The last few years have been challenging for the dairy industry, including Prairie Farms Dairy, the largest dairy cooperative in the Midwest.
But Matt McClelland sees opportunity ahead.
“I’m very bullish on ‘23,” he told the Illinois Farm Bureau Board of Directors. McClelland has served as chief executive officer of Prairie Farms since Jan. 1.
“We’ve had issues the last few years, but some great opportunities are coming in ‘23 and a lot of them are based on the idea that we’re providing solutions to the problems we’ve experienced in the last couple of years,” McClelland said.
Ongoing challenges include the lingering pandemic, inflation, supply chain disruptions and a labor shortage. Currently, Prairie Farms is looking to fill job openings that amount to 6-7% of its total workforce.
Moving through the next few years, he stressed the importance of understanding the evolution of dairy farming, especially within the dairy co-op, is “fewer, but bigger,” meaning fewer farms and bigger production.
“We also realize the importance of every single member whether they’re milking 10 cows or 5,000 cows,” he said. “As we see this change in the dynamics of fewer farms, but more production, we also recognize we’ve got a lot of members out there that are counting on us to provide them with a market and we’re going to do everything that we can make sure that those small family farms can continue to thrive.”
McClelland laid out key objectives for the future, including better utilization of base production pounds, milk price modernization, continued margin improvement, among other goals.
Record high milk prices typically aren’t good for the manufacturing production side because cost is the No. 1 component. “(Something) to recognize and part of the vision for dairy farms over the next several years is we can achieve good milk prices at the farm and good margins on the processing side,” McClelland said. “We need to make sure the cost of those goods get into the marketplace at the appropriate time in the appropriate fashion. We’ve got to recognize those milk checks are important to sustain those producers.
“My job is to make sure that the cost of that good is now being transferred and in the marketplace. So the challenge is to get both boats to rise — not necessarily seeing one benefiting from the other in a negative way.”
While the number of member farms has dropped by 15% the past couple years — an average of one per week — overall production was only slightly down thanks to skilled dairymen and efficient technology.
“The cows are still there, the nutrition is there, the genetics are there. The efficiency on the operations have gotten that much better,” he said.
Many have left due to retirement or exiting the industry, he added. Prairie Farms currently has about 699 farm members.
To create efficiencies across the co-op’s districts and open up some markets, Prairie Farms is consolidating from 10 to eight districts next year, McClelland told the board, adding he also sees expansion opportunities in the Chicagoland area, Midwest, Southeast and other markets.
He noted brand recognition has already reached as far as Alaska, where Prairie Farms’ shelf stable milk is being sold. The milk has a shelf life of 12-13 months and can be available anywhere and any time.
“The focus will continue to be on Prairie Farms as a national brand,” McClelland said. “We have an opportunity to expand our product line considerably.”
While the co-op is about sales and service, McClelland said he has stressed the need to become a solutions provider.
“There’s a lot we can do as an industry and as a co-op, and in many cases, it’s telling the sustainability story of our farms,” he said. “We need to capitalize on that and simply move from a supplier of milk to a solutions provider.”
Prairie Farms, an affiliate of Illinois Farm Bureau, was founded in 1938 and is currently headquartered in Edwardsville.