Dairy Marketing Practice | Contributing Columnist


The High Cost of Low Price is Only Part of It...

Dan Strongin ASQ CMQ/OE Uncorporate Consultant

April 6, 2018


“Median total income for farm households was essentially unchanged in 2016. Broad increases in farm household income largely reflect greater income from off-farm sources, where the majority of farm households earn most of their income. At the median, household income from farming was slightly negative in 2016, as it has been for the past several years.”


In this very objective language, the USDA underscores what is an alarming problem. In 2009 the FAO of the United Nations warned of a serious imbalance in the food supply: an overwhelming dependence on large-scale corporate production of foods and an ever-declining base of small family farmers.

I’m not going to go into a long dissertation about why family farmers are essential. I’m assuming that if you are reading this journal, you already understand. I dedicated part of my professional life many years ago to try to help small family farms survive, as best I could, so this news is alarming to me, personally. It has gotten worse, and we have to stop and ask ourselves, after all the farmer’s markets, the explosion of artisan cheese, how is it they are still in this precarious position?

Things come in waves, and recently, with the greying of the artisan cheese pioneers, issues of this kind have been bubbling up and coming to my attention. It would be very easy place blame. It would be very easy to say the consumer has to pay more. But the situation is bleaker and more complicated than that.

Part of the problem is the Emporer´s New Clothes syndrome. We believe things, cultural myths about business, that too often are not true. The other part is what I have called “IT” management training:
•The “it’s what my family did” school of management training
•“It’s all I’ve ever seen” school of management training
•“I just copied what the first people who trained me did” school of management training
•“I do what I read in a book because it sounded cool to me” school of management training
• And finally, “I figured it out once a long time ago, as best I could, and since it seemed to work then, I keep doing it” school of management training, aka Shooting From the Hip school

We are regularly told things about business that are not true; things that can kill you.

I will not go into a long diatribe about corporate farm influence in Washington. I prefer to focus in on the human side, on my friends and colleagues facing financial struggles at a time when for many of them, their energy is beginning to dwindle. Like so many social ills, the truth is hidden. It is not discussed in polite society, but, 85 percent of all family farms in the US survive mainly from non-farm outside income. Eighty-five percent!

I tried to make my experience in business available to as many as I could, in my way, trying to help them thrive. But in the throes of creating their business, or buried in the tsunami that comes when things are up and running, it is hard to find the time to think and consider alternative options.

Communicating why they might need advice on things like finances, production systems, knowing when to take on a new customer and when not to, whether to grow or not to grow for some were not so sexy. Things that conventional financial consulting are not in a position to know the answer, as financial reports were created by investors to measure the relative value of a company and not to help the poor sods run it. Even there, some of you will be shaking your heads: “What? Why not go to an accountant?” it was easy for people to understand needing a consultant on their cheese process, but not so easy on their business processes.

The problem is that the entire structure of American business is built to serve a corporation, not a lifestyle business like a farm. The way in which financial reporting is structured and the way in which Return on Investment is calculated for loans seeds doom for small producers.

A few times in my career, people who turned down proposals from me, told me later that I had been right, too late after they had lost their business. It is heartbreaking. In one case, the bank based their line of credit on their inventory. So they were forced to overproduce to keep the inventory high so as not to lose their line of credit until it was too late.

In another, a cooperative used money that should have paid for infrastructure to pay down the debts of the members of the cooperative. We always seem to underestimate the human factor.

Because their structural problems in production were not addressed, they fell into bankruptcy.

cheese makers fall into the trap of believing that to survive you must grow: that you cannot just stay small.

We all applaud the fact that a handful of producers have managed to sell their farms to larger concerns in the last couple of years. But for every success story, a family is struggling to survive, hoping against hope that this next contract with a Whole Foods or a big distributor will finally be the ticket to positive cash flow. Even cheese makers fall into the trap of believing that to survive you must grow: that you cannot just stay small.

Starting with that lie we call a Business Plan; we ask people to create something without any real experience and no historical data, dressed up in its Sunday best to win that loan. The conventional wisdom is failing our family farmers and our small artisan cheese producers. And to say that they should know better is a waste of time, and cruel.

There has to be a better way. People have to ask for help sooner before momentum bleeds them of any chance at a future.
Those who are failing or have failed need to open up and share their stories.

People need to learn small farm business management. We, as an industry, need to look at how we develop the next generation of business people in the same way that we look at developing the next generation of cheese makers. The corporate model does not apply.

Recently, a very fine cheese maker, in some difficulty, told me they wish they had understood what I do long before, as they could have used it. It is not the first time. Somehow I never found the way to turn the success of many of clients into a reason for others to take a leap of faith.

We, as a society, are blind to what it takes to manage a small or medium family business. It is not the same as what it takes to manage a stock driven corporation.



The views expressed above do not necessarily reflect those of Cheese Reporter.



Dan Strongin

Dan Strongin is a former president of the American Cheese Society, chef and business coach for small to medium value added businesses, and the owner of the sites learn.managenaturally.com, and the Facebook group Enjoy Cheese. His online course: “Cheese: How to Buy, Store, Taste, Pair, Talk About and Serve”, is available at enjoycheese.net. Dan can be reached via email at dan@danstrongin.com.

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