MILKING THE DAIRY MARKET
DAIRY PRODUCERS PROVIDE CHALLENGES AND OPPORTUNITIES FOR AGRIMARKETERS
Linda L. Leake, Contributing Editor
Can you describe an "average dairy producer"? "There's no such person," contends Jim Dickrell, editor of Dairy Today magazine. "The dairy industry is more diverse than ever before."
Despite unprecedented diversity, U.S. producers milking the nation's 9.188 million dairy cows on some 85,000 commercial dairies now averaging more than 100 cows per farm share a common bond, Dickrell says. Their major concerns are universal: cost control, margins and profit.
The number of U.S. dairy farms is decreasing as fast as the size and scale of herds is increasing. Some industry experts predict that in ten years, there will only be 10,000 to 15,000 dairy farms left, and most of the survivors will host at least 500 to 1,000 cows.
With these mind-boggling trends and changes, dairy producers are becoming more and more sophisticated in how they make business decisions for production inputs.
COMPUTER BUSINESS MODELS
Despite growing independence, producers still value recommendations from trusted resources like veterinarians and nutritionists. Recognizing this, Merial, with North American headquarters in Iselin, N.J., developed computer business models that veterinarians and company sales representatives can use to evaluate appropriate treatment programs for individual dairy operations.
One computer program, JADE, introduced in September 1999, evaluates the cost/benefit of implementing a coliform mastitis vaccination program. Another, PARABAN, evaluates the level of parasite control provided by various treatment protocols. With both programs, producers provide herd-specific assumptions, which make the computer outputs relevant to their situations.
JADE has been embraced by bovine veterinarians in all parts of the country, according to Todd Prescott, Merial's dairy marketing manager. "Dairy vets who utilize computer technology and offer value-added services are the most likely to implement JADE in their practices," Prescott says. "Computer programs appeal more to progressive vets who want to differentiate their services."
JADE is the first compact disk program that vets can use to generate a cost benefit analysis of using a coliform mastitis vaccine. "Three or four other companies offer coliform mastitis vaccines, but Merial is the first to provide an easy-to-use support program with economic return information," Prescott says.
"We are not just selling products. We are also implementing management programs to insure that our products work," concurs Jim Brewer, marketing manager for Pharmacia & Upjohn's dairy strategic business unit. "Our ultimate goal is a healthier cow that produces more calves, more milk and more profit."
Domestically, the Kalamazoo, Michigan-based firm maintains a dairy specific sales force of 35 reps in primary dairy markets. Additionally, some 20 multi-species reps promote the company's line of some 15 dairy pharmaceuticals in less prominent dairy areas.
"Our sales representatives spend a lot of time on dairy farms, but since most of our products require prescriptions and can benefit from added management advice, we work closely with veterinarians," Brewer says. "Veterinarians help us implement and monitor product and program use with their dairy clients. The collaborative effort helps insure that our products will provide optimum performance and reduces the risk of failure. That's good for producers and itís good for us."
Just over a year ago, Pharmacia & Upjohn formally implemented a dairy management program called the "100 Day Contract" dairy wellness plan. The program provides a standardized process whereby producers can monitor each cow's health and reproductive status during the most critical 100 days of her cycle. The plan's three phases include the 30 days prior to freshening, the first 10 to 20 days after calving and then until 70 days into each lactation.
"The ultimate goal that drives our marketing strategies is to provide dairy producers throughout the world with the means to face the challenges of their industries, and improve their efficiencies" says Mark Hart, senior product manager for DeLaval.
Founded in 1878 when dairy industry pioneer Gustav DeLaval invented the first continuous discharge centrifugal cream separator, the DeLaval company, now based in Kansas City, Missouri, currently operates 55 market companies in some 100 countries throughout the world. DeLaval sells a full range of milking equipment, supplies and hygiene products.
Known as Alfa Laval Agri Inc from 1992, the company recently reinvented its corporate image, most notably by reverting to its original founder's name in April of this year. A second marketing strategy in the U.S. and abroad is the continuous improvement of technical services, including scheduled maintenance programs, route truck sales and educational seminars.
"We look at the global picture, but we have to act locally to market our products and support services," Hart emphasizes.
A prime example of this philosophy in action can be found in DeLaval's most unique market, India. The country leads the world in cow numbers, with 200 million bovines and 75 million dairy producers. However, the average Indian operation usually milks cows by hand. To improve production efficiency, local Milkobikers drive from farm to farm on a moped, carrying a portable DeLaval milking machine.
DeLaval's distribution networks are designed to compliment local conditions and culture. In the U.S., independent dealers are DeLaval's key distribution channels. In other markets, company employees provide goods and services, while a few markets feature/a combination of dealers and company reps.
Hygieia Biological Laboratories is one company that deals with the ultimate marketing challenge, namely controversy. The Woodland, California-based firm develops, manufactures and sells livestock vaccines.
Hygieia's most newsworthy invention to date is a vaccine for papillomatous digital dermatitis (PDD), commonly known as hairy footwarts. The hoof disorder is considered one of the most significant, devastating and costly diseases currently affecting the dairy industry.
About 20 groups of researchers are investigating PDD worldwide, and while most agree that PDD is caused by a bacteria, all but Hygieia's team believe that the exact cause of the disease is yet unknown.
Hygieia isolated Serpens species bacteria from hoofwart lesions in cows in 15 different states, and represents this bacterium as the true cause of the disease, according to Dale Wallis, Hygieia's senior staff veterinarian. Using Serpens bacteria, Hygieia developed a commercial vaccine for the prevention and treatment of PDD. In March 1998, the firm received a conditional license from USDA to sell its Serpens species Bacterin throughout the U.S.
Hygieia has satisfied three of four USDA requirements for full licensing, safety, purity and efficacy. ìEfficacy is perhaps the most critical element, answering the question 'Does the vaccine work?'" Wallis points out. She is currently working on a test to prove the final criteria: potency.
Despite positive results from veterinarians and dairy producers throughout the country, Hygieia's footwart vaccine has not been widely embraced. Many veterinarians and scientists are skeptical, claiming that no other researchers have isolated the unique and relatively unknown Serpens bacteria from footwart lesions.
Since receiving the conditional license, Hygieia has sold about 500,000 doses of the vaccine.
"Our challenges to get the footwart vaccine to the end user are many and varied," Wallis says. "Ads are cost prohibitive for us right now, but we provide veterinarians and distributors with educational materials to include in their newsletters, we post information on our Web site, and we work to overcome rumors about Serpens species Bacterin one vet and one dairy producer at a time." AM
Freelance writer Linda L.Leake covers the dairy industry from her home base in Wilmington, N.C.