Insight on Business

April 2013

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in focus { s m a l l b u s i n e s s } By S haron Ve rbete n Strength in numbers Red Barn Family Farms cooperative helps 8 small operations realize profit C O U R T E S Y O F R e D B A R N FA M I LY FA R M S Paula and Terry Homan are co-founders of Red Barn Family Farms, a co-op of eight dairy farms in Northeast Wisconsin dedicated to high standards of cleanliness, milk quality and animal health. B oth Terry and Paula Homan grew up on dairy farms at a time when small family farms blanketed the Midwest ��� and remained viable and profitable. By the 1990s, a sea change was occurring, with many small farms either failing or succumbing to consolidation. ���I realized that small family farms were being labeled as unsustainable dairies just like the small cheese factories that used to be everywhere in Wisconsin were being labeled,��� says large animal veterinarian Terry Homan, co-owner of Red Barn Family Farms in Northeast Wisconsin. ���I wanted to do something powerful to support our state���s dairy farming heritage.��� That ���something��� was starting Red Barn ��� a co-op of eight small family 40 | Insight ��� A p r i l 2 013 farms, all located in Outagamie and Shawano counties. Together, the farms are not only profitable but also helping highlight what Homan calls ���the good that is in the industry.��� ���These small family farms excel at an individualized style of animal husbandry,��� says Homan. ���These farms embodied some very important aspects of the family farming heritage that has defined Wisconsin���s dairy industries. That���s when I conceived of Red Barn Family Farms and an economic model that changes how the game is played.��� Best care, best results Red Barn started out five years ago with just two farms and has grown since in both the number of farms and end products produced from the farmers��� milk. In support of producing the best milk, ���the humane treatment of cows and the hardworking farm families who care for them are at the heart of the mission of Red Barn Family Farms,��� says Homan. Farms in the co-op must adhere to strict standards for cleanliness, milk quality and, most importantly, animal health/ husbandry, he adds. These stringent and proprietary rules have placed each Red Barn farm in the top 25 of producers across the industry for each milk quality index. Among the rules is that all farms must be inspected and approved by the American Humane Association, each farm must be family owned and all milk must be free of the rBGH growth hormone. Red Barn���s innovative pay structure pays the farmers a premium for their performance relative to these standards. That���s unlike most commodity pricing. Amy Holewinski, whose Pulaski farm is part of the Red Barn family, values how the system rewards hardworking farm families. ���We���re here seven days a week, 365 days a year, and we were getting frustrated with the price of milk for small family farms,��� she says. ���It���s hard to make a living on a small family farm when no one works (another job outside) the farm. Terry and Paula���s company seemed to offer a better alternative for getting a higher price for our milk.��� Red Barn started small and remains small for many reasons. One of the company���s goals now is to expand the customer base for its Red Barn-branded milk. While the co-op produces humane-certified milk ��� processed locally by Lamers Dairy in Appleton and sold primarily to state universities and hospitals ��� Paula Homan says they were initially ���incredibly na��ve��� about what it would take to build a customer base. They started modestly, handing out sample w w w. i n s i g h t o n b u s i n e s s . c o m

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