Hey everyone, a quick note before we start today's show. All of us at "Planet Money" are hard at work on our T-shirt project right now. We have literally been around the world reporting on the T-shirt, Bangladesh, Indonesia, Colombia, Texas, Florida. We're about to go to the Mississippi Delta for cotton harvest, and let's just say it is taking all of our focus and energy right now. And so, to the end of November, we're going to be airing re-runs, I guess I should say, best of episodes, each Wednesday. We're looking back and picking out some of our favorite shows, including this one, that I did with Adam Davidson about a year and a half ago
["Lisa. One of these days I'm gonna buy a farm and get away from all this." "Aah, of course you will, darling." "I mean it!" "I know you do! Oliver, how soon?" "Well..." "Oliver, how soon?" "Yesterday!"][Music Intro] Hello and welcome to Planet Money, I'm Adam Davidson *and I'm Robert Smith. That was Eddie Albert and Eva Gabor, we heard them talk from that televised sociological study of agriculture known as Green Acres.* Today on the podcast we are going to visit a place straight out of childhood myth: the family dairy farm. *So I'm picturing like a rolling hill side and a white farmhouse and silos and trees and little dotted black and white cows all over the place.* I will say, this farm was as bucolic as you can imagine. Pretty much exactly what you described! But behind that peaceful scene as I spent a few hours there at the farm, I learned that there's all the roiling tension, the rising inequality, the economic volatility, and also maybe, possibly, the secret to success in this chaotic 21st century economy. [Music] So, Robert, you know I've been really fixated for the last year on what's going on in the U.S. economy. This particular question, we are so much more productive than ever; you know I love going to factories, I spend a lot of time in factories, especially in the last year, and we are so much better at making stuff. So much faster and cheaper than ever before. *Yeah, but at the same time, I mean everyone knows this, the average American feels worse off. Life is hard, incomes are stagnant - dropping in some cases - and you know, I know from podcasts you've done that this thing we're talking about here is the sort of fundamental struggle of our time. Which is how Americans react to global economic change. *Yeah! And I feel like in broad strokes, for the sake of this podcast anyway, I might change my mind later, but for the sake of this podcast, I think there are four clear lessons about how to have at least a shot at thriving in the current confusing global economy.* Number one. *Number one! Stay on top of technological change.*
Number two: Focus. Specialize on the things you can do best. Three: Find some way to buffer yourself, to protect yourself, against unexpected changes that are definitely coming. And fourth (and maybe most important): Find something you can sell, some product or service, that your customers are willing to pay a premium for because you've given them something they want that no one else can give them. Now, I have seen this - these four principles in action - I've seen them here in public radio, I've seen them in auto parts factories, I've seen them in high-tech bio-tech companies - but I think the place I've seen them clearest, the one business that I think that most perfectly represents the challenges and the opportunities of the twenty-first century: Fulper Dairy Farm.
(It's so beautiful here. This is not what comes to mind when a New Yorker thinks about New Jersey.)
So describe this place to me, Adam.
All right, so this is 90 minutes outside of New York. You drive past the, you know, the chaos of northern New Jersey -
The chemical plant -
The chemical plants and the ports and the airport. You go out to West Amwell Township - very sweet, quiet place near the Pennsylvania border. Now, Fulper Farms. I met three generations of Fulpers: Bob's the grandpa, born there; Robert runs things now (he also was born there); and Robert's daughter, Brianna, who's sort of waiting in the wings to take over the family business. And this is - close your eyes, picture a family dairy farm - this is pretty much it: it's a white farmhouse on a small hill; there's some old barns, some of which date back to when Bob's grandmother bought the place in 1908. But you go inside one of these buildings that seem kind of old, and what you see looks more like a factory floor. It's all stainless steel, hydraulic equipment... I asked Bob the grandfather what it was like to milk cows back in the Great Depression, when he was growing up.
Most of my family milked by hand. I had nine sisters and one brother. They all milked by hand.
Back then, the Fulpers - all 11 kids and mom and dad - they could spend a whole day milking 15 cows.
OK, so that is clearly your first principle: stay on top of technological change. I mean, these days no one is going to make any money if you have to milk all your cows by hand.
Right, but that's not the technological change. Yes, they have these pumps that automatically milk the cows, but that's old technology; that came out in the 1940s. Of course there's been innovations and stuff, but when I say "the latest in dairy technology," that's not what I'm talking about. It's actually not something I noticed at all, you know, I'm a city guy, I don't really know one cow from another. But Robert, the son, explained the coolest thing on their farm is actually inside the cow.
This cow here is... she's the queen of the herd right here.
This is Claudia, and I don't know much about cows, but she sure looked like a gorgeous cow to me. She won a big statewide New Jersey award last year, and she is cutting-edge bovine biotechnology. A modern cow today can produce so much more milk than any cow ever before in history.
Production level back when they were milking by hand was maybe thirty pounds a cow. Today we're milking, you know, seventy-five pounds a cow.
I don't understand this. So, is Claudia just bigger? I mean, she just makes more milk because she's a larger cow?
She is bigger, but I actually learned a lot about cow structure, I mean, it's almost like bio-architecture, and I mean, think about it this way: a Ferrari isn't faster than a Model T because it just has the bigger engine. Every part of the cow is different than a cow sixty years ago.
See her udder, how well-attached, how high it is, and see how sharp she is, and how wide she is, how big her barrel is... these are all the things that make that a special cow, you know, even if you look at this cow next to her, you know, the udder attachment's totally different, and so that's why Claudia can just eat like crazy because she has so much capacity and she makes more milk. And so that's what you're breeding for.
How does a guy like Robert Fulper end up with cows this much better than his dad's cows?
This brings us to principle number two. Do you remember what that was?
That is specialization.
Exactly. Specialization. So, back in the day, farmers would do everything. They'd breed the cows, they'd grow the feed that the cows ate. They'd birth the cows. They do all of it. One guy had to know everything. Now, the Fulpers specialize in raising the cows and milking the cows, and they hire someone else, a trained cow breeding expert, someone with genetics expertise to worry about how to produce the next generation of super cows. This is more than just putting a good looking bull next to a strong looking cow, right?
Yeah, this may be the saddest thing I learned there. The cows on the Fulpers farm will never see a full grown bull in their entire lives.
Wait, there's no bulls on the farm?
No, not at all. It's all females. If one of the females gives births to a boy, that boy is out of there very quickly. So, what happens is the Fulpers bring in a breeding expert who goes around, cow by cow, you know, 100 plus cows and identifies their weaknesses. So one might be bow legged. Another one might be too skinny. Another one has a saggy udder. And the expert then goes on. There's all these online shopping sites and and catalogues of bull semen, and each bit of bull semen has descriptions of that bull and the bull's female relatives, and so the breeding expert can find exactly the right bull to impregnate that cow to get rid of whatever weakness that cow has. So, they place an order, use a credit card. A couple days later by UPS they get a vile, a frozen vile of bull semen.
You know, it's amazing, cuz you were talking about this when you came back from the farm. But there's this whole world of experts and subcontractors out there now to help out the farmers.
Right, Robert told me that he used to really stay on top of cow nutrition. He stayed on top of what's the best feed for healthy, happy, productive cows. But he said it's now so much a fast advancing field with so many new breakthroughs that he just can't keep track of it. So, he has a breeding consultant. He also has a nutri-- a cow nutritionist. And this cow nutritionist has deep understanding of the entire cow digestive track and how different kinds of nutrients if they're delivered at different times of the year will help the cow maintain maximum productivity and maintain cow health.
You are so excited about this. It's so funny to watch you. Your-- your face is alight with glee.
It's so cool. And they also have this specialized cow feeding technology so that the cows can sort of wander around at their wheel, but when they're hungry they go into this special feeding barn and they get exactly what they need.
These cows wear this collar and have a green responder on the bottom of the collar. As they enter that stall, that computer you saw on my office over here identifies her, and then uh sends out feed into the stall depending on her production level. So she gets kind of special attention if she's, you know, she's at the stage of lactation where she's producing a lot of milk, she'll get a little extra grain there to help support her milk production.
I honestly, because I think this might be clear, I could go on all day long about all the different experts and specialists that help a modern dairy farm run.
Yeah, let's not do that.
But, let me tell you, this I thought was actually kind of cool, made me happy, the biggest advance in cow productivity. Two words: cow comfort. Figuring out how to make cows comfortable, because when they're stressed, when they're not happy, they don't produce as much milk.
Alright. To bring everyone up to date on where we are in the Davidson Principals for a Modern Economy; number one, stay on top of technology to improve productivity, which the farmers are doing; number two, specialize in what you are good at, bring in the experts to do the stuff that you don't know how to do; and that brings us to number...
Number three, do you remember what it is? Protect yourself. So, for most of the twentieth century, dairy farming, like a lot of the US economy, was fairly stable, you know. The average dairy farmer in January had a pretty good sense of where they'd be in December. For dairy farmers this was particularly the case because for most of the twentieth century the US government kept dairy prices fixed and also kept cow feed prices fixed, not precisely fixed, but they were only allowed to trade within a pretty narrow band. So, farmers pretty much could rely on a very specific margin, year after year, month after month. But in 2000, because of global trade rules, the US stopped this system. They still peg the price a tiny bit, but nowhere near as much. The prices of both milk, that means the profit for the farmers, and feed, which generally means the cost for the farmers, keeps wildly fluctuating with global market demand. Now, I should say liquid milk is not really sold globally that much, but butter is, cheese is, and milk powder are now globally traded commodities and so the price of those commodities worldwide has a very direct impact on what the fulpers can charge here in New Jersey.
So the world market has changed or skewed some numbers, you know, like, like grain prices are extremely high. Well grain prices are really high because the world market has really impacted it and the price of the dollar has collapsed, which impacts the price of grains. There are so many factors that I can't figure out.
Talking to the Fulpers now, dairy farming is almost like being a Wall Street derivatives trader. I mean, you, you buy and sell milk futures and grain futures. You can lock in high prices, or maybe you just want to ensure against big drops in prices. Now I should just say the Fulpers do a bit of this, but this is not an area that they've specialized in, and they're really, really busy running the farms, so they don't use these tools as much as bigger farms do.
Okay, so they have their super-cow. They have their team of geniuses to help with feed technology and, and breeding and, and now they have all of these financial tools, high-tech financial tools, and hedging, and options, and all of this to protect themselves, so, how are they doing? I mean, is this, is this the most successful dairy farming in the United States?
So, I said this was the perfect example of the challenges and, and some of the solutions to the 21st century, and that is definitely true, but, I should say the Fulpers are not at all rolling in dough. Robert showed me his balance sheet for 2011. He asked me not to tell you exactly how much money he and his brother (they, they split the profits between them) how much they made, but when you divide it by the 96 hours he works each week, we found it's not very pretty.
So you are well, I mean this year, or last year, you, well below minimum wage. On a per hour basis.
On a per hour basis, yes, that's true.
Like, like maybe half.
I never, I'm afraid to look.
(And by the way, last year, that was a really good year. Milk prices were really high.) It seems like we've gotten to that point you always get to in, in a, in a farming story, and that's the, like it continues to be a, a tough life. This is why we hear all these stories of it's hard to get the next generation to take over farms. They have all the advantages of a modern economy. As you've said, they're doing everything right. And, and still that's, that's, that's their best year? Less than minimum wage.
I should say, the, the Fulpers, they are optimistic. I think farmers are inherently optimistic. And they say they have, something of a secret weapon.
My brother and I have done whatever we could to get to where we are with the environment we've been in, and that environment's changing, and we haven't changed like we should, because now we think maybe the next generation's gonna have to figure some things out.
I double majored in business and finances as well as dairy management. That's the fifth generation of Fulpers, Robert's daughter Brianna. She is twenty-five and unlike a lot of people who grew up on farms she really wants to stay dairy farming. She went to Cornell and learned dairy farm management and she now has a bunch of ideas about how Fulper farms could eke out some more money from the farm. I am getting this strange idea we're about to hit principal number four. Yes.
Charge a premium by really knowing your customers, and giving them something they're willing to pay more for. Brianna realized that they kept talking about this problem they had: they're really close to New York City. Land is really expensive in Northern New Jersey. There's not an agricultural world there, so they have to travel really far to buy agg. equipment. There's all these problems with being close to new York City. And she realized by using her farm as a case study in Dairy School in college, that being so close to the city might be their best way to make money. It might be their secret to being a successful farm. After all, I looked. I could not find any dairy farm that close to New York City. I think that this is the closest one to Brooklyn. And as you know, cause you and I both live in Brooklyn, New York, people in our home burrow are kind of obsessed with farming.
Yeah, not necessarily like the actual messy, dirty part of farming, but this idea of farming. This idea that we can have live this big city lifestyle but still have farmers who will come into our farmers markets, you know, the locavores. We love this idea of having it close by.
And Brianna has figured out that there's money in that. So, for example, she's working with a cheese maker who is gonna help them create a premium Fulper branded cheese you and I hopefully one day soon can go to our local shop and buy really really local. This is the closest cheese to Brooklyn.
<laughter> I want a picture of Claudia right there and her perfectly attached udder right on the label.
Oh, Claudia's beautiful.
<laughter> I'd buy that cheese.
Brianna had this other idea. Did you know that you could actually send your two daughters for a week for summer camp at Fulper farms? The girls would learn how to groom a cow, they get to run around farm fields, I'm sure there are hay rides, things like that.
I'll love it.
Family's pay a few hundred bucks, they're kids have an awesome week experiencing agriculture.
I'm sold, but then this is actually bringing money into the farm.
You know what's actually amazing? A few weeks of summer camp that Brianna did as like a college project brings in almost as much money as a whole year of milking cows.
B: That summer camp program put me through Cornell. <laughter>
Really? <laughter>
Yes. <laughter>
That is awesome for the Fulpers. And you know I've heard about this trend of "aggritainment", you know where people can come and sort of experience agriculture and, you know, buy a lot of tchotchkes and t-shirts, you know, "I was on a farm" and that kind of thing. But how many people really have that option? You know, most of the farm in the United States are not close to agriculture hungry tourists like ourselves.
Or they might just not be into that kind of thing. But I think– so that– this is where we get into the opportunity part of the twenty-first century, which is there is no longer a single solution. I think fifty years ago you visit twenty dairy farms, they probably have pretty much identical business models. Now, each successful dairy farm is gonna find its own little recipe. I talked to this agricultural economist who specializes in dairy farms, and he said that there's a recent survey of the economic condition of fifty dairy farms. What they found is that farms today on average, make more money, than the farms of twenty years ago, thirty years ago, forty years ago. But, it's a lot more volatile, so any given year might be a lot more money or a lot less money. The average is higher, but any given year is very volatile. And, he said, a lot of farms don't make the transition successfully. So yes, there are opportunities, yes there are ways of harnessing all the things that make life today so chaotic to your advantage. But if we're looking at dairy farms, the simple fact is, most dairy farms are not gonna make the shift successfully. But the ones that do may just find themselves better off.
<music (The Animal Farm by the Kinks): This world is big and wild and half insane>
So as I said at the top of the show, this is a rebroadcast of one of our favorite episodes, we're all working on the "Planet Money" t-shirt right now. But just to bring you up to date,
we did call Folper farms this morning, and things are going pretty well there. They followed through on that plan to make their own cheese. Their mozzarella and ricotta is now being sold to local restaurants, you can find it at farmers markets, you can order it online. Also, Claudia, the super-cow, she is still queen of the herd. One other note, as we've been planning these re-runs, working on our t-shirt project, it has got us to wondering, how exactly do you listen, to Planet Money? Are you somebody who has it in your calendar every Wednesday and Friday, download immediately, listen the next day. Or, do you kinda let the episodes pile up a little bit, maybe listen on the weekends or when you have time along car rides, something like that. We would just like to hear how you respond to our schedule. So send us an email about that, or anything else you have on your mind. We're at planetmoney@npr.org . I'm Robert Smith, thanks for listening.
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