,” Salfer says. “Otherwise there can be problems.” Imagine if the older generation preferred conventional management and the new partner wanted to turn the dairy organic; there would likely be some discontent, Salfer says. Another challenge for farmers to keep in mind is expansion will likely be necessary to provide a living for the expanded number of farm owners. “It’s risky for that owner,” he says,“particularly if the incoming partner has no skin in the game.”
As dairies across the country scale, labor is becoming an increasingly difficult piece of the puzzle. Many dairy farmers struggle to find and train workers, while pressure mounts (particularly in New York) over minimum wage laws and labor lawsuits. Mueller has made employees a priority, and it’s paying off. “Our success is in our people,” Mueller says. “We’ve got very low turnover. We promote employees from within and give them everything they need to be successful.” Of their 75 full-time employees, four started working at the dairy when they were in high school, mowing lawns. One member of the milking team has been working for the Muellers for 18 years.
According to Cody Heller, a dairy farmer and dairy management consultant with Wisconsin Ag Services, there’s significant financial benefit to retaining employees. He says on an average dairy in Wisconsin, the cost to train a new milker is roughly $2,200, which includes management labor, somatic cell count bonus losses and mastitis. A hedge against turnover, Heller says, is giving employees the opportunity to learn new tasks and move into different areas of the farm. Mueller’s other focus areas include continuing education for his staff and employee empowerment, which has something to do with that cell phone he doesn’t have. “I’ve got 75 employees and I’ve hired them to make their decisions. So, I do not have a phone where they can call me so I’ll make decisions for them. I’m trying to keep the decision making down at the front lines.”
Middle managers even attend trainings to learn how to manage people. All of the dairy’s full-time employees are offered health insurance and paid vacation. At Willow Bend, the largest of the three dairies, there isn’t a milker on staff who makes less than $40,000 a year, Coryn says. The average New York farmworker earns slightly more than $28,000. “It’s a lot of fun to watch people reach their dreams while they’re helping you reach your dreams,” Mueller says.