Alan Bjerga: Hello, and welcome to Dairy Defined. This month we have a very special episode of our podcast, and not just because it’s national co-op month. We have two top-tier guests in what you may call an exchange of expertise.
Last month on the Dairy Download, the podcast of the International Dairy Foods Association, NMPF’s president and CEO, Gregg Doud, joined his IDFA counterpart, Michael Dykes, for an engaging conversation on issues.
This month, IDFA’s chairman, Daragh Maccabee, CEO of Idaho Milk Products, joins our chairman, Randy Mooney of Dairy Farmers of America, for their perspective on the industry and its future.
Daragh, Randy, thank you for joining us.
Daragh Maccabee: Thank you. Thank you, Alan. Real privilege to be with you.
Randy Mooney: Yeah, glad to be here, Alan, and I hope the build-up wasn’t too much on my side. I’m looking forward to hearing what Daragh has to say.
Alan Bjerga: We’re going to be jumping into it right away. And we want to start with you, Daragh, because your career has had a global span but you’ve been in Idaho for nearly two decades. So given that experience, what strikes you as unique about the US dairy industry and how as the CEO of Idaho Milk Products, how do you take advantage of those unique qualities?
Daragh Maccabee: Well, firstly, it’s actually hard to believe that it has been 20 years, or it’ll be 20 years next year, especially when the original plan was for a three-year assignment, would you believe. But a big part of the reason why three years turned into 19 years and counting is the personal and professional fulfillment I’ve had from being part of the US dairy industry along the way. Great companies, great people, and a great location to work and live in. They’ve all helped an awful lot.
But more broadly, when I think of my world of dairy today, I think it’s the scale, the efficiency, and ultimately the sustainability of U.S. dairy that is somewhat unique, especially when you compare Idaho to Ireland. Maybe Idaho versus other parts of the country, but Idaho to Ireland or Europe, that scale difference is striking. And in Idaho, it really is all about scale and efficiency and the associated sustainability benefits.
And the type of farmer ownership model that we have in Idaho Milk Products also sets us apart somewhat. And I think we can use that to our commercial advantage in a world that increasingly wants to know more about where the milk is coming from.
Another thing, and relevant to both myself and Randy’s broader extracurricular roles, call them the strength and the nature, the quality of the industry groups. We both have the privilege of representing two of the bigger organizations in NMPF and IDFA, but there are many others doing great things for dairy. At Idaho Milk Products, we believe in being engaged in our industry organizations, and I believe that brings personal organizational and industry-wide benefits. That’s one of the things that, I think, sets the industry apart here.
Allied to that, I think the level of investment that’s currently going on is extraordinary and I think further solidifies a position of strength and relevance. At this stage, this number keeps getting updated. It’s $11 billion or so in projects that are happening or about to happen that will significantly grow the industry capacity throughout the country. That means the processor community is stepping up, and we all know that the dairy producer community will do its part as dairy farmers always, always do.
And aligned with that investment also comes furthering innovation capabilities or further investment in innovation capabilities so that the US can continue to lead the way in delivering value for milk in increasingly sophisticated ways.
Alan Bjerga: Following on that, Randy, on some of the things that Daragh was just saying about the organizations within the US dairy industry in the leadership, you are the chairman of Dairy Farmers of America, which is the largest US dairy cooperative.
Cooperatives are very important to the US dairy structure. I’m interested in your thoughts seeing in your view of the evolution of the co-op within US dairy and the uniqueness of that model and the strength of this industry.
Randy Mooney: Well, I can tell that Daragh sees this industry a lot like I do. It’s a fantastic industry to be in. The $11 billion worth of investments that he spoke of that’s going on right now in the dairy industry paints a very bright future for the US dairy farmers. Because along with those plants, obviously it takes milk to go through those plants to make them do what they need to do, and it sets the US dairy industry, I think, apart from the rest of the world. It gives the US dairy farmers who are some of the most progressive dairy farmers in the world, the ability to grow their own farms, to produce more milk, to supply those plants. Innovation, Daragh also mentioned, is the key here into producing products that the global customer wants.
In the United States now, I think we produce one day out of seven goes to exports in this country. And when you think about that, to me, when I first started this industry, I think we exported maybe 2% of what we produce. Today, that’s 16, 17, 18%. And the world needs our product, the world wants our product, and I don’t think the US dairy industry could be sitting in any better spot from a processor side or a producer side than it is right now.
Do we have our challenges? Of course we do. We always have. We always will. But we’ll work our way through that. As long as we’ve got markets, we’ve got customers, we’ve got great people like Daragh and others who trust farmers to be able to produce the milk they need to go through the plants that they have, this industry is going to be bright for the future of farming. It’s going to be bright for the producers.
And not only that, what makes me feel good at the end of the day is on our individual farms, we produce the most nutritious product known to man. So when you talk about nourishing the world, that’s the other part of this that makes me as a farmer feel good. We’re doing something every day that the US consumer and the global consumer needs.
Alan Bjerga: Well, let’s drill down a little bit on those challenges that you mentioned, Randy. From your farm in Rogersville, Missouri, what are the biggest things to be worked through for dairy farmers today?
And then I’m interested, Daragh, in the processor perspective to that question.
Randy Mooney: Well, two of the big ones today that overshadows really everything else that we’ve got, and number one is labor. The U.S. dairy industry has been built on great labor from immigrants from other countries that specialize in milking our cows, specialize in taking care of our animals, specialize in taking care of the calves and rearing the calves. It’s not unskilled labor. It’s labor that come over here that want jobs on dairy farms and agriculture. Not just dairy farms, but in agriculture.
And they become very, very good at what they do. And we’ve relied on that in a system of our government of immigration laws that sometimes is really unclear. We’ve got the H-2A visas that don’t really fit dairy because they’re seasonal workers. We’ve got now the Trump administration closing the border and the ICE raids that we’re seeing around the country. And I’m not speaking against any of that, but what we need as a US dairy industry is we need some clear immigration policies that says, this is how this is going to work. This is how we’re going to have labor on farms that’s legal labor. And that’s what we have today’s legal labor.
But we need more clarity in how the U.S. government sees labor on farms and how we work within our farms to have that labor on our farms. We want to work within the law. Absolutely, we want to work within the law. But sometimes all these things are cloudy. We do all of our paperwork, we get it right. But we can’t guarantee somebody that brings us their paperwork, we can’t always guarantee that it’s always right.
But we need new laws that help farmers continue to have the labor that we need on the farms to produce the milk. And without that, that’s the biggest critical issue that I see as what could affect future dairy production in this country, is just making sure the cows get taken care of and the cows get milked under the labor standards that we have today.
Alan Bjerga: Daragh?
Daragh Maccabee: Yeah, I wholeheartedly agree with everything Randy has said there. And no surprise that it’s an industry that always relies on all parts of the industry being strong at the same time. So it is no surprise that our issues are very common. I would coin the phrase, or to coin the phrase, the war for talent is a real thing.
So at every level, every level we need sufficiently qualified and experienced people, the right cultural fit, of course, to work on all the projects we want to work on. We need a richer pipeline of people across all levels, functional areas. We need more targeted focus on education and training to meet the current and future needs of the industry. When you think of that $11 billion of investment, you think of people retiring from the industry. We need a very rich pipeline to keep ourselves static. But more than that, to actually grow the industry. We need to work with universities. We need to work with local community colleges. We need to work with high schools to really create that pipeline of talent for the organization.
And of course, the inevitable gaps. And there are gaps. You don’t grow an economy, you don’t grow an industry, without workforce replacement. And there simply isn’t sufficient workforce replacement within the U.S. economy so immigrants have to fill the gap. And immigrants at all levels, at the dairy farm level, at those that would avail of a H-2A visa if there was a year round one. The H-1B level, so right up to the university educated or beyond master’s PhD level.
I think there’s a misunderstanding about qualified people taking jobs from Americans. There’s plenty of jobs for Americans. We need to enrich our industry with talent we bring from elsewhere, and that will create opportunity and jobs for all Americans down the line. So there needs to be a recalibration, I think, of our attitude towards immigrants at all levels because we need them. We won’t have viable dairy farms or processing plants without adequate workforce.
In terms of other challenges, and I think it’s a good challenge that we increasingly have to do more with less. We need to be very careful about choosing correctly what projects we’re working on. There is more opportunities than there is time and money to invest in projects, and we want to make sure we’re working on the best projects.
And I think we have to increasingly do more with less because our product pricing, and Randy knows this to a certain extent, the processors are in the same boat in terms of product pricing not necessarily keeping up with inflation. So we have to constantly strive to do more with less and continue to invest in innovation and add more targeted functionality and value to all our products. There are the couple of big things that constantly keep me awake.
Randy Mooney: Well, I think, Alan, to bring up a second issue that I would bring up would be trade. As you know, we’ve had trade and tariffs, which over time, that’ll all work itself out. And I think there’s probably some good things that’s going to come out of some of these discussions when you have other countries come into the U.S. trying to work out trade deals. I think dairy will find its spot and it could be a better spot than we’re in.
When I think about 10 years ago working on TPP and some of these trade things that we had going on at the time, we’re not going to have major trade agreements with multilateral countries anymore, like we used to go into. I don’t think it’s in the cards. But being able to sit down at a table and work through some of these tariff issues and getting some of the non-tariff trade barriers changed that we might have with the countries now, I think there’s opportunity there that we’ve been going through the last 60 days.
In the next 60 days, I think there’s opportunity there. But it’s going to cause us probably short-term problems with countries moving around, where we can shift to, different tariffs to different countries. But I think in the long term, we’re going to be just fine. It will cause some short-term turmoil, I think.
Alan Bjerga: And that touches on something that Daragh was talking about with the alignment of, what does it cost to produce this? What does it cost to sell this? Especially with an international trade association, Daragh. I would be thinking that you have a lot of different calculations from a lot of different players across the spectrum.
How do you manage this turbulence at this moment? Things may well work out in the end, but you got to be moving stuff this quarter.
Daragh Maccabee: Well, on the policy front, certainly I agree that trade is the other main area of concern. You can call it an element of chaos at the moment. We believe that tariffs, the way they’re applied at the moment, are an unnecessary nuisance. We’ve been able to manage around. At the Idaho Milk Products level, we’ve been able to manage around the worst of the impacts.
But when I listen to my colleagues, my industry colleagues here this week, and we go through a review of each of the dairy product segments, there a confusion about what’s going on with trade. And I think for business, uncertainty is the worst thing. Not knowing how to plan or what to plan for or whether you need to set money aside. Will you get a project done without being hit by a tariff that you weren’t expecting? Just not being able to plan.
So tariffs and trade policy can have a very meaningful role if used in a targeted way. The issue is using tariffs as a blunt instrument, I don’t believe and I believe our industry doesn’t believe, that it’s an effective use of what could otherwise be a valuable tool.
Alan Bjerga: And Randy, while all this is going on in the policy arena, dairy farmers are looking at a flesh-eating parasite that’s 70 miles from the U.S. border. How do you manage all of these different stresses on the farm?
Randy Mooney: Well, it’s obviously not easy. You got to watch it. You got to make sure you know where it’s at, where it’s coming to, where it might land here in the United States that we’re not thinking of. I go back to the bird flu. I think it’s about leadership. At the point, the bird flu came into the country, you had Jamie Jonker from the National Milk Staff, took a lead in the industry of getting out there, having podcasts, letting other producers know where it’s at, where it’s going, the safety of milk, pasteurization works. A lot of work was done through National Milk IDFA in assuring the consuming public that milk is still safe and safe to eat.
And then you just deal with the issues at hand. You try to figure out how to get the government to help, isolate where we can. And that’s hard to do, but it’s something you just have to deal with. There’s a new issue every day, and this looks like this is going to be the issue of the day for the next few months. But it’s about leadership, I think, and making sure that the producers have the knowledge that they need to take care of their own operation, whether that be quarantine and things, taking care of fly control, whatever we need.
But having somebody with the leadership’s ability to let farmers know and consumers know that everything’s going to be okay if we do the right thing.
Alan Bjerga: And you’re absolutely right, Randy. This is far from the last you’re going to hear from either organization, I’m sure, on the emergence of New World screw worm in the United States. More to come on that.
I want to jump topics and talk a little bit about the relationship between farmers and processors since we have respective chairman on this podcast. In a co-op, of course, often the farmer is the owner of the processor, but independent suppliers are becoming ever more important within the US industry.
When you’re looking at issues like Federal Milk Marketing Orders in the years ahead, how do the various players keep themselves aligned? And what will be the biggest challenges to achieving and maintaining that alignment? I’d like to start with you, Daragh.
Daragh Maccabee: Yeah. In my dairy industry career, which has now spanned 25 years, I’ve had the privilege of working under many different models. So when I go through the different models, I work for a co-op owned organization, a publicly traded company with independent milk suppliers, a joint venture with a co-op, and today a farmer-owned private company. So I’ve had, I believe, a somewhat unique view of all the different ways that processors and producers can work together.
And I do think the Idaho Milk Products model is a powerful one. It allows for singular focus by the producers on their dairy operations and the company on maximizing the value of the milk, and with all the benefits of a end-to-end integration when required. Our industry, I believe, is very good at collaboration. The federal order hearings maybe represented an anomaly of sorts for a while, but the industry is united on so many things that I believe will always work and through our differences, including pricing.
And I don’t believe there’s a single processor out there that thinks that farmers shouldn’t get paid the best possible price for their milk. It’s an industry I’m so proud of being a part of because of that, because of that collaboration. We work through our differences because we understand the greater good.
Randy Mooney: I would agree with what Daragh said there. Farmers need processors and processors need farmers. I said that earlier. We’re aligned on so many things. You mentioned the Federal Milk Marketing Order piece. That was one where we wasn’t aligned, and I think it was more towards the timing of.
We can get into some details here that we don’t want to get into because it gets too complicated, but you take just the make-
Alan Bjerga: Very quickly.
Randy Mooney: … Yeah. You take just the make allowance for cheese to non-fat and butter and all that, that we came up with a price that ended up getting through the Federal Milk Marketing Order system and USDA. But I think more than anything else, that was a matter of timing and a matter of transparency on what the difference should be. In my opinion, that was the difference between National Milk and IDFA. What should the number be? How fast does that number passed on to the farmer? And how can we bring this all along together to where the farmer don’t get hurt too bad with too many big changes before they can absorb them? And what should that be?
So within the system that we put together, there’s going to be price transparency and what that should be. So the next time we do this, we’ll have a little better knowledge of what a make allowance should be.
The farmers will be more in tune to, this is going to happen. I think we’re aligned though on where things need to go. We just need to have more transparency and how soon they need to get there and when. Because when you look at the cost of production in plants, I think there’s a great disparity in what some of the newer plants that are being built, some of the plants that Daragh has, and some of the older plants that maybe even DFA has, there’s probably a big disparity in what that number should be.
So we just need to get all that sorted out and everybody feel good about what it is.
Alan Bjerga: We would be remiss, Randy, not to mention on this podcast, Daragh was earlier talking about how he can’t believe it’s been nearly two decades that he’s been working in the United States. For nearly two decades, you have been the chairman of the National Milk Producers Federation, but that tenure is soon coming to an end. You’re stepping down after this year.
Talk a little bit about the impressions that you have gained in this time and maybe a thought about the future where there will be someone else sitting in that chair at NMPF.
Randy Mooney: Well, I could go back and pick up Daragh’s first two or three sentences that he said on this podcast. I’ve been here for 17 years, and it’s truly about the people. When I first got into this role, and it’s a role that just like IDFA it’s elected every year, and I’ve been fortunate to have it for 17 years. And it’s because you get to know people. You get to know farmers, you get to know their families. You want to do the right thing every day and every decision you make to help those families, those generational farms, do what’s best for their families.
And working with those families has been one of the biggest honors of my life. And working with all the different co-ops within National Milk. Within National Milk, I think we represent 70 plus percent of the milk in the country. And it’s been a real honor.
I’m not leaving because I’m getting out of the industry. I’m going to stay as chairman of DFA, but it’s time for somebody different and somebody younger and new ideas. We’re going through a strategic plan right now at National Milk, and I think it’s time for somebody else to come in and take the organization to the next level. And we’ve got some very talented people on the board. And there’s no doubt in my mind that our next annual meeting, whoever’s elected as the next chairman of National Milk, will be very successful at the job.
So it’s been a great opportunity that I’ve had, I’ve had the privilege to have.
Daragh Maccabee: Congratulations to Randy on an immense career leading DFA and NMPF, two great organizations. So that is, it’s impressive indeed.
Alan Bjerga: So Daragh, if someone were starting out in this industry, was at the other end of the spectrum, what advice would you have?
Daragh Maccabee: In terms of advising people starting off, first off, absolutely choose dairy. First advice. But understand dairy economics. Dairy economics are key. It is more than just about the pure economics. You learn so much about the industry. Read everything, and gosh, there’s a lot to read. But read as much of it as possible.
Beyond that, build relationships. Build relationships and embrace the hard work. The work isn’t easy. I always say to people who are maybe joining, joining Idaho Milk Products or joining the industry, the work is difficult. The work is hard. But it’s great. It’s rewarding. It really is worth it. And I love being proud of being part of an industry that does good, making communities better and providing nutrition for the world.
And be brave. Be brave. Dairy can bring you to some unusual location. So I’d say be open about location. Go where the opportunities are, because ultimately a career in dairy can bring you wherever you want to go.
Alan Bjerga: We’ve been speaking with Daragh Maccabee, CEO of Idaho Milk Products and the chairman of the International Dairy Foods Association, as well as Randy Mooney, chairman of both Dairy Farmers of America and the National Milk Producers Federation.
Anything either of you would like to add before we go?
Randy Mooney: The only thing I would add is I really appreciate Daragh and the organization that he represents. National Milk and IDFA are so aligned on 99.5% of the issues that we deal with in Washington, D.C. and across the country. And it is really a symbiotic relationship. One without the other doesn’t work very well.
And what I found out is anytime you go to Washington, D.C. and get something done, if agriculture and dairy within agriculture is together from the processor side and the farmer side, we can get about anything we want.
But when you go try to get something and we’re split, it makes it very difficult. And I just appreciate the relationship we’ve had in the past and look forward to the continued relationship.
Daragh Maccabee: Yeah, it is the professional privilege of my life to work directly for dairy farmers, actually. I’m processor, I represent the processor side, but I work for dairy farmers. And I think it speaks to that beautiful collaboration that exists.
I would like to finish on a positive note around the industry challenges, maybe the policy political challenges because there’s no doubt there’s a few things that you wish were slightly different at the moment. But whatever challenges we face, I’ll always be positive about the future of dairy. There’s a kind of once in a generation opportunity through some of the policy political stuff at the moment.
The MAHA movement, I think, is going to be hugely positive for full fat dairy. And when you think about the insatiable demand for protein, and then you combine that with healthy fluid milk in schools, healthy dairy in schools, the probable strong support of full fat dairy, and through the dietary guidelines, there is a tremendous opportunity that we can leverage. So I think those opportunities are there to be realized for producers and processors alike.
So I think we’re always good at being positive. I have a great respect for dairy farmers and always been able to cope with bad news, cope with challenges in a way that I don’t think any other group can. So I think, given that we have such opportunities to leverage, the challenges are always overcome because of that tenacity and that commitment.
Alan Bjerga: Randy, Daragh, thank you so much again for your time today.
Randy Mooney: Thank you. Appreciate it.
Daragh Maccabee: Thank you very much, Alan. Yeah, thank you. And thank you, Randy.
Randy Mooney: Thank you, Daragh. Appreciate it. Thank you.
Alan Bjerga: And that’s the end of our special edition Dairy Defined Podcast. You, of course, can learn more about IDFA and NMPF on their respective websites. They’re both their own acronyms, dot org. In other words, IDFA.org or NMPF.org.
For more of these podcasts, all you have to do is go to the NMPF website or go to Apple Podcasts, Spotify, and Amazon Music searching under the podcast name Dairy Defined.
Thank you for joining us.
