free advice is worth what you pay for it

November 26, 2008

Melody

Here is a thumbnail sketch of what we've learned in a year and a half

A cow on a mainly grass-fed diet will produce an average of three gallons of milk per day. One gallon is four quarts. A quart is 32 fluid ounces. A liter is 39.36 fluid ounces. Forget the metric system and use American measures. The same people who are tuned-in to real food are intuitively opposed to globalization, which was what the metric system was created for ; choose you this day whom you will serve

On the premise that a household will use a gallon of milk a week, then one cow will supply 21 households. So it takes a group of about 20 shareholders to underwrite one cow in production. Remember ; that cow will be dry for two months a year. Two cows in milk will pay the overhead and provide half a day's wage for someone who will do the stoop labour. Six cows in milk is a full time job at industrial wages. By the time you have 20 cows in milk, you should be making enough to be able to pay for a piece of property. That model suits two families who will share the work

we have determined that the Agister (farmer) has to get $5 per quart in order to make it worth her while. That amount is what the shareholder winds up paying by the time the REAL MILK is delivered to the depots in Vancouver, 80 miles from the farm. It is a major mistake to try to provide the REAL MILK at a price too low. I spoke with a lady in a small town in BC who's selling milk for $2.50 a liter. She lives on a farm which is her family property, paid for. I told her that she cannot even produce it for that price, all things considered. So she's subsidizing her customers. If she wants to do that as a labour of love, more power to her. But if you want to have the raw milk dairy go as a long term proposition, everyone has to get paid properly. Otherwise it's only a matter of time before it goes out of business as its capital dwindles because of inflation

We are using the figure of $7 per day, as the cost of keeping a cow in the Lower Mainland ... some of the best dairying country in the world. I believe that figure is actually too low, by the time we get more data. The price to keep a cow in milk in Calgary, may be quite different. I expect that - taken year-round - it would be significantly higher there. So the REAL MILK has to come in at a higher price, too

The beginning farmer ought to be aware that while some cows are in milk, others have to be kept around not producing. At the moment we have 14 cows milking, with five pregnant to come on stream next spring, when the current ones dry off. As well, we are constantly on the look-out for cows for sale, and selling-off cows which don't fit into our herd. The game of dairying requires juggling demand / supply, with the natural cycles of the cows, the availability of replacements, the weather … you name it. It is not for the faint of heart … people who do it, do it because they love it. The last reason someone should get into it is, because, at the moment it may look like it's very profitable!

Lately we are seeing a movement for the 100 mile diet because that's about the limit where someone can produce a foodstuff, drive it to market in a city where the food will command a worthwhile price, then be back home the same day. That's a long day, though. So a start-up raw milk dairy should find a farm within 100 miles, max. of downtown Calgary.

It's very important for someone who's starting up to realize that managing the cows / doing the farm chores, is about 1/3 of the overall effort in getting the dairy products to the shareholders. Managing the ordering then doing the actual delivery, are no small tasks. If a raw milk dairy were to start up in a situation where shareholders come to the farm to get their own milk then the price could be lower

It's crucial, though, for someone starting out to realize that hyper-inflation is underway. At the moment, the financial tide seems to be going out as commodity prices fall. But that's the `water' receding from the shore before the Tsunami of high prices comes roaring back, within the next year. Prices of hay, feed and gas = everything = will reach heights that people cannot imagine today. So a firm lease on a piece of pasture is absolutely essential for a raw milk dairy to make it past one year. As well, a secure supply of top-quality hay is crucial

It is a cruel matter of fact that horses are starving in the Fraser Valley, and everywhere, because people who were living beyond their means cannot pay today's price for hay. A lot of expensive `lawn ornaments' are headed to the slaughterhouse. The price of good hay is going nowhere but up. As it does, the price for REAL MILK produced via cowsharing will go up accordingly

The market for dairy cows is difficult for us right now. Paying attention to what comes available, we have purchased cows anywhere from $600 to $2000. Since word has got around in the valley about our operation, farmers who are part of the quota system are covetous, and resentful, thus unwilling to sell us a cow. Lately, we are looking to import Jerseys from Washington /Oregon. Someone starting out in Calgary would be better off not mentioning what they intend them for, or they will find cows hard to come by

Our milk is very expensive milk … almost three times what the `homo milk' sells for. People are happy to pay it because they can taste the cream. Thus, besides being real food with real, available nutrition, it is a gourmet food. Our herd is all-Jersey with one Guensey. Jerseys and Guernseys have the high cream content, which is what people want in REAL MILK. Our shareholders are informed consumers … they know that all the propaganda about "high cholesterol' is bunk

The depot system is crucial to the success of a raw milk dairy starting up. Our depots are all provided by people who are bending over backwards to help us. They do not make any money at it. So it's crucial that a start-up dairy has connections to people who will lend their garage / basement / storage room to the shareholders out of goodwill. Health food stores may be sympathetic to the general idea, but when it comes right down to it, most of them don't have the nerve to make space for a refrigerator. They are too worried about the legal controversy.

The herdshare concept will work as long as it does not get away from assertion of private property rights, over into commerce.

Another key concept is that the shareholders are underwriting the dairy in advance. This is the exact opposite of how the commercial food supply system is working. The retailers have about 3 days' stock on the shelves. They operate on the `just in time' system. So part of the task of a start-up raw milk dairy is to re-educate people about food security. At first, it seems awkward. But in the long term, it pays off in several ways, particularly in money because paying for something in advance eliminates usury, which is an absolute drain. Our operation grew from one cow to 14 in milk, now, over 18 months without paying one cent in interest on borrowed money to the banksters. Usury is poison to real free enterprise

In our operation, Alice Jongerden operates her company as a business which bills each shareholder for services rendered. She pays GST on the amounts billed. Her company does not own the cows … we do. Each shareholder has an undivided interest in the herd, as an entity.

Someone starting a raw milk dairy in Canada could simply copy our shareholder agreement. Or they could copy the one used by Wild Thing Organics, in Lake BC. Or, there are several more examples on the website of RawDairy on Yahoo Forums, some drawn-up by lawyers.

To leave off on a positive note : getting a raw milk dairy going will be worthwhile in the long run. The market for dietary supplements / nutriceuticals such as colostral milk, has only begun to be developed. Products such as X-factor butter oil, and immune milk will make such specialized dairying very profitable as "low tech bio-tech" comes in to its own. For those who want to do it, a raw milk dairy is the foundation for a farm store where True Foods will be the theme. A study has shown that once a farm store has 40 different items, it becomes a destination for people to shop.

Gordon

November 26, 2008

Gordon,

It is really good to have someone present an analysis or raw dairying as a business and not just as a hobby.

Cleve