1 00:00:02,720 --> 00:00:13,960 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:18,079 --> 00:00:20,960 Speaker 2: Hello and welcome to another episode of the Odd Lots podcast. 3 00:00:21,040 --> 00:00:22,439 Speaker 2: I'm Tracy Allowhite. 4 00:00:22,079 --> 00:00:22,560 Speaker 3: And I'm Jill. 5 00:00:22,600 --> 00:00:25,760 Speaker 2: Why isnt thal Joe? You're a Jim person? Aren't you 6 00:00:26,120 --> 00:00:27,680 Speaker 2: notice I did not say Jim Burrow. 7 00:00:27,800 --> 00:00:30,440 Speaker 3: Yeah that's right. Let's say thank you. Aspirationally, I do 8 00:00:30,520 --> 00:00:32,640 Speaker 3: go to the gym regularly. I don't go to the 9 00:00:32,680 --> 00:00:35,280 Speaker 3: gym regular enough to see a difference. I think because 10 00:00:35,400 --> 00:00:37,680 Speaker 3: I'm at the stage of life for like every day 11 00:00:37,680 --> 00:00:39,199 Speaker 3: I'm getting a little bit closer to death, and so 12 00:00:39,240 --> 00:00:42,520 Speaker 3: I'm like holding serve. I'm like sort of holding at 13 00:00:42,560 --> 00:00:44,879 Speaker 3: the same So like I no progress, but maybe I'm 14 00:00:44,880 --> 00:00:45,560 Speaker 3: not regressing. 15 00:00:45,680 --> 00:00:47,960 Speaker 2: But yes, I still think if you go to the 16 00:00:48,000 --> 00:00:52,239 Speaker 2: gym regularly, you're a Jim person. Okay, Yeah, that's impressive. 17 00:00:52,280 --> 00:00:53,479 Speaker 3: I'm gonna have less shame about it. 18 00:00:53,520 --> 00:00:57,680 Speaker 2: Okay, here's my question. Have you noticed the drinking habits 19 00:00:57,760 --> 00:01:00,400 Speaker 2: of some of your fellow Jim people. Have you noticed 20 00:01:00,440 --> 00:01:03,280 Speaker 2: anyone walking around with bottles of milk? 21 00:01:03,920 --> 00:01:06,440 Speaker 3: I have? I mean I still see more people with 22 00:01:06,480 --> 00:01:09,560 Speaker 3: like the energy drinks milk, but yeah, I've definitely seen it. 23 00:01:09,600 --> 00:01:09,760 Speaker 2: You know. 24 00:01:09,840 --> 00:01:12,440 Speaker 3: I think, like back in the day. You know, you 25 00:01:12,560 --> 00:01:14,679 Speaker 3: had these guys. I think some of them still do 26 00:01:15,360 --> 00:01:17,880 Speaker 3: with actual like people who try to drink a gallon 27 00:01:17,920 --> 00:01:22,840 Speaker 3: of milk in a day. There's that famous guy. He 28 00:01:22,880 --> 00:01:25,360 Speaker 3: has a book called Starting Strength. He's like a cult 29 00:01:25,400 --> 00:01:28,760 Speaker 3: guru within the Barbelle world. Whose name I'm blanking on. 30 00:01:29,040 --> 00:01:31,160 Speaker 3: I think he's a big like drink a bunch of 31 00:01:31,160 --> 00:01:32,360 Speaker 3: milk guy. 32 00:01:32,480 --> 00:01:34,480 Speaker 2: If you're serious about it, you got to mix raw 33 00:01:34,560 --> 00:01:36,440 Speaker 2: eggs in with the milk. That's what I say. 34 00:01:37,280 --> 00:01:37,520 Speaker 1: You do. 35 00:01:37,840 --> 00:01:38,760 Speaker 3: Have you done that? No? 36 00:01:38,840 --> 00:01:42,039 Speaker 2: I haven't, although I did when I triple fractured my 37 00:01:42,080 --> 00:01:44,360 Speaker 2: foot when I was in Hong Kong, and I did 38 00:01:44,400 --> 00:01:46,680 Speaker 2: have a doctor who advised me to drink a lot 39 00:01:46,720 --> 00:01:50,440 Speaker 2: of milk to build up the calcium and heal the foot. Anyway, 40 00:01:50,560 --> 00:01:51,800 Speaker 2: we're getting slightly off topic. 41 00:01:51,960 --> 00:01:52,600 Speaker 3: Yeah, Okay. 42 00:01:52,600 --> 00:01:55,000 Speaker 2: One of the milk brands that you see a lot 43 00:01:55,040 --> 00:01:56,760 Speaker 2: in gyms is something called fair Life. 44 00:01:56,880 --> 00:01:59,400 Speaker 3: Yeah, I've seen it, and I actually literally like had 45 00:01:59,440 --> 00:02:02,000 Speaker 3: never thought about what it is or but yes, I 46 00:02:02,000 --> 00:02:02,760 Speaker 3: had seen this brand. 47 00:02:02,880 --> 00:02:05,600 Speaker 2: Okay, so I don't know that much about it, but 48 00:02:05,840 --> 00:02:08,840 Speaker 2: I first got kind of interested in the company reading 49 00:02:08,919 --> 00:02:12,200 Speaker 2: Austin Ferrick's book Barrens. There's a whole chapter in there 50 00:02:12,240 --> 00:02:16,320 Speaker 2: about dairy barns and it's about fair Oaks, which turned 51 00:02:16,360 --> 00:02:19,840 Speaker 2: into fair Life. All I know about fair Life is 52 00:02:19,880 --> 00:02:23,239 Speaker 2: that Coke bought them. They had a big distribution deal 53 00:02:23,320 --> 00:02:25,920 Speaker 2: with Coke, and we know how important distribution is in 54 00:02:25,960 --> 00:02:29,560 Speaker 2: the beverage industry from our previous conversations on Celsius and 55 00:02:29,600 --> 00:02:33,480 Speaker 2: things like that. And it's turned into this phenomenon where 56 00:02:33,560 --> 00:02:36,440 Speaker 2: fair Life is this milk that's I guess supposed to 57 00:02:36,440 --> 00:02:40,640 Speaker 2: be healthier. It has more protein, it has less lactose 58 00:02:40,760 --> 00:02:43,520 Speaker 2: or no lactose I can't remember, which means you can 59 00:02:43,600 --> 00:02:45,800 Speaker 2: keep it in your fridge for like one hundred days, 60 00:02:46,320 --> 00:02:49,240 Speaker 2: which is actually I find that useful. So we should 61 00:02:49,240 --> 00:02:52,440 Speaker 2: talk about it because it's also kind of kicked off 62 00:02:52,480 --> 00:02:54,560 Speaker 2: this whole protein crazy. 63 00:02:54,120 --> 00:02:58,480 Speaker 3: Protein only got protein everywhere I know, I don't get it. Like, yes, 64 00:02:58,520 --> 00:03:01,359 Speaker 3: Starbucks they have these you can get this protein drinks. 65 00:03:01,400 --> 00:03:05,359 Speaker 3: I haven't tried them yet. I you know, when did 66 00:03:05,360 --> 00:03:07,919 Speaker 3: it become a crime to just eat normally? I get 67 00:03:08,120 --> 00:03:10,080 Speaker 3: I ate some eat and I ate some veggies and 68 00:03:10,320 --> 00:03:13,200 Speaker 3: occasionally eat some carbs and stuff like that and whatever. 69 00:03:13,320 --> 00:03:17,440 Speaker 3: But yeah, over time, it's like different macro nutrients trend, right, 70 00:03:17,720 --> 00:03:19,639 Speaker 3: So there was a while it's like good fats, right, 71 00:03:19,760 --> 00:03:22,440 Speaker 3: people are really into fats for a while, and then 72 00:03:22,720 --> 00:03:26,200 Speaker 3: it's like, oh, you need fermented stuff, so you know, 73 00:03:26,320 --> 00:03:29,320 Speaker 3: they's more for your gut health. But we're in like 74 00:03:29,360 --> 00:03:31,880 Speaker 3: a we're certainly in a protein bowl market right now. 75 00:03:31,880 --> 00:03:34,240 Speaker 3: People really want more protein because reasons. 76 00:03:34,400 --> 00:03:37,760 Speaker 2: Yeah, And what's interesting again about fair Life is it's 77 00:03:37,800 --> 00:03:41,160 Speaker 2: making a lot of money that's feeding into Coke bottom line. 78 00:03:41,240 --> 00:03:44,560 Speaker 2: Share price has gone up quite a bit, and it's 79 00:03:44,600 --> 00:03:47,480 Speaker 2: also at odds with basically everything else that's happening in 80 00:03:47,520 --> 00:03:50,880 Speaker 2: the dairy industry, where you know, prices tend to be 81 00:03:51,040 --> 00:03:53,680 Speaker 2: pretty low and have been kind of stuck in a 82 00:03:53,760 --> 00:03:56,800 Speaker 2: downward spiral for a long time. Profit margins are very 83 00:03:56,880 --> 00:03:59,040 Speaker 2: very thin, so this is an outlier. 84 00:03:59,360 --> 00:04:02,640 Speaker 3: People are assuming less traditional dairy. I think a lot, 85 00:04:02,720 --> 00:04:04,440 Speaker 3: you know, at least I don't know how big is 86 00:04:04,480 --> 00:04:07,320 Speaker 3: it it is, but some of the quote alternative milks, 87 00:04:07,360 --> 00:04:10,400 Speaker 3: the almond milks of the world, the cashew milk, so 88 00:04:10,440 --> 00:04:14,400 Speaker 3: he milk's probably taking some yeah, plain old regular dairy. 89 00:04:15,080 --> 00:04:17,279 Speaker 3: No I ever talked on, by the way, number two milk. 90 00:04:17,320 --> 00:04:20,000 Speaker 3: I feel like everyone's either skim or fat. These days 91 00:04:20,000 --> 00:04:22,920 Speaker 3: because more of the sort of like polarization of society 92 00:04:23,200 --> 00:04:25,920 Speaker 3: that no one likes nice middle ground milk anymore. So 93 00:04:25,960 --> 00:04:28,120 Speaker 3: now apparently they want super high protein milk too. 94 00:04:28,480 --> 00:04:30,800 Speaker 2: All right, So we have the perfect guest, yes to 95 00:04:30,839 --> 00:04:34,320 Speaker 2: discuss fair Life and the dairy industry in general. We're 96 00:04:34,320 --> 00:04:36,160 Speaker 2: going to be speaking with Corey Geiger. He is the 97 00:04:36,279 --> 00:04:39,400 Speaker 2: lead dairy economist with Cobank, which is a very big 98 00:04:39,520 --> 00:04:42,680 Speaker 2: lender to the industry, so really the perfect person to 99 00:04:42,760 --> 00:04:43,120 Speaker 2: speak to. 100 00:04:43,240 --> 00:04:43,520 Speaker 3: Corey. 101 00:04:43,560 --> 00:04:44,680 Speaker 2: Thank you so much for coming on. 102 00:04:44,720 --> 00:04:47,840 Speaker 4: All thoughts, Well, I'm glad to be here Tracy and Joel. 103 00:04:48,240 --> 00:04:51,040 Speaker 2: So I'm going to start with the basic question what 104 00:04:51,240 --> 00:04:54,760 Speaker 2: differentiates fair life from traditional milk. 105 00:04:56,080 --> 00:05:00,800 Speaker 4: I think there's two big parts to this, protein and portability. 106 00:05:00,920 --> 00:05:06,200 Speaker 4: The portability is it's ultra pasteurized and uses aseptic packaging, 107 00:05:06,320 --> 00:05:10,000 Speaker 4: so that means it you can actually ship it without refrigeration. 108 00:05:10,560 --> 00:05:12,839 Speaker 4: And when you think about the dairy industry, the dairy 109 00:05:12,839 --> 00:05:18,040 Speaker 4: industry is the largest refrigerated food chain in the world. Really, 110 00:05:18,040 --> 00:05:20,279 Speaker 4: you think, as soon as we milk a cow and 111 00:05:20,800 --> 00:05:23,200 Speaker 4: we cool the milk, it's cooled in the truck to 112 00:05:23,279 --> 00:05:28,000 Speaker 4: the processing plant, and then traditional dairy products are refrigerated 113 00:05:28,040 --> 00:05:30,360 Speaker 4: all the way to the grocery store at a convenience store. 114 00:05:30,839 --> 00:05:33,880 Speaker 4: But the fair Life story and products like it now 115 00:05:34,279 --> 00:05:37,160 Speaker 4: are when you go to that aseptic packaging and altar 116 00:05:37,240 --> 00:05:40,720 Speaker 4: filtration until you open that bottle, it's got a lot 117 00:05:40,800 --> 00:05:43,680 Speaker 4: longer shelf life. Of course, once it's opened, you're at 118 00:05:43,960 --> 00:05:46,000 Speaker 4: the fourteen day clock starts ticking. 119 00:05:46,839 --> 00:05:51,520 Speaker 3: This technology that allows you to store milk for a 120 00:05:51,560 --> 00:05:56,240 Speaker 3: long time without refrigeration. Is this something that's been understood 121 00:05:56,400 --> 00:05:59,200 Speaker 3: for a long time and now there's suddenly a demand 122 00:05:59,360 --> 00:06:04,320 Speaker 3: for this milk or is the technology relatively recent? And 123 00:06:04,320 --> 00:06:06,400 Speaker 3: then the industry is like, oh, we can because of 124 00:06:06,400 --> 00:06:09,200 Speaker 3: this technology, we can market and get people excited about 125 00:06:09,200 --> 00:06:11,800 Speaker 3: a new product that can take advantage of these capabilities. 126 00:06:12,320 --> 00:06:14,920 Speaker 4: Well, fair Life first came on the scene in twenty fourteen, 127 00:06:15,000 --> 00:06:17,360 Speaker 4: so it's been with us about a decade. But one 128 00:06:17,440 --> 00:06:19,640 Speaker 4: of the things that the team at fair Life had 129 00:06:19,680 --> 00:06:23,720 Speaker 4: to really perfect was this high temperature, short time pasturization, 130 00:06:23,920 --> 00:06:26,560 Speaker 4: so you're heating the milk up quick and then cooling 131 00:06:26,560 --> 00:06:29,560 Speaker 4: it quick. One of the things I like sharing is 132 00:06:29,600 --> 00:06:32,600 Speaker 4: that milk is nature's most perfect beverage. You talked about 133 00:06:32,600 --> 00:06:36,360 Speaker 4: it being a health beverage. If it's nature's most perfect beverage, 134 00:06:36,520 --> 00:06:38,880 Speaker 4: that also means it's a great place to grow bacteria. 135 00:06:39,000 --> 00:06:42,280 Speaker 4: So pasteurization. You know, over one hundred years ago, the 136 00:06:42,400 --> 00:06:46,360 Speaker 4: Pasteurized Milk Ordinance came about, and that set a national 137 00:06:46,440 --> 00:06:50,040 Speaker 4: standard so that a Wisconsin farmer could sell milk in 138 00:06:50,120 --> 00:06:53,240 Speaker 4: the Chicago market, or an upstate New York farmer could 139 00:06:53,279 --> 00:06:56,719 Speaker 4: sell milk into the New York City under the same 140 00:06:56,800 --> 00:07:01,480 Speaker 4: rules and standards. But going to this ultra the HTST 141 00:07:01,720 --> 00:07:05,719 Speaker 4: the high temperature short time pasteurization, Originally you kind of 142 00:07:05,720 --> 00:07:09,560 Speaker 4: got a burnt milk taste. So if you're a consumer 143 00:07:09,640 --> 00:07:12,320 Speaker 4: and you're tasting it, you're like, eh, it didn't hit 144 00:07:12,400 --> 00:07:16,600 Speaker 4: the mark. But now they perfected that process and you 145 00:07:16,640 --> 00:07:18,880 Speaker 4: really get the flavor that you've come to expect from 146 00:07:18,920 --> 00:07:19,600 Speaker 4: a dairy milk. 147 00:07:20,640 --> 00:07:24,160 Speaker 2: You mentioned having to sell into markets, and I'm not 148 00:07:24,240 --> 00:07:26,120 Speaker 2: quite sure why, but I was reading a book about 149 00:07:26,160 --> 00:07:29,640 Speaker 2: small scale farming from the nineteen fifties last night and 150 00:07:29,840 --> 00:07:31,760 Speaker 2: it was talking about if you're a small scale farmer 151 00:07:32,120 --> 00:07:35,200 Speaker 2: and you want to get into dairy, you have some options. 152 00:07:35,240 --> 00:07:38,360 Speaker 2: One option is you sell into a local market that's 153 00:07:38,440 --> 00:07:41,080 Speaker 2: very close to you, because you know you can't refrigerate 154 00:07:41,120 --> 00:07:44,520 Speaker 2: the milk for that long, or you sell to like 155 00:07:44,560 --> 00:07:46,800 Speaker 2: a cheese factory or something like that, and you can 156 00:07:46,840 --> 00:07:50,080 Speaker 2: go a little bit further, sell maybe more in bulk 157 00:07:50,240 --> 00:07:53,920 Speaker 2: that sort of thing. How big a deal was fair 158 00:07:54,080 --> 00:07:59,120 Speaker 2: Life's distribution deal with Coke in its success, This idea 159 00:07:59,160 --> 00:08:01,240 Speaker 2: that now you have a bed that can be shipped 160 00:08:01,320 --> 00:08:06,200 Speaker 2: over very very long distances, long timelines, and you have 161 00:08:06,280 --> 00:08:07,400 Speaker 2: Coke distributing it. 162 00:08:08,080 --> 00:08:10,440 Speaker 4: I think it was huge when you really look at it. 163 00:08:10,520 --> 00:08:13,320 Speaker 4: If you look at the founders of the concept of 164 00:08:13,320 --> 00:08:16,880 Speaker 4: what became fair Life. Originally they were experimenting Mike and 165 00:08:16,960 --> 00:08:21,200 Speaker 4: Sue McCloskey with a product that they eventually called athletes 166 00:08:21,280 --> 00:08:24,720 Speaker 4: Milk Honey, and so they were looking at finding a 167 00:08:24,840 --> 00:08:30,040 Speaker 4: health beverage for consumers in that market. So there's one 168 00:08:30,080 --> 00:08:34,280 Speaker 4: thing to be innovative. Then it's distribution. And one of 169 00:08:34,320 --> 00:08:36,840 Speaker 4: the for me, I grew up on a sixth generation 170 00:08:37,040 --> 00:08:41,440 Speaker 4: Wisconsin dairy farmer, one of the obstacles always for milk 171 00:08:41,520 --> 00:08:44,480 Speaker 4: has been portability. You know, it's you have to have 172 00:08:44,559 --> 00:08:48,640 Speaker 4: this elaborate transportation system to move it. And I'm talking 173 00:08:48,679 --> 00:08:55,120 Speaker 4: beverage milk here, and that really overcame the situation with 174 00:08:55,160 --> 00:08:57,840 Speaker 4: what Fair Life has done with aseptic packaging and the 175 00:08:58,040 --> 00:09:03,000 Speaker 4: HSUT process to hype pastorization. It was game changing. 176 00:09:04,240 --> 00:09:06,520 Speaker 3: I think this is old news, but it used to 177 00:09:06,520 --> 00:09:09,520 Speaker 3: be the case that milk prices what's the deal they 178 00:09:09,520 --> 00:09:13,000 Speaker 3: were like set based on your distance from Oak Claire, 179 00:09:13,000 --> 00:09:16,120 Speaker 3: Wisconsin or something like that, because there was this premise like, oh, 180 00:09:16,160 --> 00:09:19,040 Speaker 3: we want milk very far away, and you sell to 181 00:09:19,080 --> 00:09:22,240 Speaker 3: your local market. And explained it that went away or something. 182 00:09:22,280 --> 00:09:25,760 Speaker 3: But why was Oa Claire, Wisconsin this sort of central 183 00:09:25,840 --> 00:09:28,559 Speaker 3: hub for a while of the index for pricing milk. 184 00:09:28,720 --> 00:09:33,120 Speaker 4: Explain that, yes, there's a number of reasons for it. Actually, 185 00:09:33,200 --> 00:09:37,520 Speaker 4: we'll start with a little dairy history. Up until about ten, 186 00:09:38,320 --> 00:09:41,559 Speaker 4: New York was the largest milk producing state in the 187 00:09:41,640 --> 00:09:46,319 Speaker 4: United States. Then that became Wisconsin, and obviously now America's 188 00:09:46,400 --> 00:09:51,000 Speaker 4: dairy Land is on the license plates Wisconsin. Actually, in 189 00:09:51,080 --> 00:09:54,600 Speaker 4: the eighteen late eighteen hundreds, a gentleman who became governor 190 00:09:54,640 --> 00:09:57,760 Speaker 4: of the state, William Dempster Hoartz, secured the first refrigerated 191 00:09:57,800 --> 00:10:01,000 Speaker 4: real car to ship Wisconsin to New York City in 192 00:10:01,000 --> 00:10:06,520 Speaker 4: the eighteen seventies, and today Wisconsin exports about ninety percent 193 00:10:06,559 --> 00:10:09,560 Speaker 4: of their milk production via cheese, and that export could 194 00:10:09,559 --> 00:10:12,600 Speaker 4: be the other forty nine states and certainly now around 195 00:10:12,640 --> 00:10:15,520 Speaker 4: the world. But because of all the cheese made in 196 00:10:15,559 --> 00:10:20,360 Speaker 4: Wisconsin and Minnesota, Well Claire was that kind of center 197 00:10:20,400 --> 00:10:25,160 Speaker 4: point between Wisconsin and Minnesota to establish a base price 198 00:10:25,480 --> 00:10:28,520 Speaker 4: for milk. That went away here in about two thousand 199 00:10:28,520 --> 00:10:31,520 Speaker 4: and we have a different system, but milk is still 200 00:10:31,600 --> 00:10:35,800 Speaker 4: highly regulated under Federal Milk Marketing Orders, which is really 201 00:10:35,880 --> 00:10:37,480 Speaker 4: what establishes milk prices. 202 00:10:38,800 --> 00:10:40,720 Speaker 3: Could you just real quickly explain one of these words. 203 00:10:40,880 --> 00:10:43,080 Speaker 3: What does that mean? Like it's regular because the prices 204 00:10:43,120 --> 00:10:45,560 Speaker 3: do fluctuate, So what does that mean that it's still 205 00:10:45,600 --> 00:10:46,479 Speaker 3: highly regulated? 206 00:10:47,040 --> 00:10:51,160 Speaker 4: Yeah, highly regulated means that Federal Milk Marketing Orders. There's 207 00:10:51,200 --> 00:10:54,439 Speaker 4: four classes of milk. Class one would be beverage milk. 208 00:10:54,679 --> 00:10:56,679 Speaker 4: That would be the traditional milk that you drink. And 209 00:10:56,720 --> 00:10:59,120 Speaker 4: when you come back to the Fair Life story and 210 00:10:59,520 --> 00:11:03,240 Speaker 4: you discussed that milk fluid milk sales have been flat, 211 00:11:03,679 --> 00:11:06,959 Speaker 4: but products like Fair Life and Core Power in those 212 00:11:07,200 --> 00:11:11,360 Speaker 4: are actually a mixture of fluid milk. In Class two, 213 00:11:11,480 --> 00:11:16,280 Speaker 4: products which traditionally have been scupable products like yogurt, ice 214 00:11:16,320 --> 00:11:18,920 Speaker 4: cream would be in there. Sour cream would be in there, 215 00:11:19,360 --> 00:11:22,720 Speaker 4: and then Class three I liked sharing little miss Tuffett 216 00:11:22,880 --> 00:11:24,920 Speaker 4: sat on her muffet eating her curds in waste of 217 00:11:25,000 --> 00:11:29,360 Speaker 4: Class three is cheese, curds and whey, and then Class 218 00:11:29,400 --> 00:11:32,520 Speaker 4: four products are butter and powder, and butt powder would 219 00:11:32,520 --> 00:11:35,760 Speaker 4: be non fat dry milk. But each of these classes 220 00:11:35,880 --> 00:11:42,400 Speaker 4: has different pricing mechanisms, and today beverage milk is priced 221 00:11:42,440 --> 00:11:47,000 Speaker 4: on the higher of Class three or class four. It 222 00:11:47,040 --> 00:11:51,479 Speaker 4: gets complicated, and that's why I call their very regulated. 223 00:11:51,960 --> 00:11:54,800 Speaker 4: But these orders came about in nineteen thirty seven. It 224 00:11:54,840 --> 00:11:58,240 Speaker 4: was an act of Congress and it was to ensure 225 00:11:58,640 --> 00:12:03,400 Speaker 4: the orderly marketing milk and ensure fluid milk in markets 226 00:12:03,400 --> 00:12:04,960 Speaker 4: that don't have a lot of dairy coves. 227 00:12:05,600 --> 00:12:09,680 Speaker 2: So one thing I learned from reading my old farming 228 00:12:09,720 --> 00:12:12,120 Speaker 2: book is that there are a lot of levers that 229 00:12:12,200 --> 00:12:14,760 Speaker 2: you can pull if you're again this is for small 230 00:12:14,760 --> 00:12:17,040 Speaker 2: scale farming, but there are levers you can pull to 231 00:12:17,080 --> 00:12:19,520 Speaker 2: boost profits. So maybe you're not going to make that 232 00:12:19,600 --> 00:12:22,920 Speaker 2: much from milk itself, but you know, you can sell 233 00:12:22,960 --> 00:12:27,040 Speaker 2: the calves for veal, or once the dairy production starts 234 00:12:27,080 --> 00:12:29,840 Speaker 2: going down with your cows, you can sell those, or 235 00:12:29,960 --> 00:12:32,960 Speaker 2: you can sell manure for fertilizer and things like that, 236 00:12:33,080 --> 00:12:35,360 Speaker 2: all these different levers. Can you talk a little bit 237 00:12:35,400 --> 00:12:38,640 Speaker 2: more about the actual business model of a dairy farm 238 00:12:38,800 --> 00:12:42,520 Speaker 2: and where money comes from nowadays, because I imagine it's 239 00:12:42,640 --> 00:12:43,480 Speaker 2: changed quite a bit. 240 00:12:45,040 --> 00:12:48,719 Speaker 4: This is a dynamic space and from over. We'll talk 241 00:12:48,760 --> 00:12:51,800 Speaker 4: about the dairy farm in a second. But dairy right 242 00:12:51,840 --> 00:12:55,480 Speaker 4: now has eleven billion dollars of new plant investment in 243 00:12:55,520 --> 00:12:59,360 Speaker 4: the United States, and it's a number of categories, so 244 00:12:59,400 --> 00:13:01,520 Speaker 4: there's a lot of energy taking place in a lot 245 00:13:01,520 --> 00:13:04,440 Speaker 4: of investment. This is historic investment. When you get to 246 00:13:04,480 --> 00:13:07,760 Speaker 4: the dairy farm. Obviously, if you're a milking cows, your 247 00:13:07,840 --> 00:13:11,360 Speaker 4: number one revenue source is milk. I would say up 248 00:13:11,400 --> 00:13:14,760 Speaker 4: until five years ago, ninety percent of your income came 249 00:13:14,800 --> 00:13:17,080 Speaker 4: from milk, unless you were selling a lot of crops. 250 00:13:17,080 --> 00:13:19,679 Speaker 4: But one of the dynamic things that have changed, and 251 00:13:19,720 --> 00:13:23,000 Speaker 4: it's in the news a lot right now, is beef prices, 252 00:13:23,720 --> 00:13:27,400 Speaker 4: and every cow has a second career as a beef animal. 253 00:13:28,120 --> 00:13:32,520 Speaker 4: About five years ago, well I considered the dairy cow 254 00:13:32,559 --> 00:13:35,360 Speaker 4: the most researched animal on planet Earth. We know more 255 00:13:35,400 --> 00:13:37,920 Speaker 4: about her. We have over one hundred and twenty three 256 00:13:38,000 --> 00:13:40,320 Speaker 4: million records on her over the last one hundred years. 257 00:13:40,760 --> 00:13:44,600 Speaker 4: In two thousand and eight, the science of genomics came 258 00:13:44,640 --> 00:13:47,760 Speaker 4: into the industry. I was actually the first one to 259 00:13:47,760 --> 00:13:49,880 Speaker 4: write a public article about it. But what you do 260 00:13:50,040 --> 00:13:53,400 Speaker 4: is you take a DNA sample from the cow, you 261 00:13:53,480 --> 00:13:55,880 Speaker 4: run her profile, and you can compare it to all 262 00:13:55,920 --> 00:13:59,000 Speaker 4: this phenotypic data that one hundred and twenty three million 263 00:13:59,000 --> 00:14:04,400 Speaker 4: records about seventy percent accuracy, we can predict what that 264 00:14:04,520 --> 00:14:07,800 Speaker 4: baby calf will do as a cow, and that has 265 00:14:07,960 --> 00:14:12,160 Speaker 4: changed a lot of things in dairy. We are improving 266 00:14:12,200 --> 00:14:16,920 Speaker 4: butterfat and protein levels at paces we've never seen before. 267 00:14:16,960 --> 00:14:21,120 Speaker 4: And these days one out of four heifer calves, baby 268 00:14:21,240 --> 00:14:24,880 Speaker 4: calves that will eventually become cows, have a genomic test 269 00:14:24,960 --> 00:14:29,560 Speaker 4: run on them, and that has really changed things. Then 270 00:14:29,680 --> 00:14:33,520 Speaker 4: as that took place, gender sorted seamen came into the industry, 271 00:14:33,640 --> 00:14:37,280 Speaker 4: so we can they use lasers. They can sort out 272 00:14:37,280 --> 00:14:40,320 Speaker 4: the y chromosomes which make a bull calf, and with 273 00:14:40,400 --> 00:14:43,600 Speaker 4: about ninety to ninety five percent accuracy, produce a product 274 00:14:43,600 --> 00:14:48,360 Speaker 4: that makes dairy heffercalves. So dairy farmers are planning their replacements. 275 00:14:49,000 --> 00:14:52,520 Speaker 4: They're using science to predict the ones and that opened 276 00:14:52,520 --> 00:14:57,040 Speaker 4: a whole new door to use what we call beef breeds, 277 00:14:57,080 --> 00:15:02,960 Speaker 4: think angus, limousine, charlat that we breed those, we'd use 278 00:15:03,080 --> 00:15:07,760 Speaker 4: artificial insemination. The original AI and agriculture had artificial intelligence 279 00:15:08,120 --> 00:15:12,760 Speaker 4: to inseminate the cows, and dairy farmers are making more 280 00:15:12,800 --> 00:15:16,160 Speaker 4: money on that these days. So about five years ago, 281 00:15:16,840 --> 00:15:20,600 Speaker 4: back to Tracy's original question, a dairy farmer was making 282 00:15:20,640 --> 00:15:23,600 Speaker 4: about one dollar per hundred weight per hundred pounds of 283 00:15:23,600 --> 00:15:27,480 Speaker 4: milk equivalent from beef sales, and say a dairy farmer's 284 00:15:27,520 --> 00:15:30,000 Speaker 4: making eighteen to twenty, So it wasn't eighteen to twenty 285 00:15:30,000 --> 00:15:32,200 Speaker 4: dollars per hundred weight for milk. It wasn't a big deal. 286 00:15:32,640 --> 00:15:35,160 Speaker 4: But today that number has gone to four four fifty. 287 00:15:35,320 --> 00:15:39,360 Speaker 4: So we're generating a baby black heighted calf. An angus 288 00:15:39,400 --> 00:15:42,720 Speaker 4: calf that's destined for a feed lot eventually is selling 289 00:15:42,760 --> 00:15:46,000 Speaker 4: between twelve and eighteen hundred dollars right now, and so 290 00:15:46,040 --> 00:15:49,560 Speaker 4: it's a big revenue stream doesn't no matter what size 291 00:15:49,600 --> 00:16:04,800 Speaker 4: your farmers, everybody can play. 292 00:16:07,000 --> 00:16:10,680 Speaker 3: So when you're talking about improving sort of butterfat and 293 00:16:10,840 --> 00:16:14,080 Speaker 3: so forth, what is going is it selective breeding? That 294 00:16:14,240 --> 00:16:16,680 Speaker 3: just means that you're more likely to get a baby 295 00:16:16,760 --> 00:16:20,800 Speaker 3: cow that has high levels of whatever you're looking for, like, what. 296 00:16:20,800 --> 00:16:22,000 Speaker 2: Is better production rate? 297 00:16:22,120 --> 00:16:25,280 Speaker 3: Yeah, what is the source of I guess higher yields. 298 00:16:25,560 --> 00:16:28,880 Speaker 4: So I'm past president of Holstein Association USA, which is 299 00:16:28,920 --> 00:16:32,080 Speaker 4: the largest dairy breed organization in the world, and that 300 00:16:32,160 --> 00:16:35,440 Speaker 4: source is a bundle of metrics. We study a lot 301 00:16:35,480 --> 00:16:39,040 Speaker 4: of traits. Certainly the big two would be butterfat, well 302 00:16:39,080 --> 00:16:41,800 Speaker 4: big three would be butter fat, protein, and milk, but 303 00:16:42,080 --> 00:16:45,280 Speaker 4: we are also looking at mass titus, resistance or that 304 00:16:45,360 --> 00:16:48,040 Speaker 4: you know, the ability to combat and infection. In the 305 00:16:48,080 --> 00:16:51,560 Speaker 4: other we're looking for longevity, which as a trait we 306 00:16:51,600 --> 00:16:54,840 Speaker 4: call productive life, or even daughter pregnancy rate, which is 307 00:16:54,840 --> 00:16:58,800 Speaker 4: a fertility metric. So that's this bundle of better yields 308 00:16:58,840 --> 00:17:03,320 Speaker 4: from the cow and reduce costs from the standpoint of 309 00:17:03,560 --> 00:17:07,360 Speaker 4: healthcare and those kind of things. And right now, if 310 00:17:07,400 --> 00:17:10,240 Speaker 4: you use the best group of Holstein bulls or even 311 00:17:10,320 --> 00:17:14,320 Speaker 4: Jersey bulls on the next generation, each year, we're improving 312 00:17:14,520 --> 00:17:18,600 Speaker 4: genetics one hundred dollars per year. Prior to genomics that 313 00:17:18,680 --> 00:17:22,399 Speaker 4: number was like thirteen dollars. So this is like significant 314 00:17:23,080 --> 00:17:28,639 Speaker 4: improvement and using natural science and really doing a better job. 315 00:17:29,320 --> 00:17:34,440 Speaker 2: Sorry, I started laughing at the mastitis reference because it's hilarious. 316 00:17:34,840 --> 00:17:35,560 Speaker 2: It's hilarious. 317 00:17:35,680 --> 00:17:35,760 Speaker 1: No. 318 00:17:35,960 --> 00:17:39,520 Speaker 2: One of the old timey solutions for this in that 319 00:17:39,600 --> 00:17:43,439 Speaker 2: old book was using a bicycle pump to inflate the 320 00:17:43,480 --> 00:17:47,040 Speaker 2: cows utters. Huh, So I'm guessing people don't do that 321 00:17:47,160 --> 00:17:48,040 Speaker 2: so much anymore. 322 00:17:48,600 --> 00:17:52,040 Speaker 4: That is true, we do not do that any Okay. 323 00:17:52,280 --> 00:17:55,840 Speaker 2: What about you know you're talking about income that dairy 324 00:17:55,880 --> 00:17:59,360 Speaker 2: farms can generate. What's going on with the actual input 325 00:17:59,440 --> 00:18:03,639 Speaker 2: prices because it takes a lot, again from reading this book, 326 00:18:03,920 --> 00:18:06,240 Speaker 2: takes a lot of feed, a lot of hay, a 327 00:18:06,240 --> 00:18:10,160 Speaker 2: lot of grains to actually get these cows producing milk 328 00:18:10,280 --> 00:18:12,320 Speaker 2: and also up to size if you're going to sell 329 00:18:12,359 --> 00:18:12,920 Speaker 2: them for beef. 330 00:18:13,480 --> 00:18:16,600 Speaker 4: So the biggest costs on a dairy farm are feed 331 00:18:16,640 --> 00:18:20,000 Speaker 4: and labor. My wife's family was actually the first to 332 00:18:20,080 --> 00:18:22,760 Speaker 4: put robots in twenty five years ago in the United 333 00:18:22,760 --> 00:18:25,680 Speaker 4: States start milking their cow. So some farmers are using 334 00:18:25,760 --> 00:18:30,119 Speaker 4: robot technology, but that's not exactly mainstream at this point. 335 00:18:30,280 --> 00:18:34,040 Speaker 4: But look at the near term prices for feed soybean 336 00:18:34,240 --> 00:18:37,720 Speaker 4: and corn grain, certainly in LFELFA are some of the 337 00:18:37,720 --> 00:18:41,880 Speaker 4: core constituents. Those prices are down now that's a good 338 00:18:41,880 --> 00:18:44,200 Speaker 4: thing if you're a livestock producer, not a great thing 339 00:18:44,320 --> 00:18:47,760 Speaker 4: if you're a row crop farmer. The other thing, these days, 340 00:18:48,040 --> 00:18:51,720 Speaker 4: thirty seven percent of the US corn crop actually goes 341 00:18:51,760 --> 00:18:56,960 Speaker 4: to biofuels ethanol, so there's byproduct feeds there as well 342 00:18:57,000 --> 00:19:01,720 Speaker 4: as in the soybean space. We're making biodiesel and one 343 00:19:01,760 --> 00:19:04,359 Speaker 4: of the by products of that is soybean meals. So 344 00:19:04,400 --> 00:19:08,160 Speaker 4: the cow is a great recycler. In fact, that four 345 00:19:08,240 --> 00:19:11,160 Speaker 4: stomachs of the cow allow her to eat a lot 346 00:19:11,200 --> 00:19:14,000 Speaker 4: of by product feeds. And I've traveled I think I've 347 00:19:14,000 --> 00:19:16,320 Speaker 4: been to forty eight states covering the dairy industry. 348 00:19:16,560 --> 00:19:16,720 Speaker 2: You know. 349 00:19:16,760 --> 00:19:20,600 Speaker 4: I've seen tomatoes and carrots that didn't make human grade 350 00:19:20,920 --> 00:19:23,119 Speaker 4: food in California get fed to cows. I've been in 351 00:19:23,119 --> 00:19:27,119 Speaker 4: Ohio where reject jelly from smuckers has been fed to cows. 352 00:19:27,160 --> 00:19:30,639 Speaker 4: I've been to Canada where a farmer plows out driveway 353 00:19:30,800 --> 00:19:34,200 Speaker 4: next door of the plant that makes biscuits for McDonald's 354 00:19:34,200 --> 00:19:37,000 Speaker 4: and the reject biscuits go into what is a total 355 00:19:37,040 --> 00:19:40,000 Speaker 4: mixed ration a TMR, So it's a big food blender 356 00:19:40,480 --> 00:19:42,760 Speaker 4: mixes up all the food and the cows get a 357 00:19:43,080 --> 00:19:45,959 Speaker 4: blended diet. So it's kind of a remarkable story. 358 00:19:46,520 --> 00:19:49,840 Speaker 2: Honestly, a cow fed on McDonald's biscuit sounds pretty good. 359 00:19:49,880 --> 00:19:52,440 Speaker 3: So great. It sounds like a cow is just an 360 00:19:52,440 --> 00:19:57,560 Speaker 3: amazing machine. All of these discarded food products go in 361 00:19:58,200 --> 00:20:00,640 Speaker 3: that people that there are no other use because most 362 00:20:00,640 --> 00:20:02,880 Speaker 3: of us don't have four stomachs. And then every year 363 00:20:02,960 --> 00:20:05,520 Speaker 3: the cows get better at production, or you get better 364 00:20:05,760 --> 00:20:09,959 Speaker 3: at producing higher producing cows. Sounds like a great business. 365 00:20:10,400 --> 00:20:15,239 Speaker 4: It is remarkable. And that's why. Even though milk is 366 00:20:15,320 --> 00:20:18,959 Speaker 4: a product that is very consistent, every farm is different 367 00:20:19,000 --> 00:20:21,400 Speaker 4: and however they approach it. You know, there's very there's 368 00:20:21,400 --> 00:20:24,240 Speaker 4: similarities to it, but there's a lot of regional differences 369 00:20:24,240 --> 00:20:24,720 Speaker 4: as well. 370 00:20:25,119 --> 00:20:29,879 Speaker 2: Wait, okay, so cows might be amazing machines. Amazing machines. 371 00:20:29,960 --> 00:20:30,920 Speaker 3: Yeah, good machines. 372 00:20:31,000 --> 00:20:32,720 Speaker 2: Thank you. I had to get at least one pun 373 00:20:32,800 --> 00:20:38,480 Speaker 2: in there. But the dairy industry, we hear, has been challenged, right, 374 00:20:38,560 --> 00:20:41,000 Speaker 2: So consumption has been going down. I think I read 375 00:20:41,040 --> 00:20:44,080 Speaker 2: somewhere it's down forty percent in the US since nineteen 376 00:20:44,160 --> 00:20:49,960 Speaker 2: seventy five something like that. Profit margins are still pretty compressed. 377 00:20:50,440 --> 00:20:53,439 Speaker 2: Prices seem to be on basically it's a race to 378 00:20:53,520 --> 00:20:55,320 Speaker 2: the bottom, and so you've kind of seen a lot 379 00:20:55,359 --> 00:20:59,480 Speaker 2: of consolidation of the smaller farms into these big dairy conglomerates. 380 00:20:59,560 --> 00:21:00,879 Speaker 2: Is that this story there? 381 00:21:01,520 --> 00:21:04,560 Speaker 4: Well, I want to back up first though. Dairy consumption 382 00:21:04,720 --> 00:21:07,359 Speaker 4: is actually at the highest level it's been in forty years, 383 00:21:07,400 --> 00:21:10,040 Speaker 4: and we measure that. We have some really good USDA 384 00:21:10,160 --> 00:21:13,560 Speaker 4: data on that. But if you look at your term, 385 00:21:13,720 --> 00:21:16,080 Speaker 4: you know, we started out talking about fair Life, that's 386 00:21:16,800 --> 00:21:20,440 Speaker 4: Coca Cola's newest one billion dollar brand. If you look 387 00:21:20,480 --> 00:21:24,760 Speaker 4: at yogurt year over a year, it's up almost ten percent. 388 00:21:24,880 --> 00:21:27,600 Speaker 4: One of the big stories in the yogurt category is 389 00:21:28,520 --> 00:21:32,360 Speaker 4: certainly Shabani and I would have half of the sales 390 00:21:32,359 --> 00:21:35,320 Speaker 4: of yogurt these days are Greek yogurt, which are high 391 00:21:35,320 --> 00:21:39,440 Speaker 4: protein yogurt. Another category that's been exploding. It's we made 392 00:21:39,600 --> 00:21:43,600 Speaker 4: Grandma's cottage cheese hip again, and cottage cheese is up. 393 00:21:43,600 --> 00:21:46,200 Speaker 3: The cottage cheese is great. I always thought it always 394 00:21:46,240 --> 00:21:48,520 Speaker 3: feels like it should have a moment more like Greek yogurt, 395 00:21:48,560 --> 00:21:50,280 Speaker 3: and it's like, oh, this is cottage cheese is year? 396 00:21:50,400 --> 00:21:51,480 Speaker 3: Is it finally happening? 397 00:21:52,040 --> 00:21:54,960 Speaker 4: It is? And people can't make it fast enough. I 398 00:21:55,040 --> 00:22:00,000 Speaker 4: was actually talking to a dairy processor at Wisconsin Cheesemakers 399 00:22:00,520 --> 00:22:03,520 Speaker 4: just last week when it comes to yogurt, and one 400 00:22:03,560 --> 00:22:07,600 Speaker 4: of his customers said, can you get me more? And 401 00:22:07,640 --> 00:22:09,640 Speaker 4: he goes, well, not until next year, and he goes, well, 402 00:22:09,680 --> 00:22:12,560 Speaker 4: just send me whatever you can. It's those products are 403 00:22:12,680 --> 00:22:15,879 Speaker 4: very tight right now. And then cheese consumption is at 404 00:22:15,880 --> 00:22:19,439 Speaker 4: an all time high, actually at forty pounds per person 405 00:22:19,720 --> 00:22:22,439 Speaker 4: per year per capita. So those are some big growth areas. 406 00:22:22,640 --> 00:22:25,639 Speaker 4: What you're probably seeing Tracy, though, is the story on 407 00:22:25,720 --> 00:22:29,280 Speaker 4: fluid milk. In the nineteen seventies, the average American drank 408 00:22:29,440 --> 00:22:33,159 Speaker 4: thirty gallons a year, and now we're probably closer to 409 00:22:33,240 --> 00:22:37,760 Speaker 4: nineteen gallons. One of the things for fluid milk is 410 00:22:37,840 --> 00:22:42,479 Speaker 4: it's hitch to dry breakfast cereal compliments to one another, 411 00:22:42,920 --> 00:22:45,600 Speaker 4: and in fact, one third of all fluid milk it's 412 00:22:45,680 --> 00:22:48,560 Speaker 4: consumed on dry breakfast cereal, and that category has not 413 00:22:48,720 --> 00:22:51,680 Speaker 4: been going well. But then you flip over to these 414 00:22:52,000 --> 00:22:55,639 Speaker 4: the core power, which is really a high protein milkshake, 415 00:22:56,240 --> 00:22:59,719 Speaker 4: and that is not actually tracked in the fluid beverage 416 00:22:59,760 --> 00:23:05,040 Speaker 4: cat it's considered a different product. We have seen consolidation 417 00:23:05,160 --> 00:23:08,440 Speaker 4: in the dairy industry. There's fewer dairy farms each year. 418 00:23:08,480 --> 00:23:11,199 Speaker 4: But the interesting thing is I graduated college in nineteen 419 00:23:11,280 --> 00:23:15,040 Speaker 4: ninety five. While dairy farm numbers are down, the number 420 00:23:15,080 --> 00:23:19,760 Speaker 4: of dairy cows are the same, essentially about nine nine 421 00:23:19,800 --> 00:23:23,560 Speaker 4: point three million, but milk production from those cows is 422 00:23:23,640 --> 00:23:26,240 Speaker 4: up forty five percent during that time. It just speaks 423 00:23:26,280 --> 00:23:31,000 Speaker 4: to the efficiency of the dairy cow and what things 424 00:23:31,040 --> 00:23:33,720 Speaker 4: are taking place on a dairy farm. 425 00:23:33,720 --> 00:23:38,000 Speaker 3: My intuition is correct that within the liquid milks category, 426 00:23:38,359 --> 00:23:41,679 Speaker 3: we've sort of everything in society has become so polarized, 427 00:23:41,680 --> 00:23:45,400 Speaker 3: and everyone loves extremes, and we see it in politics, 428 00:23:45,440 --> 00:23:48,040 Speaker 3: we see it everywhere. This is well known people. No 429 00:23:48,080 --> 00:23:51,760 Speaker 3: one likes the middle ground anymore. Within the liquid milk category, 430 00:23:52,200 --> 00:23:55,040 Speaker 3: has everyone sort of has gone to the extreme ends. 431 00:23:55,119 --> 00:23:57,679 Speaker 3: They want the high fat milk or the skim leaving 432 00:23:57,720 --> 00:23:59,840 Speaker 3: that good old two percent milk the missing middle. 433 00:24:01,160 --> 00:24:05,240 Speaker 4: That's a very interesting question, Joe. What's taking place in 434 00:24:05,320 --> 00:24:09,720 Speaker 4: fluid milk? I three big trends protein so products like 435 00:24:09,760 --> 00:24:12,880 Speaker 4: fair Life. Another one is lactose free. A new milk 436 00:24:12,920 --> 00:24:15,919 Speaker 4: plant going up today will have membrane technology and to 437 00:24:15,960 --> 00:24:20,280 Speaker 4: do reverse osmosis. And about everybody on the new milks 438 00:24:20,280 --> 00:24:22,960 Speaker 4: are pulling out lactose. And you've got to remember about 439 00:24:22,960 --> 00:24:27,080 Speaker 4: one third of Americans are probably lactose and tolerant, about 440 00:24:27,080 --> 00:24:29,240 Speaker 4: one hundred and twenty million. So let's make a product 441 00:24:29,240 --> 00:24:33,800 Speaker 4: that they can enjoy. And then in the traditional milk categories, 442 00:24:33,800 --> 00:24:36,760 Speaker 4: you're absolutely right, whole milk is about the only one 443 00:24:36,880 --> 00:24:40,280 Speaker 4: that's growing right now, skim, which is basically fat free, 444 00:24:40,520 --> 00:24:43,320 Speaker 4: and the other percentages are down. You know, the dietary 445 00:24:43,359 --> 00:24:48,080 Speaker 4: guidelines for Americans that USDA and FDA do every five 446 00:24:48,200 --> 00:24:52,280 Speaker 4: years haven't really changed their guidance on fat. But there's 447 00:24:52,320 --> 00:24:55,040 Speaker 4: a lot of research out there that said the fats 448 00:24:55,480 --> 00:24:59,920 Speaker 4: saturated fats found in dairy and animal protein like beef 449 00:25:00,080 --> 00:25:03,640 Speaker 4: and pork and poultry, fish too, seafood, are actually good 450 00:25:03,720 --> 00:25:05,879 Speaker 4: for you. And so so there are people already voting 451 00:25:05,920 --> 00:25:07,840 Speaker 4: with their pocketbooks this category. 452 00:25:08,359 --> 00:25:11,639 Speaker 2: One thing we learned from previous episodes on I Guess 453 00:25:11,800 --> 00:25:14,760 Speaker 2: Trendy Drinks of the Moment is the importance of shelf 454 00:25:14,840 --> 00:25:17,280 Speaker 2: placement in grocery stores. And I have to admit, when 455 00:25:17,320 --> 00:25:20,040 Speaker 2: I'm buying milk at a grocery store, I basically just 456 00:25:20,080 --> 00:25:24,000 Speaker 2: buy what's at eye level. I do buy whole milk though, Yeah, 457 00:25:24,040 --> 00:25:29,480 Speaker 2: that's the preference. But how important is placement for a 458 00:25:29,520 --> 00:25:33,400 Speaker 2: product like milk, which generally would be considered a staple 459 00:25:33,640 --> 00:25:36,879 Speaker 2: and perhaps doesn't have as much brand loyalty as some 460 00:25:36,960 --> 00:25:37,920 Speaker 2: other things. 461 00:25:38,520 --> 00:25:41,520 Speaker 4: Yeah, well, there's a reason in the grocery aisle. If 462 00:25:41,560 --> 00:25:43,480 Speaker 4: you look at if you walk through your grocery island 463 00:25:43,520 --> 00:25:47,520 Speaker 4: next time after listening to this podcast, dairy is often 464 00:25:47,560 --> 00:25:50,280 Speaker 4: in the back of the store because dairy is in 465 00:25:50,560 --> 00:25:54,199 Speaker 4: like over ninety five percent of households, so it's a 466 00:25:54,440 --> 00:25:59,280 Speaker 4: routinely purchased product, and that's part of the placement situation. Now. 467 00:25:59,280 --> 00:26:01,520 Speaker 4: About five years years ago, a lot of the plant 468 00:26:01,600 --> 00:26:05,360 Speaker 4: based beverages were making inroads, and those sales are actually 469 00:26:05,400 --> 00:26:09,760 Speaker 4: down now. People consumers, in my intuition, are looking for 470 00:26:09,840 --> 00:26:13,000 Speaker 4: clean labels and they want to see ingredients that they 471 00:26:13,000 --> 00:26:15,919 Speaker 4: can understand, and I think that's been part of the 472 00:26:16,000 --> 00:26:19,040 Speaker 4: changing tide in a dairy space as well. And it's 473 00:26:19,040 --> 00:26:21,520 Speaker 4: interesting when you look at it and you think about 474 00:26:22,040 --> 00:26:25,160 Speaker 4: we're just past a ten year anniversary now of Coca 475 00:26:25,200 --> 00:26:29,240 Speaker 4: Cola and Select Milk and Fair Life Partnership. Now there's 476 00:26:29,280 --> 00:26:32,320 Speaker 4: others that are looking into that space, you know, PepsiCo 477 00:26:32,520 --> 00:26:35,520 Speaker 4: has announced that they're going to have their Propel water 478 00:26:35,600 --> 00:26:37,479 Speaker 4: brand is going to have a clear protein in it 479 00:26:37,760 --> 00:26:41,880 Speaker 4: that has twenty grams of protein. And they're also reformulating 480 00:26:41,880 --> 00:26:44,440 Speaker 4: their muscle milk and they're going to have dairy based 481 00:26:44,480 --> 00:26:47,720 Speaker 4: protein in that category as well. I think when you 482 00:26:47,760 --> 00:26:52,800 Speaker 4: go to places like Costco or Walmart, dairy is just 483 00:26:52,880 --> 00:26:56,280 Speaker 4: not found in the dairy aisle anymore. It's shelf stable. 484 00:26:56,320 --> 00:26:58,400 Speaker 4: It could be in the health food section, it could 485 00:26:58,440 --> 00:27:01,920 Speaker 4: be in you know, all nutrition sections and those kind 486 00:27:01,960 --> 00:27:06,040 Speaker 4: of things. And so it's expanding beyond its traditional role 487 00:27:06,160 --> 00:27:11,160 Speaker 4: because of these high protein beverages. And also if you're 488 00:27:11,200 --> 00:27:13,679 Speaker 4: looking for calcium, some of these products are you know, 489 00:27:13,760 --> 00:27:15,880 Speaker 4: and one serving can get you fifty percent of that 490 00:27:16,000 --> 00:27:16,440 Speaker 4: as well. 491 00:27:32,320 --> 00:27:36,640 Speaker 3: The way these trends change when it comes to macro nutrients, 492 00:27:36,680 --> 00:27:38,840 Speaker 3: you know, someone I saw a tweet or something and 493 00:27:38,840 --> 00:27:40,920 Speaker 3: there's like a fiber is going to be the new protein. 494 00:27:41,000 --> 00:27:42,720 Speaker 3: That's going to be the big thing everyone wants. 495 00:27:42,760 --> 00:27:46,199 Speaker 2: We should encourage fiber. We should probably we're useful than 496 00:27:46,440 --> 00:27:48,800 Speaker 2: I mean, Americans consume a lot of protein already. I 497 00:27:48,800 --> 00:27:49,880 Speaker 2: don't know why we need more. 498 00:27:50,280 --> 00:27:53,880 Speaker 3: Apparently we need more, But does the industry, Like how 499 00:27:53,920 --> 00:27:56,960 Speaker 3: long does it take the industry to say, you know what, 500 00:27:57,080 --> 00:27:59,880 Speaker 3: this is a durable trend We're actually going to invest 501 00:28:00,240 --> 00:28:03,720 Speaker 3: in the processing space for this, because there's got to 502 00:28:03,760 --> 00:28:08,080 Speaker 3: be some risk. Consumers are very fickle Internet health influencers. 503 00:28:08,119 --> 00:28:10,800 Speaker 3: They may be onto something else by next year, like no, 504 00:28:10,880 --> 00:28:13,720 Speaker 3: you got to get whatever, you go back to low fat, 505 00:28:13,760 --> 00:28:17,280 Speaker 3: that's the new hot thing, etc. How do producers think 506 00:28:17,320 --> 00:28:22,440 Speaker 3: about their capital allocation budget when it comes to playing 507 00:28:22,480 --> 00:28:24,520 Speaker 3: on new trends within consumption. 508 00:28:25,080 --> 00:28:30,359 Speaker 4: Well that's a large and big question. Yeah, and you 509 00:28:30,440 --> 00:28:32,600 Speaker 4: really look at the long term trends and where things 510 00:28:32,640 --> 00:28:35,119 Speaker 4: are going. Tracy's absolutely right. If you read some of 511 00:28:35,160 --> 00:28:38,000 Speaker 4: the research. Fiber probably will be the next follow up 512 00:28:38,040 --> 00:28:40,840 Speaker 4: the protein. I hear people talking about how do I 513 00:28:40,880 --> 00:28:43,040 Speaker 4: put a protein drink out there with fiber in it 514 00:28:43,360 --> 00:28:46,640 Speaker 4: and bundle the two together. You know, when I was 515 00:28:47,160 --> 00:28:49,400 Speaker 4: going to grade school, there was a cheese out there 516 00:28:49,400 --> 00:28:52,800 Speaker 4: called Mazzarella in the late mid nineteen seventies that was 517 00:28:52,840 --> 00:28:56,600 Speaker 4: only at a couple pounds per capita consumption, and now 518 00:28:56,680 --> 00:29:02,280 Speaker 4: it's the most consumed cheese, largely because of its relationship 519 00:29:02,320 --> 00:29:06,440 Speaker 4: with pizza. So these mega trends can reshape categories. You 520 00:29:06,440 --> 00:29:09,080 Speaker 4: know in the nineteen well, let's back up even a 521 00:29:09,120 --> 00:29:12,320 Speaker 4: little further. There was in the nineteen sixties there was 522 00:29:12,360 --> 00:29:16,120 Speaker 4: an organization called the Wisconsin Feeder Pig Cooperative. And how 523 00:29:16,160 --> 00:29:18,360 Speaker 4: in the heck would that be formed in Wisconsin when 524 00:29:18,360 --> 00:29:21,720 Speaker 4: I was the largest hog state. But what was happening? 525 00:29:22,000 --> 00:29:25,560 Speaker 4: We didn't have the technology going back to kurds and 526 00:29:25,560 --> 00:29:28,400 Speaker 4: Way making cheese and why we could make cheese, but 527 00:29:28,600 --> 00:29:32,520 Speaker 4: the byproduct was way, and in Way was protein, the 528 00:29:32,560 --> 00:29:36,960 Speaker 4: most complete amino acid known humanity. But cheesemakers were just 529 00:29:36,960 --> 00:29:39,000 Speaker 4: set in a farmer's home with it do something. Some 530 00:29:39,040 --> 00:29:41,280 Speaker 4: would spread it on fields, some would feed it the 531 00:29:41,320 --> 00:29:44,000 Speaker 4: baby pigs. Well, we learned the baby pigs would grow 532 00:29:44,040 --> 00:29:47,520 Speaker 4: so fast, so that Wisconsin Feeder Pig co Op started 533 00:29:47,960 --> 00:29:50,360 Speaker 4: shipping two to three million feeder pigs that I want 534 00:29:50,400 --> 00:29:52,920 Speaker 4: to be finished with porn and soybeans. Well, now we 535 00:29:52,960 --> 00:29:58,000 Speaker 4: can use these big dryers just using drying and harvest 536 00:29:58,040 --> 00:30:01,360 Speaker 4: that way in a lot cheese plants, not a lot. 537 00:30:01,680 --> 00:30:03,880 Speaker 4: All the new cheese plants are really going in with 538 00:30:03,960 --> 00:30:06,479 Speaker 4: a business model not only to make cheese, but to 539 00:30:06,560 --> 00:30:10,520 Speaker 4: capture the way weigh. Protein isolates are selling roughly at 540 00:30:10,520 --> 00:30:13,400 Speaker 4: ten dollars a pound, which is record high. And so 541 00:30:13,480 --> 00:30:16,280 Speaker 4: these business models that are taking place and the research 542 00:30:16,360 --> 00:30:19,400 Speaker 4: to build these eleven billion dollars A new plant investment 543 00:30:19,960 --> 00:30:22,920 Speaker 4: is really how do we make more out of milk? 544 00:30:23,440 --> 00:30:27,720 Speaker 4: I think you know collagens and colostrum, and now a 545 00:30:27,800 --> 00:30:30,280 Speaker 4: new one is lacto fare in, which is one of 546 00:30:30,280 --> 00:30:34,440 Speaker 4: the milk components that really helps reduce inflammation. There's some 547 00:30:34,480 --> 00:30:37,600 Speaker 4: research out there, you know, depending on the number you see, 548 00:30:37,840 --> 00:30:40,959 Speaker 4: there may be five thousand there, maybe six three hundred 549 00:30:41,000 --> 00:30:44,480 Speaker 4: somewhere in their unique molecules and milk. And we are 550 00:30:44,720 --> 00:30:48,080 Speaker 4: just beginning to research that, learning what parts we can 551 00:30:48,120 --> 00:30:52,040 Speaker 4: pull apart and help humans. And there's going to be 552 00:30:52,080 --> 00:30:54,480 Speaker 4: more and more in that space here in the coming years. 553 00:30:54,600 --> 00:30:58,200 Speaker 4: And that's all part of that investment strategy. What's going 554 00:30:58,240 --> 00:31:00,880 Speaker 4: to take place in the plant years away from some 555 00:31:01,000 --> 00:31:01,200 Speaker 4: of that. 556 00:31:01,320 --> 00:31:04,360 Speaker 2: But so, one thing I know about farmers is they're 557 00:31:04,360 --> 00:31:08,120 Speaker 2: always complaining about something and no judgment there. I'm always 558 00:31:08,120 --> 00:31:10,719 Speaker 2: complaining about something too. Joe can attest to this, But 559 00:31:11,080 --> 00:31:14,200 Speaker 2: what are the current complaints that you're hearing the most 560 00:31:14,200 --> 00:31:15,320 Speaker 2: from dairy farms. 561 00:31:15,760 --> 00:31:19,080 Speaker 4: Well, right now, near term, ninety percent of milk in 562 00:31:19,080 --> 00:31:22,720 Speaker 4: the United States is priced on multiple component pricing. Dairy 563 00:31:22,720 --> 00:31:26,120 Speaker 4: farmers would see an mcpiece, so the ninety percent of 564 00:31:26,120 --> 00:31:29,840 Speaker 4: that pricing is butterfat and protein. Well, if you look 565 00:31:29,840 --> 00:31:33,560 Speaker 4: at protein and butterfat is two nascars on the racetrack. 566 00:31:33,600 --> 00:31:37,480 Speaker 4: From two thousand to two thousand and fourteen, the protein 567 00:31:37,720 --> 00:31:42,160 Speaker 4: nascar always won, and then as consumers started demanding more fat, 568 00:31:42,200 --> 00:31:45,680 Speaker 4: and remember the flavor is in the fat, butterfat won 569 00:31:45,840 --> 00:31:48,760 Speaker 4: eight of the last ten years. But right now we've 570 00:31:48,800 --> 00:31:52,520 Speaker 4: made so much butterfat that butter prices are down, not 571 00:31:52,560 --> 00:31:55,160 Speaker 4: only in the US but worldwide. So that's changed the 572 00:31:55,200 --> 00:31:57,240 Speaker 4: milk checks. So that would be if you went to 573 00:31:57,280 --> 00:31:59,920 Speaker 4: a dairy meeting right now to be like, that's what's 574 00:32:00,240 --> 00:32:02,960 Speaker 4: milk prices down here in the last sixty days. That's 575 00:32:03,000 --> 00:32:06,800 Speaker 4: one issue that is near on top of mind. The 576 00:32:06,920 --> 00:32:10,400 Speaker 4: other thing would be labor. Of course, it takes a 577 00:32:10,440 --> 00:32:14,720 Speaker 4: lot of people to run a dairy farm, and the 578 00:32:14,840 --> 00:32:18,560 Speaker 4: US dairy industry and a lot of farmers Americans don't 579 00:32:18,680 --> 00:32:21,400 Speaker 4: like doing dirty jobs when it comes down to it. 580 00:32:22,240 --> 00:32:25,640 Speaker 4: On weekends, I work on our family farm. But these 581 00:32:25,720 --> 00:32:28,840 Speaker 4: are still just like building homes. This is very hands 582 00:32:28,880 --> 00:32:32,200 Speaker 4: on process here and that would be another issue that 583 00:32:32,360 --> 00:32:35,800 Speaker 4: would be top of mind dairy farmers, and you'll always 584 00:32:35,840 --> 00:32:38,800 Speaker 4: get a good conversation on the weather. Farmers in general. 585 00:32:38,840 --> 00:32:41,320 Speaker 4: Are we always beholding to Mother Nature? 586 00:32:42,440 --> 00:32:46,200 Speaker 3: It's interesting you didn't say trade, but partly like I 587 00:32:46,240 --> 00:32:51,680 Speaker 3: get the impression that there's always a million little lawsuits 588 00:32:51,720 --> 00:32:55,280 Speaker 3: going on between Wisconsin farmers and their friends on the 589 00:32:55,320 --> 00:32:58,520 Speaker 3: other side of the border about some rules of origin 590 00:32:58,720 --> 00:33:01,320 Speaker 3: and they're not buying enough this. It seems like this 591 00:33:01,400 --> 00:33:04,680 Speaker 3: is one of those things that transcends every administration. They 592 00:33:04,720 --> 00:33:06,720 Speaker 3: try to hammer it out, but they're always like sort 593 00:33:06,760 --> 00:33:09,440 Speaker 3: of arguing over details. You're not fulfilling that as you're 594 00:33:09,440 --> 00:33:11,560 Speaker 3: supposed to let in this mini galllenge. You didn't what 595 00:33:11,640 --> 00:33:17,080 Speaker 3: are the core persistent issues that American dairy farmers feel 596 00:33:17,240 --> 00:33:21,520 Speaker 3: is unfair or unideal about I guess our dairy trading 597 00:33:21,600 --> 00:33:22,680 Speaker 3: relationship with Canada. 598 00:33:23,800 --> 00:33:26,120 Speaker 4: Joe. That's a great point, and I should have put 599 00:33:26,120 --> 00:33:29,080 Speaker 4: it in my list. Trade is top of mind. In 600 00:33:29,200 --> 00:33:33,719 Speaker 4: nineteen ninety five, the US was essentially a non player 601 00:33:33,840 --> 00:33:37,760 Speaker 4: in the global dairy exports, and that's the year that 602 00:33:37,880 --> 00:33:41,000 Speaker 4: NAFTA came about. Actually, NAFTA came about nineteen ninety four, 603 00:33:41,400 --> 00:33:44,440 Speaker 4: and then nineteen ninety five the US Dairy Export Council 604 00:33:44,640 --> 00:33:48,200 Speaker 4: was formed. And these days about seventeen percent of the 605 00:33:48,240 --> 00:33:52,080 Speaker 4: US milk supply, or one out of seven tankers of milk, 606 00:33:52,080 --> 00:33:55,719 Speaker 4: are actually exported as either dairy products or ingredients around 607 00:33:55,720 --> 00:33:59,760 Speaker 4: the world, so it's very important to dairy. We're actually 608 00:33:59,800 --> 00:34:03,840 Speaker 4: having a strong export year, but largely because US dairy 609 00:34:03,840 --> 00:34:08,879 Speaker 4: products and ingredients were lower than the other two major competitors. 610 00:34:08,880 --> 00:34:12,400 Speaker 4: So the EU the twenty seven countries of the European Union, 611 00:34:12,480 --> 00:34:16,480 Speaker 4: are the world's largest dairy exporters. They roughly export twenty 612 00:34:16,520 --> 00:34:19,360 Speaker 4: percent of their milk production. Then the small and mighty 613 00:34:19,480 --> 00:34:22,879 Speaker 4: nation of New Zealand is the number two export They 614 00:34:22,880 --> 00:34:26,719 Speaker 4: have five million cows and five million people, roughly in 615 00:34:26,719 --> 00:34:29,600 Speaker 4: the size of Minnesota and Wisconsin, so one third of 616 00:34:29,600 --> 00:34:33,080 Speaker 4: their gross domestic product comes from dairy. If you read 617 00:34:33,080 --> 00:34:36,560 Speaker 4: Auckland paper, you would hear dairy at least weekly. And 618 00:34:36,600 --> 00:34:41,359 Speaker 4: then comes to US. The US is number one export 619 00:34:41,520 --> 00:34:44,680 Speaker 4: customer is our friends south of the border in Mexico. 620 00:34:44,840 --> 00:34:48,040 Speaker 4: So the US is about a nine billion dollar export 621 00:34:48,120 --> 00:34:52,000 Speaker 4: market on dairy. Mexico is at about two billion of that. 622 00:34:52,520 --> 00:34:57,840 Speaker 4: Now Canada is a discussion to itself. Canada's milk supply 623 00:34:58,440 --> 00:35:02,000 Speaker 4: is largely governed by quota system, so dairy farmers up 624 00:35:02,040 --> 00:35:05,560 Speaker 4: there purchased the right to sell milk, and in fact, 625 00:35:06,160 --> 00:35:09,839 Speaker 4: on a Canadian dairy farm, the quota is worth more 626 00:35:09,880 --> 00:35:12,319 Speaker 4: than everything else. It's worth more than the cow's it's 627 00:35:12,360 --> 00:35:14,200 Speaker 4: worth more than the land, it's worth more in the 628 00:35:14,239 --> 00:35:16,960 Speaker 4: equipment to make that work. You can have a lot 629 00:35:17,000 --> 00:35:19,480 Speaker 4: of imports come in, so there are some things that 630 00:35:19,520 --> 00:35:22,239 Speaker 4: we send north to the border, butter being one of them. 631 00:35:22,600 --> 00:35:25,560 Speaker 4: But when you hear the headlines right now, of course 632 00:35:25,840 --> 00:35:27,920 Speaker 4: there are other things that were agreed upon in the 633 00:35:27,920 --> 00:35:31,920 Speaker 4: trade agreement the last time, the US Mexico Canada trade agreement. 634 00:35:32,239 --> 00:35:35,080 Speaker 4: In one of those largely centers on protein. 635 00:35:35,200 --> 00:35:40,680 Speaker 2: Surprisingly, that's interesting. So if you look into your crystal 636 00:35:40,680 --> 00:35:44,239 Speaker 2: ball for the future in the next ten years, look 637 00:35:44,280 --> 00:35:47,200 Speaker 2: at the dairy industry, what's going to be most important 638 00:35:47,239 --> 00:35:50,840 Speaker 2: in terms of the success of a dairy farm or profitability? 639 00:35:50,880 --> 00:35:55,640 Speaker 2: Is it technology? Is it scale and consolidation, is it 640 00:35:55,719 --> 00:36:00,640 Speaker 2: perhaps branding and specialization or efficiencies in a way you're 641 00:36:00,760 --> 00:36:05,799 Speaker 2: breaking down milk into all these various products, or all 642 00:36:05,840 --> 00:36:06,360 Speaker 2: of the above. 643 00:36:07,320 --> 00:36:09,399 Speaker 4: I think that's a two part question. Because you got 644 00:36:09,440 --> 00:36:11,759 Speaker 4: the dairy farmers or dairy producers, and then you have 645 00:36:11,840 --> 00:36:14,879 Speaker 4: the dairy processors. We're going to have to use more 646 00:36:14,880 --> 00:36:17,640 Speaker 4: and more technology on the dairy farms. I think, coming 647 00:36:17,680 --> 00:36:21,360 Speaker 4: back to the cow, when dairy farmers invest in genetics, 648 00:36:21,800 --> 00:36:25,000 Speaker 4: those genetics are additive and they're so important and if 649 00:36:25,000 --> 00:36:28,640 Speaker 4: this protein booms continues, genetics is one of the only 650 00:36:28,680 --> 00:36:30,360 Speaker 4: ways to improve it. We don't have a lot of 651 00:36:30,600 --> 00:36:34,520 Speaker 4: feeding practices in the toolbox in that regard, certainly AI 652 00:36:34,680 --> 00:36:37,600 Speaker 4: and technology and I'm going to say artificial intelligence here 653 00:36:37,640 --> 00:36:41,120 Speaker 4: for the farmers out there, listening will be very crucial 654 00:36:41,160 --> 00:36:44,120 Speaker 4: into this, and we're going to have to use more 655 00:36:44,160 --> 00:36:47,840 Speaker 4: technology and find ways to use robotic technology. We're already 656 00:36:47,920 --> 00:36:50,560 Speaker 4: doing some of that and rotary milking parlors. So a 657 00:36:50,680 --> 00:36:52,719 Speaker 4: rotary parlor would be like a merry go round that 658 00:36:52,760 --> 00:36:55,719 Speaker 4: the cows go on. But when we do milking preparation 659 00:36:55,880 --> 00:36:58,719 Speaker 4: right now, some robots are putting on teat dip or 660 00:36:58,760 --> 00:37:02,280 Speaker 4: a sanitizer before we milk that cow, which is important. 661 00:37:02,480 --> 00:37:05,600 Speaker 4: So those are some areas the space, and a lot 662 00:37:05,600 --> 00:37:09,280 Speaker 4: of dairy farmers are also crop farmers, especially growing corn 663 00:37:09,400 --> 00:37:14,080 Speaker 4: silage where alfalfa would be two big staples, and you know, 664 00:37:14,120 --> 00:37:17,480 Speaker 4: the whole space on farm equipment would be another area. 665 00:37:17,760 --> 00:37:20,480 Speaker 4: When it comes to the processing plants. You know, some 666 00:37:20,520 --> 00:37:23,080 Speaker 4: of these new and modern processing plants have a lot 667 00:37:23,120 --> 00:37:26,319 Speaker 4: of stainless steel and those costs are going up. But 668 00:37:26,400 --> 00:37:31,279 Speaker 4: it's that investment in technology, investment in it. You know, 669 00:37:31,600 --> 00:37:34,279 Speaker 4: all this ultra filtered milk that we've been talking about too. 670 00:37:34,760 --> 00:37:36,560 Speaker 4: You know, I was just in a plant. There's almost 671 00:37:36,760 --> 00:37:40,399 Speaker 4: nine thousand filters in there. It's very it's a very 672 00:37:40,600 --> 00:37:44,000 Speaker 4: clean and good process, but it takes a lot of investment. 673 00:37:44,640 --> 00:37:47,680 Speaker 3: It's materials heavy, materials heavy environment. 674 00:37:48,040 --> 00:37:48,879 Speaker 4: Yes, it is. 675 00:37:49,280 --> 00:37:51,880 Speaker 2: All right, Corey. Thank you so much for coming on 676 00:37:51,920 --> 00:37:53,479 Speaker 2: all thoughts that we're going to have to leave it there. 677 00:37:53,520 --> 00:37:56,120 Speaker 2: But that was so much fun. Love talking about milk clicking. 678 00:37:56,200 --> 00:37:58,520 Speaker 3: Yeah, that was fantastic. I learned a bunch of stuff. 679 00:37:58,560 --> 00:37:59,560 Speaker 4: Thank you, Joe and Tracy. 680 00:38:00,080 --> 00:38:02,600 Speaker 2: I will say after that conversation, I'm not I'm not 681 00:38:02,719 --> 00:38:05,840 Speaker 2: craving liquid milk, but I'm craving I'm craving cheese. 682 00:38:05,960 --> 00:38:09,080 Speaker 3: Yeah, I'm craving cheese right now. And butter like a 683 00:38:09,160 --> 00:38:11,319 Speaker 3: nice piece I want a piece of bread, would just 684 00:38:11,320 --> 00:38:14,160 Speaker 3: like go crazy with the butter, butter and salt. Yeah, 685 00:38:14,200 --> 00:38:14,960 Speaker 3: butter and salt. 686 00:38:15,080 --> 00:38:17,320 Speaker 2: I love that it's lunchtime. 687 00:38:17,560 --> 00:38:19,040 Speaker 3: Yeah, I know, we have a yeah, right. 688 00:38:31,360 --> 00:38:33,440 Speaker 2: I really did learn a lot conversation. 689 00:38:33,719 --> 00:38:36,880 Speaker 3: No, that was really helpful. This is one of those markets, 690 00:38:36,920 --> 00:38:40,960 Speaker 3: like many egg markets, I think, where there's clearly a 691 00:38:40,960 --> 00:38:46,360 Speaker 3: heavy market component and clearly a heavy regulatory component as well, 692 00:38:46,840 --> 00:38:48,560 Speaker 3: and so I think those are some of the hardest 693 00:38:48,600 --> 00:38:50,960 Speaker 3: for me to wrap my head around. I didn't realize, 694 00:38:50,960 --> 00:38:53,520 Speaker 3: for example, that in Canada that you buy the right 695 00:38:53,600 --> 00:38:56,120 Speaker 3: to sell dairy, and so that just that right to 696 00:38:56,160 --> 00:38:59,000 Speaker 3: sell into the market becomes a very valuable asset in 697 00:38:59,080 --> 00:39:01,360 Speaker 3: its own right. I thought that was a great conversation. 698 00:39:01,520 --> 00:39:04,920 Speaker 3: I'm also fascinated by the fact that maybe it's just 699 00:39:05,000 --> 00:39:07,040 Speaker 3: day one in terms of learning about all of the 700 00:39:07,160 --> 00:39:11,680 Speaker 3: useful molecules in that can be separated out and have 701 00:39:11,800 --> 00:39:14,160 Speaker 3: some He mentioned a few that I had never heard of. 702 00:39:14,520 --> 00:39:17,279 Speaker 3: But the idea that there's just more science there to 703 00:39:17,320 --> 00:39:19,480 Speaker 3: be done on learning what is milk or what is 704 00:39:19,520 --> 00:39:21,520 Speaker 3: in it that could be a value A lot of 705 00:39:21,520 --> 00:39:22,520 Speaker 3: interesting stuff there. 706 00:39:22,440 --> 00:39:25,439 Speaker 2: No the efficiencies and the values you can ring out 707 00:39:25,480 --> 00:39:28,920 Speaker 2: of a single product. The cow kind of amazing. 708 00:39:29,160 --> 00:39:29,560 Speaker 3: Yeah. 709 00:39:29,600 --> 00:39:32,640 Speaker 2: So yeah, again, I'm going to go back to that 710 00:39:32,719 --> 00:39:34,759 Speaker 2: book just because it's fresh in my mind. But one 711 00:39:34,800 --> 00:39:36,399 Speaker 2: of the things that was saying is if you feed 712 00:39:36,400 --> 00:39:39,920 Speaker 2: the cow is a bunch of corn, then they spit 713 00:39:39,960 --> 00:39:43,600 Speaker 2: out corn kernels in their manure. Oh and you can 714 00:39:43,640 --> 00:39:48,120 Speaker 2: apparently actually feed pigs on the half eaten corn kernels. 715 00:39:48,200 --> 00:39:50,000 Speaker 3: That's truly discussion in the manure. 716 00:39:49,719 --> 00:39:51,640 Speaker 2: I know. But it's efficient, Joe. 717 00:39:52,280 --> 00:39:55,800 Speaker 3: It's interesting. I think, what do you call it? Mixed something, 718 00:39:55,880 --> 00:39:57,480 Speaker 3: something that you could just like, oh, we're going to 719 00:39:57,560 --> 00:39:59,560 Speaker 3: have some old biscuits and we're going to put some 720 00:39:59,600 --> 00:40:02,840 Speaker 3: tomatoes together, and it doesn't matter. The cow's stomach is 721 00:40:02,880 --> 00:40:04,640 Speaker 3: going to be able to digest it like that is 722 00:40:04,680 --> 00:40:07,520 Speaker 3: a really incredible machine, and it is a good reminder 723 00:40:07,560 --> 00:40:11,400 Speaker 3: of how extraordinary nature and biology are from efficiency standpoint. 724 00:40:11,520 --> 00:40:15,080 Speaker 3: That if you wanted to build a machine that could 725 00:40:15,160 --> 00:40:19,240 Speaker 3: separate do the equivalent of four different stomachs, et cetera, 726 00:40:19,440 --> 00:40:23,440 Speaker 3: it would be such an extraordinarily costly machine. And nature 727 00:40:23,520 --> 00:40:26,440 Speaker 3: has solved this for us via hundreds of millions of 728 00:40:26,520 --> 00:40:30,360 Speaker 3: years of evolution. It's just a very fascinating thing to 729 00:40:30,600 --> 00:40:33,440 Speaker 3: think about some of these how efficient these processes have 730 00:40:33,520 --> 00:40:35,960 Speaker 3: gotten and then what scientists can do when they learn 731 00:40:36,000 --> 00:40:36,879 Speaker 3: more about how they work. 732 00:40:37,200 --> 00:40:40,040 Speaker 2: The cows are efficient themselves. I'm still amazed at some 733 00:40:40,080 --> 00:40:42,960 Speaker 2: of the labor inputs that go into this. So, you know, 734 00:40:43,680 --> 00:40:46,600 Speaker 2: cows producing milk have to produce calves, so you have 735 00:40:46,680 --> 00:40:50,520 Speaker 2: to inseminate them. You have to take the calves away 736 00:40:50,880 --> 00:40:54,240 Speaker 2: from the cows so that the cows will produce milk 737 00:40:54,320 --> 00:40:56,359 Speaker 2: that you can sell. And then you have to teach 738 00:40:56,400 --> 00:40:59,759 Speaker 2: the cows to like drink from either a bucket or 739 00:40:59,800 --> 00:41:03,480 Speaker 2: an artificial utter or whatever. There's a lot you have 740 00:41:03,520 --> 00:41:03,799 Speaker 2: to do. 741 00:41:03,920 --> 00:41:06,680 Speaker 3: I'm not sure. I may have mentioned it once or twice. 742 00:41:06,719 --> 00:41:09,440 Speaker 3: When I was growing up in the Midwest, my grandmother, 743 00:41:09,760 --> 00:41:13,040 Speaker 3: her husband was a dairy and fruit farmer in the 744 00:41:13,080 --> 00:41:16,279 Speaker 3: middle of Michigan, and he was very big in the 745 00:41:16,320 --> 00:41:19,520 Speaker 3: local sort of dairy board or whatever it was, et cetera. 746 00:41:19,880 --> 00:41:21,800 Speaker 3: And when I was younger, I thought that was so boring, 747 00:41:21,920 --> 00:41:23,960 Speaker 3: And now I'm like, it's so many I wish you 748 00:41:24,040 --> 00:41:26,000 Speaker 3: were still around. Yeah, I wish I have so many. 749 00:41:26,120 --> 00:41:28,200 Speaker 3: Quite like, if I hear around these days, it'd be 750 00:41:28,200 --> 00:41:30,040 Speaker 3: one of those things where I would like visit him 751 00:41:30,040 --> 00:41:31,920 Speaker 3: and I would like ask him two hours of questions 752 00:41:31,920 --> 00:41:34,200 Speaker 3: about the dairy. You have him on odd Lots like 753 00:41:34,239 --> 00:41:36,440 Speaker 3: one of those people who will answer any of my questions. 754 00:41:36,560 --> 00:41:38,399 Speaker 3: She would have. He was a very patient, good guy. 755 00:41:38,760 --> 00:41:41,160 Speaker 3: And I always feel like, man, I wish a little 756 00:41:41,160 --> 00:41:44,360 Speaker 3: bit older whatever, because that would have been a very 757 00:41:44,400 --> 00:41:45,000 Speaker 3: good resource. 758 00:41:45,120 --> 00:41:47,400 Speaker 2: Yeah. I feel the same way. My granddad was a 759 00:41:47,480 --> 00:41:51,399 Speaker 2: cattle rancher in Texas, and he died before I got 760 00:41:51,400 --> 00:41:53,279 Speaker 2: a chance to ask him all these questions. All I 761 00:41:53,320 --> 00:41:56,840 Speaker 2: remember from his cow industry is that he used to 762 00:41:56,960 --> 00:41:58,880 Speaker 2: name some of the cows after me and my cousin, 763 00:41:59,000 --> 00:42:02,479 Speaker 2: yeah them, and he'd tell us like, Tracy number three 764 00:42:02,719 --> 00:42:04,799 Speaker 2: is no longer with us, So there we go. 765 00:42:04,920 --> 00:42:05,759 Speaker 3: That's fun, all right. 766 00:42:05,800 --> 00:42:06,520 Speaker 2: Shall we leave it there? 767 00:42:06,560 --> 00:42:07,279 Speaker 3: Let's leave it there. 768 00:42:07,520 --> 00:42:09,840 Speaker 2: This has been another episode of the odd Bots podcast. 769 00:42:10,000 --> 00:42:12,640 Speaker 2: I'm Tracy Alloway. You can follow me at Tracy. 770 00:42:12,360 --> 00:42:15,080 Speaker 3: Alloway and I'm Jill Wisenthal. You can follow me at 771 00:42:15,160 --> 00:42:18,960 Speaker 3: the Stalwart. Follow our producers Carbon Rodriguez at Carmen armand 772 00:42:19,040 --> 00:42:21,960 Speaker 3: dash O Bennett at Dashbot and kill Brooks at Kilbrooks. 773 00:42:22,200 --> 00:42:24,800 Speaker 3: From our Oddlows content, go to Bloomberg dot com slash 774 00:42:24,800 --> 00:42:27,040 Speaker 3: odd Lots, where the daily newsletter and all of our 775 00:42:27,080 --> 00:42:29,520 Speaker 3: episodes and you can chat about all of these topics 776 00:42:29,560 --> 00:42:33,520 Speaker 3: twenty four seven in our discord discord dot gg slash 777 00:42:33,520 --> 00:42:34,359 Speaker 3: odd lots. 778 00:42:34,320 --> 00:42:36,560 Speaker 2: And if you enjoy adlots, If you like it when 779 00:42:36,600 --> 00:42:39,560 Speaker 2: we do these agricultural episodes, then please leave us a 780 00:42:39,600 --> 00:42:43,120 Speaker 2: positive review on your favorite podcast platform. And remember, if 781 00:42:43,120 --> 00:42:45,879 Speaker 2: you are a Bloomberg subscriber, you can listen to all 782 00:42:45,920 --> 00:42:48,799 Speaker 2: of our episodes absolutely ad free. All you need to 783 00:42:48,840 --> 00:42:51,520 Speaker 2: do is find the Bloomberg channel on Apple Podcasts and 784 00:42:51,600 --> 00:43:10,960 Speaker 2: follow the instructions there. Thanks for listening in