Sustainable Profits Green Valley Dairy implements a sustainability platform modeled on profitability

Commitments, unlike rules, aren’t made to be broken.

Commitments, unlike rules, aren’t made to be broken. When you commit to something, you’re creating an expectation that an action is going to take place. Some commitments take little investment. After all, it doesn’t take much to meet your friend for social hour. Other commitments, like promising to follow certain business practices, can mean a significant investment.

Making a commitment to sustainability can be one of those significant investments. But making that commitment is certainly one worth making.

“When you do a long-term financial model on sustainability, it’s the right thing to do,” says John Jacobs III, who along with his family own and operate Green Valley Dairy near Krakow, Wis. “Now, you might sacrifice some short- term profits for long-term gain, but if we continue going down this path, we will have a very efficient dairy.”

Committing to sustainability means adhering to three generally recognized pillars: people, planet and profitability.

Committing to sustainability means adhering to three generally recognized pillars: people, planet and profitability. The Jacobs family understands taking care of the rest two pillars—people and the planet—will lead to healthier cows and greater profitability. Every decision made on the dairy is geared toward that sustainable goal.

“Our definition of sustainability is making the right decisions for the environment, our livestock and our people to allow us to be successful and stay in business for future generations ," said John Jacobs IV.

"We take the view that we’re going to farm forever, and everything we do has to t with that,” John III says. “Our definition of sustainability is making the right decisions for the environment, our livestock and our people to allow us to be successful and stay in business for future generations,” says John Jacobs IV, who manages the 3,200-cow dairy. His dad, John III is the financial manager and started the dairy back in 2000 with his brother Mark, who now manages special projects on the dairy. John has two other sons on the operation, Joe who manages crops and Paul who oversees young stock.

“Everything we do to try to become more sustainable has effectively lowered our cost of production,” John III says. “For us it’s a business model. It’s about being optimally efficient.”

Good Business Sense

Good Business Sense: Part of creating an air-tight business model is ensuring market access. Food companies, following consumer preferences, are making sustainability commitments that encourage those within the supply chain to adhere to certain sustainable production and manufacturing practices.

General Mills, makers of Haagen- Dazs ice cream, Yoplait yogurt and many other dairy-laden products created goals around sustainably sourcing raw materials. In 2013 the company committed to sourcing 100% of its raw fluid milk from sustainable sources by 2020. For General Mills, that means environmental stewardship and reducing greenhouse gases. According to the company website, 38% of raw milk is currently sustainably sourced.

For General Mills, sustainability also makes good business sense. “As a food company, we have a vested interest in making sure Mother Nature continues working well,” says Kevin O’Donnell, responsible sourcing director at General Mills. “But there is also a business imperative for us to have healthy, resilient supply chains.”

While consumers have pushed sustainability efforts, the business aspect of sustainability has created broader adoption of sustainable practices. “For all of ag, but especially dairy, sustainability has been a legacy,” says Chad Frahm, senior vice president at the Innovation Center for U.S. Dairy, a checkoff-funded organization.

Food companies, following consumer preferences, are making sustainability commitments that encourage those within the supply chain to adhere to certain sustainable production and manufacturing practices.

“Making good business decisions leads to more sustainable operations. That’s something we need to continue to prove with science and data, but also communicate to our consumers and customers.”

The Jacobs family at Green Valley Dairy, self-proclaimed business modelers, understand the business importance of sustainability. Even though it was obviously the right thing to do, John III says it was the business models that made their more aggressive sustainability efforts make good business sense.

Long term benefits

Long term benefits: One of the largest investments was building a digester. But their initial decision to build the digester wasn’t based on sustainability.

The initial reason for the digester was to nd a better bedding solution away from sawdust and mattresses. John III saw an advantage to using recycled manure and the digester could help produce that resource. The Jacobs’ also wanted to expand the herd, but there was considerable pressure from neighbors in their mostly traditional, small-herd region.

“We would spread manure and my phone would ring off the hook,” John III says. “I told the town chairman that we wanted to go to 3,500 cows and enhance methane production. The resulting methane gas is piped to another building where it powers two 800-hp methane engines, used to generate power for the dairy.

About 1.2 megawatts of electricity is generated, which is enough to power about 1,000 homes.

About 1.2 megawatts of electricity is generated, which is enough to power about 1,000 homes. The dairy consumes about a third of that energy. Heat generated in the process keeps the shop, calf barns and other buildings warm, plus maintains the manure inside the digester at a constant 100°F all year. The remainder the short-term, but John IV says that if they do another project, he’s building a digester. “We have to gure things out on the economics, because we can’t pay for it with cows. But it’s the right thing to do,” he says.

When the digester was installed in 2005, natural gas on the Chicago Mercantile Exchange was trading at about 11¢ per therm. Today it trades at about 3¢ per therm, even as energy costs continue to rise.

“My goal is to be fully sustainable from an energy standpoint.” says John IV.

“My goal is to be fully sustainable from an energy standpoint.” John IV says he would only really need voltage support from the power company when generators aren’t being used, and hopes someday the power com- pany will share in his vision.

Another element of the environment pillar are cover crops. Depending on the time of year and conditions, corn silage ground could be seeded with annual rye, cereal rye, a clover/radish/rye mix or winter wheat. A springtime minimal disturbance vertical till is done with a manure application. The goal is to hold the soil and nutrients to be used by crops when the time is right.

Cover crops are another investment that didn’t see immediate returns, but has paid off over time. “If you look at it for one year, cover crops can cost around $40 an acre. Looking at the return, it’s tough to justify,” John III says. “But then soil organic matter increases and you put less nitrogen on and retain more phosphorous, and you have a better soil structure to get crops in and out on time. All of that takes years to build but, boy, once you’re there it’s hard to beat.

The technology debate

The technology debate: Using technology to enhance productivity causes lively debate in sustainability circles. Technology that creates more output with similar or fewer resources is a benefit.

Feeding a diet with BMR corn silage is part of the Jacobs’ sustainability efforts, as are rumination monitors. “We use technology to give us leading indicators so we can prevent sickness and disease and keep us from reacting to situations,” John IV says.

Ironically, a loss of the ability to use technology that can enhance sustainability rBST has forced the Jacobs to re-evaluate management practices.

The only way to make up for that loss is to become better at what you’re doing,” John IV says.

“With the loss of technologies like rBST you have to become better managers. You have to be that much better at cow comfort, rations, how feeds are put up, selecting genetic proles, etc. The only way to make up for that loss is to become better at what you’re doing,” John IV says.

But consumers don’t always see technology in a positive light. “Our challenge with consumers has been communicating why producers use technology,” Frahm says. “We need to lead with our values and make sure consumers understand it’s important for us to produce healthy, safe products and, because of that, we use certain technologies to enhance those efforts.”

But just as there is wide variety in the types of dairy operations, thereis a wide range of consumer preferences. “We are a consumer-facing food company, and at the end of the day the consumer decides,” O’Donnell says. “We have vast swaths of our consumer base that are quite ne with conventional agricultural practices. We also have consumers that want organic or gluten-free products. We simply try to deliver products that consumers ask for.”

Investing in People

Investing in people: Just as investing in technology is important, investing in the people who both use the technology and benefit from it is critical as well. “We put a lot of time and effort into training our staff and working with them on personal and professional development,” John IV says. “They are one of our greatest resources and assets.”

Employees are encouraged to grow within the operation. Some could move from entry level to middle management positions. “It’s about giving people the training and knowledge to empower them to grow,” John IV says.

“It’s about giving people the training and knowledge to empower them to grow,” John IV says.

Off the dairy, it takes industry investment so consumers respect the efforts by producers to make products safe and wholesome.

“We need to be more bold, open and transparent about why producers use certain practices,” Frahm says. “The questions being asked are ones that we can con dently answer about why we do certain things.”

“We need to be more bold, open and transparent about why producers use certain practices,” Chad Frahm says.

Credits:

Mike Roemer

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