Fri, 27 Jan 2006

The Demise of the Milkman

Milk ManThe milkman returned for almost a year - but he's gone back to the Fifties now. Hammerstead Farms is discontinuing our dairy home delivery service. I'm afraid that any action I take to try and alleviate the current situation and continue our operations would merely prolong the agony - and I hate long goodbyes.

There are a couple of reasons behind this, although the most immediate problem is one of supply. When I arrived at the dairy for my pickup last Tuesday, there was no whole milk. The week before that there was no strawberry yogurt and precious little chocolate milk.

As a result, the route has been running at a serious loss for the past three weeks - and this week was a near total loss. Whole Creamline milk makes up the bulk of my sales - and nearly everyone who gets other dairy products also gets at least one milk, so there was little point in spending the gas to run the route.

I don't have a cold room for long term milk storage on the farm - all I have is a small powered cooler, which is mostly used to hold eggs. I had one bottle of whole milk and two plain yogurts in stock from last weeks pickup, and the milk had been delivered to a local customer near Jamestown on Monday evening. I went ahead and delivered the two yogurts to my customer who lived very close to the dairy in Indianapolis, and headed for home, delivering eggs only in Lebanon along the way.

Trader's Point Creamery is growing by leaps and bounds - so much so that they can't really keep up with demand. A store could always say "Well, if you don't have any milk today, just redeliver tomorrow when you've got some." I can't do that. It's very difficult for me to arrange my schedule to accommodate their production: I can't call and reschedule my deliveries every week, nor could I ask you to just leave a cooler and a check on your porch every day in the (sometimes vain) expectation that product would magically appear sometime during the week.

The other reason is a business classic: rising costs and declining sales. My weekly route sales have dropped by nearly a third since September. Coincidentally (or not) that happened to be the same time when energy costs went through the roof, and gas briefly hit $3/gal.

I tried to cover that with the fuel surcharge, and while it helped, the number of customers dropping delivery because of it (or their own increased energy costs) was high. I stopped my east side route when the number of customers dropped below 5.

Of the customers that remained, many cut back on their orders - again, and this is just conjecture, I suspect it had a lot to do with being able to afford both top quality (and expensive) milk and gasoline to get to work to be able to buy any food at all. "Let's see here, do I want a quart of milk for $3 or a gallon of gas? Let me think ..."

I was encountering the increased energy costs myself: as mentioned previously, my propane bill has skyrocketed this winter, as has electricity. And it goes down the line: I supplement my free range layers in the winter with bagged feed. That price has gone up over a dollar a bag since September. And of course the dairy was encountering increased energy costs and passing them on as well, necessitating the recent price increase.

Bottom line: a business exists only to serve product to it's customers, and when it doesn't have enough product or enough customers to turn a profit, it goes away. For us, in the case of the milk delivery service, it was some of both.

Our beef sales have been disappointing as well: I still have three quarters of the cow we slaughtered three weeks ago available. That's the first time in three years that I've still had beef after announcing it's availability. Previously I had sold out in less than a week. Based on that, I only have freezer space for two quarters, which means that I'll have to purchase another freezer. That was one costly cow!

Topping everything off, the USDA processing plant that we had used for our chickens has been closed. And while we could still process chickens ourselves, without the USDA sticker we're constrained by law to selling only 1000 of them in an one year - last year we did almost double that number. This coming year looks bad for broiler sales.

In short, it's been a grim winter. Decisions had to be made, and they were. We'll be continuing with egg delivery in Boone County - our original product in our original delivery area. I have control of the layers, and am not dependent on anyone else's production schedule to meet my needs. Since I'm not selling milk any longer, we can sell the reefer truck, which is a considerable capital cost, not to mention insurance and gasoline for it. I can deliver eggs out of coolers in the bed of my S10 just fine.

Our beef herd is going to decrease in size as well: I've already got two heifers and a steer sold as breeding stock (well, not the steer!), and we'll be going down to a maximum of three head as rapidly as we can get there. This will allow us to retain our self-sufficiency in meat and still have a single steer to sell every year.

We'll also be increasing the presence of our petting zoo and draft goats - we will be appearing at the Earth Day Celebration and Kewaukee Trail Dedication in Thorntown this year as a paid "gig", and hope to conclude a deal with Indy Parks and the local YMCA day camp program as well.

I'll pick up some more programming contracts, do a few web pages, get even more deeply involved with Odin Lives! radio. We'll survive - we always have. But it's still depressing ...

I just try to keep reminding myself that it could be worse, and that was pretty easy to do this morning. When I went out to open up the barns I found Yeti, now our only barn cat, asleep on Elmer's grave. It could be a lot worse.

/Home | 2 writebacks | permanent link

On 1/27/2006 03:40:30
Scott Holtzman wrote

Got Milk?

On 1/27/2006 10:13:25
Arwin wrote

You are due for some good luck

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