I drove up to the feed mill in Conway, about 20 minutes north of my farm, to pick up a sack of feed, and stopped in at the conway pub for lunch. Washington state has great seafood at odd places, and the oyster basket, pan fried oysters at the conway pub, are a favorite of mine. Crispy and fresh, served with cocktail sauce and tarter sauce on a bed of fries.
It was pretty crowded, and I looked around, and decided I'd eat at the bar, and I ordered. I feel like if I'm seated at the bar I have a bit of a license to listen to the conversations around me, and I heard the tail end of one... "yea, when I got out of the navy, I was milking 40, and you just don't see anything under 500 any more. "
The speaker was a white haired man, mid to late sixties, with the leather face that comes from being years in the sun, and he was dressed like a farmer, boots and baseball cap, with the name of a ship on the cap. It's the sort of baseball cap worn by crew members for the ship they served on. It was dark blue, and well-loved, that cap.
He was talking to a younger man, maybe mid 40s, and they went back and forth over various dairy related topics as I listened, and at an appropriate pause, I told them that I was working on buying a farm that had been a dairy, and had heard them talking about dairying.
Turns out that they owned a distribution company that distributed milk products to various stores in the area; their business card listed various brands of ice cream that you'd recognize, and that I did. So we talked about dairying. "If I were you, and I had a pig business that was profitable, I'd stay the heck out of dairying!", says the younger man, as the older nodded. "It's a tough business, and I don't know any new dairies. If you're not in it already, you really can't get into it."
We talked a bit about price; he knew what the price was for darigold, the biggest cooperative dairy organization around here, and I knew the price for organic valley, and he cautioned me that it might seem like I could compete with the big dairies, but that I would "have to buy milk at the same price as them eventually".
It took me 20 minutes to get what his thinking was. Here's a summary: He believes that a new dairy can only compete on price with larger dairies, and that all milk is basically the same, and further that anyone who gets into dairying wants to get as large as possible as quickly as possible. The American dream, milk style.
One thing that I know for sure is that all milk is not the same, particularly drinking milk. There's a pretty substantial difference in taste between milk brands, and there's absolutely a market for milk that tastes good. In fact, I won't buy mainstream brands of milk anymore. Once you know what good milk tastes like it makes the other stuff completely unappealing.
The basic concept, that a new farm can only compete on price, is what a lot of farmers think, and in fact, it's the easiest way to compete. And size is the holy grail of farming for a lot of farmers. They want to have a farm that is big enough to be able to work solely on the farm. That's one reason we get huge, specialized farms. They get really good at whatever they are doing and blow themselves up to do a lot of it.
Not making enough money on Sugar beets? The solution, for a lot of farmers, is to get more acres and plant more beets. That's not the only way to go, but it is a very popular choice.
I explained that I think that there's a market for quality, and that I would never compete on the basis of a lower price than some other farm. I do that because I cannot beat our American specialist farms on price; there's a guy out there who raises 10,000 pigs with a fraction, a very small fraction, of my labor costs. He can shave a penny thinner than I can any day of the week. Fight the battle you can win. I'm local; you can see how my pigs are housed and fed and treated; they have great lives doing pig things the whole time, and I'm absolutely local; all of my supplies are purchased locally if at all possible, and I support the local feed stores and farm infrastructure, and the folks who buy from me like that.
I could see this guys eyes glazing over, and I realized that I wasn't getting my point across. I'm not sure that he understood my point.
The price argument reminds me of how the big retail outlets compete with each other. Be it building supplies or variety stores, all I ever hear them talk about is how they can beat the price of the competition. That's because they're all selling the same products. Go into any big box store and they're all selling the same thing and the same range of things. All they have left to compete on is price.
ReplyDeleteYou're right, unless you can do high volume low margin production you'll never beat them. So you have to compete in different areas such as quality, producing and selling local, etc. Those are the things that you can provide that they can't.