404 Joe Tomandl – CAFOs have caught up, can regenerative dairy still win?

We are at an interesting moment in the dairy sector. For years, smaller farmers with around 200 cows, who were also great graziers, could undercut the costs of large concentrated dairy operations, keeping costs low, taking healthy margins in good years, and surviving the bad ones.

But something has changed: CAFO dairies have grown bigger and bigger (10,000 cows is now normal, and 100,000 is no longer an exception) and their economies of scale mean they are undercutting the grazers. Of course, this leads to massive manure lagoons, animal welfare disasters, and all kinds of other externalities, but nobody is paying for that yet. Not to mention that you can only push biology so far before it literally breaks.

So what’s next for regenerative grazing? Joe Tomandl, 4th generation dairy farmer, founder and director of the Dairy Grazing Alliance, argues instead for focusing on the transition of mid-size farms with 300– 700 cows that have surrounding land which could be grazed but currently isn’t. You need grazing experience and a long-term offtake agreement, but it can be done.

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Transcript

Setting The Stakes In U.S. Dairy

SPEAKER_03 0:00

Welcome to a deep dive in dairy, region grazing based dairy in the US. We had an interesting moment in the dairy sector. For years, smaller two hundred cows or so, farmers that were also great graziers could undercut the cost of the large concentrated dairy operations, caifoos, keeping the cost low, taking nice margins in good years, and surviving the bad ones. But something has changed. The caifo dairy have gone so big, bigger, bigger, bigger. Ten thousand cows is normal, and a hundred thousand is not an exception. And their economies of scale mean that they're undercutting the grazers. But of course, this leads to massive manure lakes, animal welfare disasters, and all kinds of other externalities. But nobody's paying for that yet. Not to mention, you can only push biology so far before it literally breaks. So what is next for region grazing? Instead, our guest of today is arguing that focusing on the transition of mid-sized 300 to 700 cow farms that have land around them, which could be grazed but isn't at the moment, is the key. You need grazing expertise, of course, and long-term off-take agreements, but it can be done. And what about nutrient density and quality? What is good enough in terms of grass fat? 50% on grass or 70? We talk about decentralized processing, the consumer who's finally waking up to where their food comes from and the huge fragility and risks of a supercentralized and heavily indebted system. Enjoy. This is the Investing in Regenerative Agriculture and Food Podcast, where we learn more on how to put money to work to regenerate soil, people, local communities, and ecosystems while making an appropriate and fair return.

SPEAKER_02 1:33

This podcast series explores the key role of animals in the food and agriculture system of the future. This series is co-produced and supported by the DataMars Sustainability Foundation. Find out more on Datamars Dot Foundation or in the link below.

Joe’s Path From Farm Kid To Grazer

SPEAKER_03 1:49

Welcome to another episode. Today we take a deep dive in dairy with the founder of the Dairy Grazing Alliance. And you own a number of certified organic dairies. And according to Tina Owens, friend of the show, you're the go-to for all things regenerative dairy in the US. Welcome, Joe. Thanks for having me. Appreciate being here. And always listen to Tina Owens when she suggests things. No pressure now. Of course, all things regen dairy is quite a statement. But I'm very much looking forward to unpack your journey and how you ended up in the grazing side of dairy, which you would expect is the same, but actually that's very often not the same. Dairy is such a touchy subject, such an interesting one in the egg space. And yeah, I'm just really looking forward to unpacking. But let's start with the question we always like to ask at the beginning. How come you spend most of your waking hours thinking about dairy and grazing? What was your journey into the dairy quote unquote industry? I think it's a word we should use in this case, but how come you spend most of your time thinking about dairy and grazing? Yeah, good.

SPEAKER_00 2:45

That's a great question. And yeah, again, thanks for having me here. And it's flattering to get recommended by Tina. She's respected in the world for regenerative. So that's wonderful. But dairy has always been I grew up on a dairy farm, on a smaller dairy farm, actually not too far from the farm that I'm working right now. And in probably the 80s, my parents started grazing cattle, and we kind of had a trend in the US at that time where you could really start going big. They talked about go big or go home, where you really started industrializing these farms. There was a lot more confinement, a lot more intensive feeding, a lot more of the feed was brought in and put in silos and storage systems. And that's where a lot of this real heavy investment in dairy started coming in.

SPEAKER_03 3:32

Did you see that happening? Did you see was that the moment you were growing up? Did that did your farm also started to, or how did other farms in the environment, like how did you see that shift arriving?

SPEAKER_00 3:43

You could see it. You could see it in the neighborhood. With some dairies, they started investing more in buildings, in equipment, in manure storage and feed storage, started really driving more production, and you could really start seeing this U.S. system of dairy start firing up. And it was that point you could make a decision whether you wanted to go down that pathway or if there's a bit of a different type of pathway, and that's really where this grazing came in. And we had a number of farmers in Wisconsin. Fortunately, we had some pretty good leadership in Wisconsin for managed grazing. And there was even some delegations that went to New Zealand and saw what was going on there. I think we can do this stuff here. And that's where there became more and more traction with grazing cattle. They said, okay, let's just bypass this whole idea about just investing and industrializing this thing. And let's go back to what these cows normally do. And it was always something too, and we can talk about this more later in finances. But when we looked at how these farms and how we could stay in farming the longest, it was really nice to take a look at the countries that had the least cost production. And the least cost production were the New Zealands and the pasture-based countries. So that was always something where you thought, okay, this is going to protect me in this market a long time. We're going to reduce our costs long enough. We're going to be relevant to these markets and really let these cows go out and harvest as much feed as possible. Now we're up in the northern climates here, so we got about six months, seven months of solid grazing, but you could still get those efficiencies out of that amount of time. And that's just some of the pathway started going down. So I started learning that system in the 80s and 90s on the home farm. After that, I went to school and got my egg teacher's degree, egg education. So I taught high school agriculture for four years, an F of A advisor. And then in 1998, my wife and I were expecting our first child. So we came back and we had picked up one of the neighboring farms. And it was just a very modest 80-acre farm that we picked up in the home neighborhood. And it was really managed grazing that allowed us to get started. We didn't have a bunch of cash or capital laying around in like that. So we took all of our equity and dumped it into about 40 jerseys and some excuse, even used fencing equipment, I remember. And we put that up, and that's how we got started here. So that's really where our real entrance into managed grazing started. It was from the home farm and then jumping into it ourselves. So that's how we got here.

The Push Toward Scale And Its Limits

SPEAKER_03 6:19

Going back to that sort of fork in the road where farms and your home farm decided not to go there, if you could already see at that point, like long-term wise, lower cost of production would keep you in the game the longest, let's say, because the milk price does what it wants. It goes up and down, and you don't want to be, let's say, high and dry, or not high and dry. And why were other farms going down the other route? What was the incentive, maybe just financial? What was the incentive to put a lot of money into a system? Was it the driver, the production increase and thus revenue, but also the cost increased? What was so interesting for others to make a different decision than what you and some others did?

SPEAKER_00 6:58

Yeah, let's just we're the dairy industry, it's a mindset of it's almost an industrialized type of a mindset in a way. We didn't really see it, I don't think, at the time necessarily, but it was a production-driven thing. It's like, okay, if you're a better farmer, we're doing better if we could get 20,000 pounds of milk out of an animal or 25, and you just keep driving toward that direction. And in order to do that, it may take more consistent feed or a certain type of feed or a certain type of housing and cow comfort. And it's just one thing leads to a next, and it's really uh it's driving toward production, and I get it, that's it's economics in a way, and that's also where a lot of the support came, the industry from nutrition from university, and that's like I say, that's was really the supported pathway that was out there in dairy. There wasn't a lot. That was the other problem, is with grazing, there isn't a lot to buy necessarily, so you didn't have all the different products and all the different research and all the different customer support or any of those and all the tech support. It was hard. A lot of that was really driven by university or extension or conservation groups. That's where a lot of that came out of. There were some government types of pools of money and some initiatives that came out of that. That's what we'd have to lean on to really get any tech service education. There were a lot of producer groups that came together, a lot of farm walks and pasture walks. And yeah, that's just the people you'd surround yourself with.

SPEAKER_03 8:28

As basically, yeah, there's not a lot to sell to farmers, thus, there's not a lot of support to hold hands in decision, which we see in road cropping as well, which we see in many places. What are the best advisors? The ones that are on the payroll of the big four or five input companies. And yeah, let's say they have uh even best meaning people there have an incentive to sell you more stuff, and the advice is always to put more, never to put less. And now, for the people that are not in dairy, what's the current state of dairy? We're talking beginning of 2026. Dairy goes up and down quite interestingly, let's say, but from like the more industrialized big dairy, where did that path take them over the last 30-40 years since you started seeing that that direction of more stuff, more buildings, more cows, less outside, more feed, more depth, probably. Like, where is dairy dairy now?

Why Grazing Lost The Cost Advantage

SPEAKER_00 9:49

Yeah, uh so dairy has continued down that path of consolidation and scaling, and it just it's the economies of scale and kept chasing and and see nobody's at faltering like that. It's just it's economics that got it there. So we've got a lot of dairy that are looking at that thousand, two thousand, ten thousand, there's hundred thousand plus dairy units of cows I'm talking in the US, and that's really a lot of the driver. And I think what we're really seeing in the last five, ten years here, it's scaling so quick, it almost seems like when you get to a certain point, the scalability and the speed almost exponentially feels like it starts growing. So we've had an incredible investment in infrastructure and processing infrastructure, it's like$11 billion in the last year here into processing infrastructure for dairy. And it's in some of these areas where it's really incentivizing larger scale production. It's a lot more almost direct contracts with these processors and larger dairies that are locking into it. So that's a lot what we're seeing. So we're seeing a lot of the pressures of scale and competing with scale, and that's one of the pressures on this regenerative and on these grazing type of dairies, is uh just to fast forward this thing that in about my original comments is we always were the least cost producer, it felt like with with the managed grazing type of a system. These dairies have scaled and they've gotten so good at it, and it is very difficult to be a least cost producer anymore on a grass-based system. That's just again, it's economics. To compete with a 2,000 cow dairy, you can see costs of hundredweight could potentially be eight to ten dollars less just because of the efficiencies of the scale that they have, and now that pretty much overshadows the efficiencies we could get out of feed and the least the lower cost in feed that we're able to see, where it's making these systems a lot tougher to be economically viable.

SPEAKER_03 11:49

And on the market, so basically, we're just saying they're reaching to a point now where they can undercut you, basically, the low input and low cost version, and there's a limit, of course, on your scalability and efficiencies. There's only so much you can reach in terms of grazing quality and efficiency, and at some point that filters out. Do you see like what's a way out there in a sense of how do you stay competitive, or is there something on the market side, also in terms of quality of the milk obviously coming out of these systems? Is there a consumer interest to that? What are wayouts for you? Are you are you gonna continue on the regen side, or are you saying actually I need to go to 2000 hat cattle inside because the cost just doesn't make sense anymore? Like, what do you see in the future of the regen side?

Organic, Grass-Fed, And Viable Niches

SPEAKER_00 12:36

Yeah, I think the future of this. So we've got there's a few markets that are out there. I think we've got the organic markets, and then we've got the 100% grass organic market that's out there. And those are a couple of safe havens. We've got to be careful with organic though, yeah, because organic markets could be the same. Yeah, it could be it looks a lot the same, it's coming together with that. There are 5,000 cow dairies that can supply an organic market. When that happens, a hundred cow dairy has got the potential to become very irrelevant, and it's just economics, that's just the way it is. The 100% grass organic market is out there, and there's a lot of farmers that are moving toward that. It's a high dollar market, a very value-added type of market, and a high integrity market. Cost of production is high, and it's tough to hit with a lot of producers, too, but a very viable one. But I don't know if it can scale at the level that the consumer needs, also. I think that's something that we really got to keep an eye on, and that is just the dollars behind it and the the ability for it to scale and the ability for farmers to produce to it. There's so many farmers that have either exited the industry that were a lot closer to be able to producing to an allgrass or an organic type of uh market, and they've either exited or they've gone down a more of a conventional path, we're gonna call it. And they're so invested in that financially that it's very hard to unravel it. It's very hard to take all that investment in a thousand cow dairy or two thousand cow dairy and unravel that and back that up and try to pay for it on a regen type of a system. So you really, again, you're really gonna need some of these markets that are out there. A piece that we're investigating here with the Dairy Grazing Alliance, so a little bit of my history here, too, is in about 2009 or 10, we had always looked at what was happening in our rural communities to say, okay, these farms are leaving, they're scaling, we're having less of them, we're producing more milk, and how do you create opportunities for people and how do you diversify what production systems and what our rural landscape looks like? And one of the pieces was say, we've got these grazing dairies, let's invest in the next generation, let's try to find the successors. So in 2010, and this started with a group of farmers, and we launched what was the first in the nation registered apprenticeship in managed grazing. So we basically took something just like the guilds and the trades and came in and said, All right, let's build this around managed grazing because you really couldn't teach these sort of principles, excuse me, in the classroom. And I saw that as a teacher, we just cannot teach them that they are. Yeah, so it's really experiential learning. So we created a two-year, 4,000-hour apprenticeship where it's an earn while you learn, working on a dairy farm, 3,700 hours of on-the-job training, 300 hours of related instruction, and started launching that. And it became an apprenticeship that started in Wisconsin and it went through to about 15 other states. So it's now a national type of program by about 2015-2016, and it was engaging young people. There were some actual farm transitions that came out of it, and it was really it's going well after that. And 2015, we could see it coming where apprenticeship maybe wasn't going to be enough, and the transition of these dairies was not going to be enough to preserve that sect of dairy farmers, and so we really said we need to take a look across the whole supply chain. So that's really where some of these seeds of the dairy grazing alliance started out. It all built out of this dairy grazing apprenticeship, and the alliance came in as a bit of a group effort where we actually started it by convening people across the supply chain of dairy and everything from finance all the way to retail, market, uh, to environmental type of groups, education, production, and try to identify what needs to happen across the supply chain. And then coming out of that, there were a few different initiatives on pushing on production and markets and finance. Uh, but then another piece of this is we need some sort of a platform or an organization that's going to house all of these pieces and all these initiatives, and that's really where the dairy grazing apprenticeship transitioned into the dairy grazing alliance and is trying to really be pushing on the whole supply chain and look at catalyzing that whole grazing-based sector of dairy in the nation. So that's where we're sitting with this now. One of the things that we've identified, and it came out of this convening even a couple years ago, is that we need to really get a definition of what is grass-fed. Is there a more inclusive definition with the integrity of grass-fed and regen that we're looking for? And the integrity being can it still have the nutrient density, can it still have the conservation benefits, can it have the rural development type of benefits that we're looking for? Can it check all these boxes? And we've got the hundred percent organic great. Can we scale that a little bit more? Can there be an entry or can there be a baseline for this grass-fed type of a label and markets? Because if we don't create, this is the other reality, if we don't create a baseline of what a US grass-fed standard could look like, we're gonna have all sorts of brands that could pop up and utilize the grass-fed type of branding, and they may not have that level that we're looking for, or that level of what could happen, or a market that could actually reward this type of a farming practice. And that's a train that could leave the station pretty quick here, if unless we can get on that and create a baseline. I'm basically looking at something that's if it can be something that's attached to how much dry matter is coming from pasture, then I think we really need to look at it. That is the key thing.

SPEAKER_03 18:40

And if we can create dry matter as what they eat, or dry matter. What do you mean by dry matter?

SPEAKER_00 18:45

Yeah, sorry, it's basically what a cow will eat per day. So what we're saying is if you can if a cow is eating about 50% of their forage during the grazing season from pasture-grazed grass, where they've got to go out there, harvest their own grass, and 50% comes off of it.

SPEAKER_03 19:03

That's the key part, right? They do it themselves, not that you have to go out there and mow it. Yeah, that's and harvest it with a tractor and diesel.

SPEAKER_00 19:10

Yeah, and if they're doing it themselves too, you're getting closer back to that regenerative, that natural type of a system. And the other thing that you're doing is you're limiting the size of these farms too. You're creating a viable farm. That's all of a sudden where a mid-size or a smaller farm becomes relevant because a cow becomes a lot of different things.

SPEAKER_03 19:27

Because that's not the case now, right? In conventional, the relevant size or the viable size became bigger and bigger, bigger every year, basically.

SPEAKER_00 19:34

There's a real theory about this that the real viable size of dairy could be 2,000 cows here in the very near future if it isn't already here. There's a lot of smaller ones, obviously, but just we've got a lower milk production, it keeps coming down, and it gets harder and harder to produce too. I think there's dairies out there that are carrying very low debt load, and they're gonna be able to keep pushing on. But there's really no transition plan or no financial ability to transition some of these things then when you're really competing in that kind of a scaled market.

SPEAKER_03 20:40

And so then the question becomes how do you transition into grazing? If you have a low depth load, maybe that's possible. If you have a high depth load, of course, it's gonna be very difficult. Like the train has to continue to grow, basically.

Training Graziers: Apprenticeship To Alliance

SPEAKER_00 20:52

Right. And I think some of the thing that we have here is we've got plenty of dairies that are in that two to seven hundred cow range where they're just in this range where it might be a little bit too big to go direct to consumer. They might be set up a little bit differently and not ready to make a complete jump to organic or for sure 100% organic grass. But could they produce to a standard where, you know, five, six months out of the year, those cows are heading outside and they're just unraveling this a bit because they're sitting on depreciated assets now. So can are those the farms they are? Those could be the farms that could come into a value-added market like this. So if you could dangle another$10,$12, 100 weight, get somewhere in between conventional and organic.

SPEAKER_03 21:36

Basically, like transition to regen, or there's a path towards. I see some of that, like crowd farming, is a platform in Europe on direct-to-consumer, only organic in this case, but also versus regen, which in their case is on top. But you can label, you can see which fruit farm, and this is all fruit and veggies, and you can see which ones is towards regenerative or which ones are in the process of. And somehow you think, okay, I want to support those, I'll buy from them. In a sense, because there's a there's and if you can dangle it in front of them, do they have the grass and the grazing capabilities? Because this is not just opening the door and hope for the best. This is because we see that with, I don't know, there's a whole scandal now in the US, right? On pasture fed chickens and eggs, and yeah, technically they have a door to go out. And Paul Greef, friend of the show of Pasture Bird, is very angry about that. They have a door to go out, but chickens are scared to go out on the canopy if there's no canopy. If they technically have the door to go out and they never do, if yeah, it's officially pasture, but of course they never touch the pasture. So, what's the level of skills and maybe investments in in the pasture, etc., needed and in fencing and all of that to make that worth their wow? Or it's it's just easier to keep them in and buy a bit more feed.

SPEAKER_00 22:44

Right, right, right. And it is, it's it is a lot easier. When you've got a system set up, buy-in feed. It's a they're efficient systems and they're easy to I don't want to say they're easy, but you can get your head around them. And a farmer can get their head around it, it's controlled to actually send them all.

SPEAKER_01 23:01

Yeah.

SPEAKER_00 23:01

Yeah, exactly. So to send them out, not every farm, it's not gonna work for every farm. You don't just have to have there's gotta be some luck in it. You gotta have a farm where it's got enough acres right around those buildings to be able to convert it. But it would be the investment in fencing. I think we're getting the other thing too is that the technology that's coming with no fence thing, with collars, with invisible techniques.

SPEAKER_03 23:26

Full disclosure, I'm a very small investor, no fence. Yeah. And invested in fence before, very small again, like a few thousand. And we invested in Collie, which is actually a dairy-focused one in the Netherlands. They're not coming to the US anytime soon, but it's a virtual fence company focused purely on dairy, like to make sure they can go in and out, calling them for the milk machine twice a day, three times a day, with a curriculum button. So there's stuff coming there, but I'm happy to what do you see in that kind of because as a non-dairy farmer, it seems magical, but of course, you're under reality on the ground. What do you see on those kind of things?

SPEAKER_00 23:58

Yeah, I think there's a ton of potential, especially for these systems, and there's a couple of them out there that allow the cows to come back twice a day. So many of these that seem like originally were set up very good for non-mactating animals, beef heifers, where you could keep moving them. I think that trick is to bring them back, you know, twice a day.

SPEAKER_03 24:15

Because that takes so much time, right?

Building A U.S. Grass-Fed Baseline Standard

SPEAKER_00 24:17

It takes time. It takes time. But the other thing too is let's even talk about the conversion of farmland to grazing now. So if I'm a dairy farmer and I've got 500,000 conventional type of a setup, but I'm sitting in the middle of 500 acres where 600 that account could actually walk to. Some of these farms are set up like that. Putting in all the infrastructure with all the interior fencing, I can put a perimeter fence around this, put some lanes in, put some water in out there, and then run them with collars. This still allows you to have large fields if you need to do any mechanical harvesting or if you need to unravel or whatever. It's I think it would be a really nice transition step. It allows that farmer to get the data. A lot of these farms they get such good data out of their production systems and out of their cow management systems, and we don't see that as razors necessarily either. But some of these no-fence systems, more of these collars, we're able to get more of this data. And I think this is the stuff that a lot of producers just require. They're looking for that, they manage on that. So I think that also helps make another step that makes it a little bit more palatable, where you can get that actual cow data out of it, and nothing.

SPEAKER_03 25:32

See what it does to the animal and to disease pressure and production and quality potential, protein level. And now, let's say a farm like that has the land. The question is always then from the non-dairy people, why are they not outside already? Okay, it's definitely a big step, but are they growing the feed there as well? What's happening to the land around normally around these farms at the moment?

SPEAKER_00 25:52

A lot of it is growing, it's growing raw crops. So there could be cornfields or soybean or some hay and forage right around all those barns, is typically what it is.

SPEAKER_03 26:02

So that's relatively easy to get back into pasture.

SPEAKER_00 26:05

I think it very well could be. You know, it but it's got to be the right farm. Not of all of them are set up like that, but there's some of them where there's just this great facility. There's a parlor, there's manure storage, there's everything you need, and there's land all around it. Are you looking at those?

SPEAKER_03 26:20

Are you thinking about those like with the apprenticeship? If you have the technical capability of people that want to get into grazing, and of course, these are also the facilities where they can afford to pay someone because they are relatively large. Are you looking at some of those? Can you transition it to 1,000 or 700 or 2000? Like what are some of those compared to the ones you manage now? Because you manage quite a few farms on the smaller side, all very successful. What's what are you thinking there? What are you seeing as opportunities?

SPEAKER_00 26:46

Yeah, and really it's so I'm in the northern level, the the US. So we're under snow right now, we're cold, but we can grow a lot of forage during the summertime. My farms right now, the ones they're really the there's a good ratio between cows and land base around it. Cow can only walk so far. So I'm limited a bit. The farms I run, they're about 175 to 200 cow dairy. So I've got three of them that we put together. And we did that, we started that in 2010. So we bought our farm in 1998. As the farm grew to about 150 cows grazing-based dairy, we made that decision back then to say, okay, if we want to keep investing in dairy, how do we do that under a grazing system? And we could have doubled our farm and went to 300 animals, but we would have cut our grazing way down, we would have invested into more mineral storage, more feed storage, more housing.

SPEAKER_03 27:41

And you would be on that train track. Yeah.

SPEAKER_00 27:43

We'd be on that track because that track is about every seven years, you almost have to double it again. So at the end of this exercise, that just that's how the economics work. It's just like, all right, you turn it again, you turn it again.

SPEAKER_03 27:55

And that's because the bank lends you more money. Like, how is that possible?

SPEAKER_00 27:58

But that's just that's the way to get some of the efficiencies out of it.

SPEAKER_03 28:02

That's a bit of the pathway that you end up going on this thing, and they just and so you sat down and did like a seven-year, seven, seven-year exercise, and I don't I don't like the look of this and where this is going.

SPEAKER_00 28:13

That was just the trends of it you could see at the time. They just, and that is still, and when you start down that track, it's still efficiencies of scale. And the way to get the next efficiency is you're adding on how many more cows can you manage, how much more can you get out of them, how much more land can you turn for that equipment investment. And when we looked at that, we're like, yeah, if we do this through our career, we could end up with thousand, two thousand cow dairy on one spot. There'd be zero grazing, there'd be a ton of money into manure storage and buildings, and uh, and at that point, our successor probably maybe we could get another generation in to be able to transition into that thing, but that'd probably be it. Otherwise, our successor or buyer would be another larger either crop.

SPEAKER_03 28:59

So you could see children, your children coming. This is such a fundamental point. You could see your children potentially, but that would be the last generation because that it had to be a large company, whatever setup. Maybe it would be part of a large company, they would be employed, whatever, but there's a limit to that, which is such an interesting exercise. Do more people do that?

Tech For Transition: Virtual Fencing And Data

SPEAKER_00 29:17

More people shoot, probably I think they do, but I don't know. But I think you're gonna see it's very difficult in to keep these things coming right down right into a family type of a thing. I think you're gonna see large dairies, and they may have 40, 50, 60,000 cows and they're a family run type of a thing, but they're very much a scaled business, and that's they're just gonna look a bit different.

SPEAKER_03 29:39

Um you decided at that point, let's not double because then we keep doubling, but let's decentralize double. Or yeah, let's do it at other places.

SPEAKER_00 29:48

Yeah, yeah, that's so that's what we did. So when you look at especially in these rural communities, there were a lot of farms that were just okay, they could have been exiting the business. So yeah, instead of doubling, we decided duplicate and stay with that grazing type of a system chasing that, and it was low-cost basis. That's what we're really looking at at the time because we thought that was our competitive edge. Low cost, and I just enjoyed it. I liked I'm anyway. I just like all the things that go along with it. So at that point, we had picked up a second dairy, uh traditional 50 cow dairy, and we put the fencing, the water lines, the lanes, we put a milking parlor in it, some housing, we turned it into 200-cow grazing dairy, and then we did it again in 2020, and same type of a thing, and so that's where the three 200-cow dairies came from. But it's getting tougher to even do that because the land price and everything is going up, and there's fewer of these types of opportunities where there's some assets that are there where there is some old either manure storage or some facilities or things like that you can utilize, there's less of that's out there. So, to get back to your question, what could be this next opportunity? And I think it very well could be these three to 700 cow dairies that have got infrastructure there, maybe a bit of a depreciated infrastructure, that are located in the right spot that have got enough land around them. I think there are some opportunities there that uh that could be the type of dairy that you want to be able to transition into. If it's got that land base around it and it's got some facilities, it's getting tougher to just play build a greenfield, also, just with the costs of everything. Unless you've got that kind of assets behind you, uh just to go in and build them from the ground up. That's getting tougher always, too, to push that, push those numbers.

SPEAKER_03 31:37

And so then the strategy would be maybe slightly more south, where you have a bit longer grazing season, or at least get these animals out as much as possible, which might be half the year or whatever is feasible of the pasture and the grazing, and really lower the cost dramatically and hopefully improve lowering the veterinarian costs, improve the health drastically without losing production and potentially getting into maybe losing a bit of production in transition, whatever needed, but getting into higher value markets. Is that a fair summary?

SPEAKER_00 32:09

And that last part is the key. Yeah. It's gonna take a higher value market. So we're gonna have to find a market that wants what we're talking about. Whether they just want cows that are outside, they want a smaller scale theory, whether they're motivated by nutrient density, by diverse food security, diverse type of production systems, whatever their motivation may be, we need to develop that market and produce to it. Because you just are not gonna compete with a commodity market. There's a whole sector, and I'm not gonna knock it either, it's just the way it is, but there's a whole sector that's gonna be a commodity market, and we just cannot compete with that. So there's gonna be a good thing.

SPEAKER_03 32:47

Which you could until now, until recently, you could still. I agree.

SPEAKER_00 32:50

I think we could until whether it's five years ago or six something, it that is all starting to switch because these baked dairies have just gotten so efficient, and the cost of everything has gone up. It continues, not just land, but it's everything from labor to buildings to repair to all of these pieces where you just have to have the more or not?

SPEAKER_03 33:14

That would hit them even more, the large ones. But they can spread it out over more liters, so it doesn't work.

Converting Row Crops To Walkable Pasture

SPEAKER_00 33:18

And that's just that's flat on what it is. Because then when you deal with the let's even just say your cost of production is five dollars less and you're a 50 cow dairy, and you're five dollars less per hundredweight, you know, great.

SPEAKER_03 33:30

What is a hundred weight just for what is a hundred what is a hundred weight just for a hundred weight of milk.

SPEAKER_00 33:37

That's all that's sold. Yeah, yeah. So a hundred weight, so it's milk is all sold by hundredweight units. And right now, a class three price for milk, this is US milk, and it's per 100 pounds of milk, it's in that$16 range, somewhere like that. It's been as high as 23, so it's low right now. And I think we're gonna have some rocky roads ahead of us in dairy, but dairy keeps expanding, it keeps consolidating, and we just keep cranking milk. And I think that could be some of the reality, what our milk prices look like in the future is they could be staying in this of a level, and it's gonna take that scale to to be able to produce or get out of that commodity market. And is there out of that commodity market?

SPEAKER_03 34:23

How is the demand you mentioned nutrient density a few times? You said I I don't know if there's enough, or like how has that been like is there at least in in if you would transition a few of those at that point, like would it be easy, a few of the larger ones you mentioned, the seven three to seven hundred ones, with a clear grazing plan and all of that, and a clear quality plan? Do you see quote unquote easy markets for that to find? Are there distributors, supermarkets you have to get together and scale some of that infrastructure to separate it? Because of course you don't want to dump it into the commodity, the commodity tank. What would that look like? Is that feasible? Or is that you actually really have to do a lot of work on on showing that this is a completely different product, basically, because it's been grazed?

SPEAKER_00 35:08

Yeah, no, you're spot, it's not easy. There's nothing that's that easy. And the more scaled and consolidated this industry gets, the harder and harder it's gonna be. Because we've got just like we've got fewer dairies that are producing a lot more milk, we've got way fewer production centers or processors that are producing a lot more milk. So if you want to come in and differentiate a load of milk. So what are we seeing in gray and then elsewhere? Yeah, you maybe have to come in with 20 semi-loads so that they can stop that plant clean, run it through to make it worthwhile. And they all got to show up at the same time and it's more and more difficult. But there's still some infrastructure that's out there that can do this, and that's why I think it is pretty critical if we're gonna do something, it needs to be done here pretty quick because a lot of these opportunities will just flat start going away from the farms and the production type opportunities to the processing opportunities can go away pretty quickly. Uh so I think yes, something needs to move.

SPEAKER_03 36:05

Something needs to move, and then how different is the quality? You've been in milk for forever and dairy in general. Like we follow some of the work of Eric Smith, of Audacious, and the team on they do some on dairy, I think. I don't know if they published, but there's a whole hype, let's say call it a hype, around quality and nutrient density. How different is it in milk if you graze properly? Of course, you have the 100%, you have the sort of middle ground you're now saying, compared to, of course, then it depends what you feed them the other six months. What is the spectrum of quality and grazing and what do you like, what do you see and taste most importantly?

Duplicating Grazing Farms Versus Doubling Size

SPEAKER_00 36:36

Yeah, no, those are great questions. And so we're working with Eric Smith too within the dairy grazing alliance, and we're trying to dial in on that and say, okay, what is this nutrient? What did the milk characteristics look like at let's just say 50% grass versus 100% versus 30% or 20% or 0%. So we're trying to dial in more on that. So we're actually doing experiments across some of our dairy farms that are in the network just to try to figure out what that is. But what we are seeing, like I'll say it's uh it's this omega fatty acid ratio, the three to six fatty acid ratio. When you're looking at some of these heavily grazed type of dairies, you're seeing much more much closer to one type of a ratio, which is where you want to be. And then it's that CLA content, uh so you're seeing a considerably higher CLA conjugated linoleic acid. Thank you. I was gonna ask. Yeah. Yep. Which are both markers, health markers, nutrient density type of markers. There's more to get into with it, probably, but I think these are things that we're on the front end really trying to dial in. And so when I say creating a baseline definite.

SPEAKER_03 37:45

What is the minimum? Is it 50, 60, 30, 40? Yeah, to see most of the effects. Of course, they're not gonna be perfect, but you there must be an 80-20 somewhere.

SPEAKER_00 37:53

Correct. Gotta be something somewhere. We're targeting that 50% and modeling that out. Because the other thing that you've got to model is we also got to have a sector or a market. Perfection can be the enemy of good, too. So it may not be 100% organic, grass-fed. Absolutely. I'm not gonna knock it. That's gonna get you, I mean, right the top level of what you're looking for.

SPEAKER_03 38:18

That's especially coffee in this case, but it is a whole market under and especially coffee is maybe 10-50% of the market. Yeah. No, but I totally agree.

SPEAKER_00 38:27

I totally agree. But it can be it's unobtainable by so many. Yeah, uh, you can't produce it that one, it can be very unobtainable. Why is that?

SPEAKER_03 38:35

Is because of the climate, because of the land, or what's the difficulty there?

SPEAKER_00 38:39

High cost, just the high cost of producing it. So it takes more. So you there's studies out out of the northeast of the states. A cost of production can average$47 per hundredweight. And it's because of the land base that's needed, it's because of the production we're getting out of the cows, it's a lower production. You've still got a lot of the overhead in some of the facilities you may need, but it's just uh it's a higher cost type of a production system. So obviously that links all the way down to the retail market, so it's priced higher in the retail market and it does make it unobtainable. It's very hard to forms that are especially if they've been invested in any sort of traditional type of dairy, it's hard to make that switch all the way over and that transition and just to even financially weather that transition because you're gonna produce commodity milk for three years before you can even hit these value-added type of markets with organic cost.

SPEAKER_03 39:33

Yeah, no, good luck.

SPEAKER_00 39:34

Yeah, yeah. So there needs to be something, an entry point that we can produce to that is still giving us those profile that we're looking for, or else a portion of that profile that we're looking for, and can hit the consumer at a decent price where it's obtainable. So it needs to be obtainable to producers that are looking to produce to it, and obtainable to the retail customer, and there needs to be money for the whole supply chain to be made too. So what we start looking at that 50% or so, we're still it's gonna cost a few bucks to do it because you still do have that infrastructure, and you aren't getting probably the I know you're not gonna get the production levels out of them necessarily that get out of a big confined dairy. Confined dairies, these guys, they're getting they're good. Where they're cranking 28 to 30,000 pounds out of a cow per year, and they can be well over 4% butter fat and 4-5 butter fat and upper 3% on protein. That was unheard of typically. We can never drive that kind of a butter fat and protein and ammonia milk out of a cow, but we're just gotten very good with nutrition and pushing milk out of these animals. Uh sort of thing.

SPEAKER_03 40:54

Well, it's a different beast. Yeah, it's a different beast, and it's right not too because there's very poorly run, not so big ones as well, and they're very professional ones. There, but there's like the just the wording on cranking, like it's seen as a machine, like a milk machine, literally. You put X in there.

SPEAKER_00 41:11

And they're they're bigger cows, different genetics.

SPEAKER_03 41:14

Of course, yeah, yeah. But they would prefer to be outside, probably, if we look at the cow life of the cow is different. Do you see a risk there? I have so many questions. Do you see a risk there of disruption of fermentation? And if we get if it's so mechanical anyway, already, is there a risk there of some of the I mean if we had some of the stories we have a lot of investment went into that, most of it is not really there anymore, but some of that continues on precision fermentation, specifically on dairy, or some of the pieces of dairy that goes into the industry to make cookies, to make wherever it ends up, to disrupt that mostly highly industrialized. It's already a plant anyway, like an industrial plant. Do you see any any of that on the horizon?

SPEAKER_00 41:57

And you're talking with which pieces of milk?

The Market Premium Regenerative Dairies Need

SPEAKER_03 41:59

Without the cow. Like, how do you pre-if we've seen a lot of investment going into precision fermentation to get some of the pieces of the milk, let's say, in a factory at scale, at costs that are competitive to industrial dairy, which could disrupt the whole dare that that part of the dairy piece. Because if you don't need a cow anymore, then suddenly you get a different I haven't seen it at scale yet, but I keep reading reports like we'll get there at some point, just like incident precision fermentation got to there. And I I don't know enough about it to to even grasp it, but that could be a risk at some point for these immense investments that are being done in in confined dairy.

SPEAKER_00 42:33

Yeah, it could. I think it could be a risk, and I think the real risk comes the farther and farther everybody gets away from their food and understanding where it comes from and the connection they lose to it, the bigger risk lab type of food uh becomes. Because I think people just they just like say, when you get so far away from your food, you don't have that connection with it. And then all of a sudden it becomes rational that it's just getting produced in a fact by a lamb and coming towards you.

SPEAKER_03 43:04

And coming back to that, actually, how is the taste different? And you've tasted a lot of different milk and dairy products for sure, like grazing and systems, like how is that you say they they reach a very high level now as well, or very interesting butter, fat level, protein. What do you just as a consumer and as an eater and a drinker, uh, what do you see in difference in terms of grazing systems and and systems to produce dairy?

SPEAKER_00 43:44

Yeah, and I think we could take a look at the milk tests and look at the work like like Eric Smith and Adacious is doing, and there are some qualities, some density qualities in it. Actual flavor profiles on the grazing type of systems and the regenerative systems, the flavor profile can actually change through the year. And this isn't always the most interesting thing to markets either, because they want such consistency, but you can get flavor profiles that are changing a bit every year because if you're sending these cows out to eat what's there at that time of year, and your pastures are changing, everything changes, and your flavor profiles can so I think you're gonna get some of that. I'm like I said, my milk, I'm a raw milk dry, I just drink the milk out of my tank, so I'm not comparing a whole lot, so I think it tastes pretty good. But I don't know if I'm qualifying to make a lot of actual frames in that. But but I do think that we've got when I'm drinking a full fat type of a milk.

SPEAKER_03 44:42

And yeah, is that market like you say the further we drift away from where food comes from, we but we're definitely in the bubble, the Eric Smith bubble of food quality and then Kittridge and and all of Jill Clapperton and all of those, that quality is gonna be a big driver. But of course, consumers or eaters have to show up to that. We see that a bit, we've done a very interesting citrus episode with Herb Young, ex bayer, by the way, that that sells nutrients, then citrus, lab tested, at that at etc. and has a market for it. Of course, he's a small grower, so he can ship it because it's citrus. But He says people find me. Like people they Google nutrient that is that the same in dairy on the raw milk side? There's a lot of debate, obviously. But is do you feel that it's growing compared to the thirty, forty years you've been in this in terms of people uh starting to pay attention to quality, not just the labor organic grade, but it could still be a confinement. But do you see an interest growing at least on on quality and what how your food was grown or grazed in this case?

Processing Bottlenecks And Segregated Milk

SPEAKER_00 45:39

I do. I think the consumer is looking for that connection, and not all of them, but there's enough of a consumer presence there that are looking for these type of things. And if we can verify that, if we can deliver it, I think that's a whole solid piece of this too, because there are different, say, flavor profiles. And in so we're playing with the idea of actually one of the ways and looking at even trying to stay relevant in dairy and for our farms too, is we are messing around with basically creating our own cheese product or almost going a horizontal type of a business plan as much as we can. So can we actually have a little bit more influence on the market end too? And in some of the test batches of cheese, the cheesemakers are seeing a difference in just characteristics, qualities of milk that are coming in there, and they're just they're a little bit different. They're the they're good quality, and you they make some unique cheeses too. So I think we've got a lot of potential there in that end too.

SPEAKER_03 46:40

That's interesting, yeah. And because that's a big thing for any farmer, how can I smartly do value add and process some of it or turn something into something slightly more durable or less perishable, which of course cheese is, and milk has an issue, you have to sell it like the day itself, or maybe like because otherwise, and and so there is that constant, you're not in the easiest market in that sense. You cannot store it and wait for a better price. You can store it in milk, or you can store it in cheese and wait for a better price at some point, but that that's a whole different business or a whole different craft to get into.

SPEAKER_00 47:12

Yeah, and and dairy is tough to do, it's tougher than some of the other livestock sectors where it's whether it's poultry or small ruminants or beef or anything like that. You can store those products, you can go, you know, freeze. Dairy is I mean, you get it. It's you've got 24 hours to get that processed and then figure out where to store it, how do you balance it, how do you say it's enough. But but it's a pathway that we're playing with here right now in our dairies to say, okay, how can we add some value to this down the road? Because I don't take it for granted that we're safe for the long term to stay relevant, and one of the reasons why we've got the dairies is that our goal was to try to produce a tanker load of milk every other day, and that's really about where we're at here right now. To try to stay relevant. So if I can get that, because those are the things it's as simple as trucking milk that's gonna make smaller farms irrelevant and has already. If a processor or a brand or anybody has got a if it takes 10 farms and they're and it takes a 600-mile route to fill up a tank or load of milk, that's a high cost of procurement. Versus if one entity or a couple of farms can ship a load right down to you, that's a lot cheaper. And it's those margins that are really gonna keep different markets and brands and farms and processors relevant, and it's just like say just economics.

SPEAKER_03 48:33

And coming to a few questions we always like to ask, let's say we do this in a room full of investors or a theater, and we talk a lot, obviously, on grazing and dairy and the industry on stage, and the room is filled with people in the finance industry, investors either uh investing their own money or other people's money. And what would be your main message, or what would be a seat you would like to plant in their mind that they remember the next day when they're back at the office, when they're open their laptop or their computer, and they should do or look at something. What do they what should they remember from the evening we had in front of them?

Nutrient Density: Omegas, CLA, And Targets

SPEAKER_00 49:06

Yeah, uh from a macro standpoint, let's take a look at U.S. grass-fed. And U.S. grass-fed sector is growing, the organic sector is growing too, but so is the actual grass-fed type of a sector. It's looking at about 6.5% growth per year, where it could be starting million. We're looking like it could be a$7 billion industry in the US. That's just the grass-fed one by 2032. There's some of it being produced domestically here, and it's coming through the 100% grass-fed type of uh organic market. Wonderful. But we can't produce it all of it. There's so much of it that's actually also coming in as imported type of products that are coming in here. Bottom line is there's the opportunity to create a domestic, grass-fed type of a production system here that's checking a ton of boxes, all the way from food security, diversity of production, a way to transition assets in this egg of the middle dairy world to environmental type of boxes it can change. Community jobs, community, nutrient density, all of these things, and diversify our US dairy system too, and add value to it. So, to do that, it would really take about 5% of our cows, if you do high-level math, about 500,000 cows could produce to this market, and just say two acres per cow would be about a million acres of land. So I think there is a solid opportunity to have a million-acre uh dedication into a grass-fed type of a sector underneath a solid baseline standard. So we're talking a multi-billion dollar investment, and if you even wanted to really rethink this thing, I think that there is investment that could come right along to rethink even regional type of a processing where you're clearly identifying how we can segregate milk efficiently, and how can you efficiently create this sector? So I think there is a world of value and economic driver in here that is waiting to be released, and that is out of this, basically, this grass-fed type of a sector. If you'd utilize basically 5% of dairy, of land and cows that are dedicated to dairy right now. Our dairy industry in the US is about, I think it's like$58 billion industry. That 5%, if we would engage that toward a grass-fed to the market that wants it now, you could be looking at$7 billion. It's well over 10% value or of the market, 5% of the assets to it. So I think there's a huge potential there in developing more of a US type of a market here.

SPEAKER_03 51:50

Focused on dairy and beef, or is that combined? Or what do you see there? Dairy, pure dairy.

SPEAKER_00 51:55

We're looking at that dairy market itself, and yeah, obviously beef is right there also.

SPEAKER_03 52:00

Is there a market there as well? I remember I haven't talked to Dan Barber about it too much, but he just released something on like the milksteak or like the dairy cow after to make it uh the most highly praised meat there could be, which in some cultures it is, in some others it's not. Again, I haven't I'm butchering the pun unintended, I'm butchering the process, it's way more complex than that. But at least also valuing the dairy cow after a lot of hard work. What do you see there on the beef side?

SPEAKER_00 52:27

As far as the dairy cow filling in some of that market, absolutely. I think it's very well can in there again. If you're pulling out of these types of a market, so let's you're pulling out of a grass-fed dairy type of market where there is a floor. And if that meat could be segregated into burger or some of the it's harder to get some of the higher end cuts, but higher end cuts either way. It's regarding it.

SPEAKER_03 52:51

Yeah, I think they're working on some some processes to not food food processing done well, to make it to turn into something really again. I will get Dan back on the show and talk about it. Last time we didn't, because that would be is would that drive some interesting margin or is it just a fun side thing?

SPEAKER_00 53:07

No, I think it definitely could drive some margin. I think those markets definitely could. It's in there again, it's just a matter of segregating that, figuring out the supply chain, the processing, and all those pieces. It feels like we're getting a little bit more investment into some of the smaller processors throughout some of our states here, too, to get back to we've got a few smaller processes. Access to original type of.

SPEAKER_03 53:31

The same with slaughterhouses, right? It's super centralized. Well, right, and that's yep. And yeah, of course you're not gonna do grass fat if you have to drive 10 hours to get your cow somewhere and you don't get a slot, and the quality and stress of the animals is gonna let's say any quality improvement you made by grazing probably disappear by then. And that's it's yeah, it's difficult to comprehend the size of the processing issue, I think, in the US. For us in Europe, etc., where it's like a lot of things are nearby or relatively nearby or still around, and not perfect, etc., but at least accessible if you wanted to do that. And it just became so centralized and thus very tricky. But you're saying there are also opportunities, and that leads to the next question. If you partly answered it, maybe there's another answer to it. But if you would be in charge of a a billion dollar tomorrow, somehow magically that happened, how would you put it to work? What would be your main buckets of investment? It could be very long-term investments. We're not talking three to five years, where like you can do with it what you want, but it has to be put to work. What would you prioritize if you had a billion dollars?

Taste, Seasonality, And Cheesemaking

SPEAKER_00 54:37

Billion dollars, it would be building out this grass-fed type of a sector. And it would be engaging with the billion dollars, you could engage with a higher volume type of a market and realize an off-take agreement with a brand, a retailer, and realize a longer-term off-take agreement, and then start backing that up through the supply chain and ultimately invest in the production. I think you could integrate, you could identify a region where there was scale production and opportunities, but that's what I would do with it. Say, okay, there's a billion dollars here, let's look at a retail, let's try to build out a solid off-take agreement, and then back that all the way down into the conversion or dedication to grass-fed through dairy production systems and identify those three to seven hundred cow dairies that were ripe for grass milk production.

SPEAKER_03 55:35

That's really the unlock, you think, the offtake from some kind of retailer brand, or create a brand, which could happen as well.

SPEAKER_00 55:43

I think that's so much of it. Farmers can produce to demand. Uh in the demand is not a good idea. It is. Yeah. And so many times we look at this and we say, okay, we're going to solve this by convincing farmers to produce a different way to a system. Let's convince farmers to put cows on grass. And because of all the reasons, because of all X reasons, whatever. But at the end of the day, if there is not a value in it or extra dollars in it, they can't do it. They're not going to do it. But if you could come to a dairy farmer say, listen, I've got a five to ten year offtake agreement that's going to float that$10,$12,$15 higher than class three if you're able to send, put up fences and send those cows out and pull down X amount of grass from them. You're going to have some dairymen that are interested in doing that. And I think that's really what it's about. So with a billion dollar investment, it would be putting that together. And then you come to those dairy farmers with, I not only have us off-take agreement, a market, but I've got some innovative, some patient capital here. So that is with that billion dollars, would be really nice if there was a blended stack where you've got some patient capital in there. You might even have some mission-related type of investment in there that it had a little bit of patience that you could convert these dairies over and then allow them to hit their return.

SPEAKER_03 57:10

Super interesting. And if you we take away the fund, unfortunately, but we do give you a bit of magic power to change one thing overnight in the sector. What would that be if you had a magic wand?

SPEAKER_00 57:22

In the dairy sector?

SPEAKER_03 57:23

In general. No, it could be general. It could be from better flavor, it could be we've heard all the animals outside. We've also heard end of ag subsidies in Europe, global consciousness. There are there are a lot of answers to this question. Take it as far and or as close to home as you want to.

SPEAKER_00 57:38

Boy, boy, that's a wide open thing. But it's really only one thing. We're not out of the end where you can do more. Boy. I just go back to cows on grass. It's that simple thing. If there was, let's just say we could take in the US 5% of the US dairy production was linked to a grass-fed or a grass-based type of a dairy system. That's what I'd like to see. What will catalyze that? There's a variety of things that could catalyze that, but I only get one thing.

Trucking, Scale, And Staying Relevant

SPEAKER_03 58:09

And but if we take it one step further, what would be one thing to enable, I don't know, 30%, 50%? What would be erasing the investment appetite or some of the incentives, or I don't know, sort of factory mentality, or erasing the depth of a lot of these players? Like what would be a magical? This could be absolutely not possible in the near future, but if it happened, it would be very interesting for the dairy space, or globally suddenly consumers are waking up to Omega 3-6 rate. I don't know. Like what would be such a big kicker or a driver for systemic change?

SPEAKER_00 58:41

Uh food security, I think it's going to be a lot of it. Interesting. When you get a food system that is so incredibly efficient, and that's what we drive to, and especially that's what we're looking at here. It's a very scaled, a very centralized, but it can produce very cheap food and it can be very efficient economically. But it's also very brittle. When you've got so few players looking exactly the same, that thing is as brittle as it is strong and efficient. And there could be significant weather events, there could be significant geopolitical events, there could be things that can completely disrupt things. And it would be a significant disruption like that, where people can say, okay, and where they also get connected with their food a lot more and they realize the depth of we need more decentralized type of food. It needs to look a little bit different, we need to be closer to it, and the way that happens is you've got more of these regional type of systems. They still got to be efficient, they got to be economically efficient. Of course, but you can do it, it can be done.

SPEAKER_03 59:46

Very interesting. And as a last question, definitely inspired by John Kemp, who asked it slightly differently. He said, What do you believe to be true about agriculture that others don't? But we like to ask, what do you believe to be true in this case about regenerative dairy that others don't believe to be true? Like, where are you different in your bubble of graziers and dairymen and women?

SPEAKER_00 1:00:05

Yeah, biological systems will still at the end of the day determine those rule. You can you can't completely take the biology out of animal and plant and systems in general. That will the universe will talk in time and it will bring you back, I think. And I think that's just something that we can play with it. And I think we're we're showing it right now, but I think it's it's the true biological systems which will ultimately have the say in in where a could look like.

SPEAKER_03 1:00:40

And I'm always regretting as a last question, but there's another one because this is a great way to wrap up. There will be not a reckoning, but there's only so far you can push a biological system in a living system and a factory and industrial or what is it, industrial mindset or engineering mindset, sorry. Like these are complex systems and not complicated systems. Is there ways it came up before and I thought about it before? Are there ways to lower the costs of this absolute higher end, the specialty coffee of the dairy, the grass fat? You said there, the costs are like do you see opportunities there of lowering those costs with better grazing, with new technologies, to of course genetics potentially as well, but are there pathways to to lower that, or is it this is the costs are there and there are just not many many levers we can pull to to make that more cost efficient?

Investor Lens: A Million Acres Of Grass

SPEAKER_00 1:01:30

I think there's always spots with integrity that you can reduce these costs. It can come from better grazing, better management. There can be some genetics in there, it can be data and technology that can help us out with it. You always got to be careful which training you start, though. But I definitely think there is. I think that there is this market could scale. And this is the other thing that I look at the benefit if we could create a high integrity, I see a baseline grass-fed standard. It's about creating a bigger pool in a way and a bigger pie in the sector. But could that also lead to more processing opportunities and maybe more regional type of processing opportunities, where all of a sudden the cost of trucking maybe isn't as high, and that all brings these costs down too. So as that whole sector gets larger and that's actually scales, it's gonna bring these efficiencies into play. And I think that's how that does when it when these sectors become the closer to the norm than the outlier, those efficiencies, there'll be some scalability efficiencies that come with it, if that makes sense.

SPEAKER_03 1:02:48

Yeah, and potentially we see some mini dairies in the Netherlands, like that can easily separate even on the I saw it in the supermarket actually, some bottled milk from the cow. Like there was a name of the cow on it. Like they could trace it back to, which I don't know if it'll work. I mean, it works, but I don't know if it works in terms of is if consumers are interested. I bought it because it was fun. But you can taste different and you could see the different levels of fat in it. Like you could like, I actually want a fatter one today for my cappuccino or something like that. So I'm curious, like if of course if it gets a bigger sector, there will be more machinery that is appropriate size. It might be smaller. There's a whole movement of decentralized processing anyway, but that caught that costs. Like how AI and computing helps with that, like how do you make that the whole robotization, of course, in dairy is quite advanced into the big ones. So they're yeah, but you have to be careful which path you step on, and you just go down the same high-depth, high production pathway. And how do you augment or enhance that biological activity? Like, how do you produce more and better grass, reduce veterinarian cost, produce more milk as well, maybe separate it, create some brand. It's a fascinating puzzle. Thank you for bringing it here with us. Thank you for the work we do. Oh, you do, sorry. Thank you for the work you do and bringing it here to us so we can listen to it. And for waking up very early, a dairy man wakes up and women wake up very early, but this was very early to make this happen in a snowy environment and very curious to follow the other developments over the next years, as it's gonna be a rocky ride and potentially a very interesting one as well. And of course the nutrient density and quality data that's coming out will be keeping our ears and eyes open to that.

SPEAKER_00 1:04:27

Yeah, hopefully we'll have more coming off through the dairy grazing alliance, and there'll be things to come. So it's gonna be a good ride. Put all the links in the show. But I appreciate everything you do. Thank you again. And thanks for all you do and your work in this world and bringing these stories out. It's important. Appreciate that.

SPEAKER_03 1:04:43

Thank you so much.

SPEAKER_00 1:04:43

It's a joy. Thank you.

SPEAKER_03 1:04:49

Thank you for listening to this deep dive on dairy. If you're not into dairy, I hope this was relevant and interesting. I think it shows some of the history where regen practice in this specific one really had a cost advantage for a long time, and then concentrated KFA operations became so good and even relatively okay in quality, of course, with all the issues like the animal is not a machine, and we all agree on that, but that's the direction that part of the industry took. And until there will be a major shock, I don't think that will change or major shocks, which I think we discussed as well that could be coming soon or not. So, how do we make sure we survive this period of until the major shocks in that system comes down or until it's going to be regulated stronger, et cetera, et cetera, et cetera? And I think Joe showed some very nice and interesting directions of okay, what are mid-1? What are mid-sized ones on distribution? What do we need in terms of offtake? What do we need in terms of technical assistance? What do we need in terms of size? And what is good enough? Is 50% grass-fed? Does it get you to 80% of the nutrient density and quality that we want? Let's see what the research of Eric Raudacious says, of course. Or is it 70% or 80%? Or can't you escape it? It needs to be 100. And then of course it depends on the feed they get as well, as the other 20, 30, 40, 50%. I think it's very interesting because perfect is definitely the enemy of movement and good. And the question, what is good enough? And what are interesting investment cases? Like how can you put significant money to work to hold a lot more jobs regionally and locally, and to just have way shorter food chains and thus way more robust. So very curious what you thought of this episode. As always, get in touch. If you have feedback, I do read everything. My email is a mess, but I do read everything. And definitely, hopefully, see you at the next one or hear you at the next one. Chao. Thank you for listening all the way to the end. For show notes and links discussed, check out our website, investinginregenerativeagriculture.com/slash posts. If you like this episode, why not share it with a friend? And get in touch with us on social media, our website, or via the Spotify app, and tell us what you like the most. And give us a rating on Apple Podcasts or Spotify or your podcast player. That really, really helps us. Thanks again and see you next time.