Don't Give Up: Consider Growing Your Business Sideways Instead

.
( . )

In 1991 Tom and Nancy Murray started Muranda Holsteins in Waterloo, N.Y., with 90 milking cows. Today, not only do they milk cows, but they have a thriving cheese business called Muranda Cheese and an event center called the Barn at Muranda. Their path to success was marred by challenge, failure and hard work, but the couple never gave up. Not once.

Like many farms throughout the country, the Murrays saw the need to find a second revenue stream to stay in business, but instead of giving up, they figured one (or three) out.

THE EARLY DAYS

“We started with 90 milk cows and we borrowed 100% of our financing to start, with no collateral,” Tom explains. “It was basically an opportunity for us to assume a mortgage on a farm and borrow the rest of the money to get started.”An opportunity Tom was able to capitalize on because of his determination and the knowledge he had gained in previous experiences. “When I graduated from high school, I went to Colorado. I had the opportunity to work at Paclamar Farms, which, at the time in the 70s, 80s, was probably considered the world’s most predominant breeding establishment for registered cattle,” Tom says.

He “learned at the hand of the master” and then came back to New York to attend SUNY Cobleskill and then went on to Virginia Tech to finish college. After college he moved to Hamilton, N.Y., where he met his wife.

“We got married and worked on her dad’s farm in a partnership. They had a larger farm operation, and they purchased a small tiestall barn, which fit my expertise of registered cattle,” Tom explains. “We worked in a partnership for six years, and then we decided after our children were born that we needed to make some different decisions for ourselves.

”So they started Muranda Holsteins. First, they assumed the mortgage on a farm of roughly $200,000 which they borrowed through FSA’s beginning farmer program. “Because the mortgage was with them, we could only borrow $900 per cow, so we had to buy everybody’s culls to fill the barn, which left us no extra capital for young stock,” Tom recalls.

They bought everything they could get their hands on, high somatic cell cows, bad feet, bad legs, poor breeders. If the price was right, they bought the cows. Except one cow. The Murrays splurged on a $30,000 cow from Pennsylvania who would turn out to be integral to their success. That cow was the mother of Muranda Oscar Lucinda, a cow that produced 67,914 lb. of milk in 1997, breaking the world record for milk production at the time. She changed the course of their farm’s history.

MAKING MONEY ON GENETICS

“We took our expertise on the cow side and were able to make a couple of key purchases early on with some heavy risk. All that turned out to be very significant in the progression of our farm on an international and domestic and national level,” Tom says. “They also made great leaps in helping us reduce our debt load.”

Starting with that fancy cow from Pennsylvania, Tom and Nancy turned over their initial herd in a matter of three years. Soon they were on a path to prominence.

“We continued down that road, made some other key purchases and we were able to put together some pedigrees,” Tom says. “At the time, some of our bulls and some females were very highly sought after, both domestically and internationally.”

Then $10 milk arrived in 2003, and they decided to disperse the herd. They sold every milking cow, and for that year, it was the highest-paying milking herd dispersal in the U.S. But the dispersal wasn’t Tom giving up, instead it was a strategic business move that would allow them to pay down debt.

“Our milking herd was very highly sought after, and our reputation in the business was at an all-time high,” Tom remembers. “So, we knew our Miranda prefix would carry great weight if we decided to have a dispersal.”

As luck would have it, the Holstein World was celebrating 100 years in business and having a select cow sale two miles from the Murray farm, which Tom thought presented the perfect opportunity to offload their valued genetics.

“Timing is everything. It just so happened that sale was happening,” he says. “There was going to be a lot of international and domestic breeders in town for that, and so they were right here in our backyard. So why not have our sale the night before the Holstein World sale?”

It was a risk, but one that paid off. Literally. Tom had estimated their sale average to be around $2,000 but it ended up being more than $4,000 per cow. “It just really surprised us that the general public, the international interest that we had, just opened up their checkbooks and bought livestock from us as investments to their breeding establishments,” he recalls.

The Murrays kept all of their young stock, including cows that were pregnant. So they took a little time off, and when the heifers started calving they started building their herd back up. Today they still sell some heifers, but Tom’s middle son Blane, who now manages the farm, says genomics have completely changed the genetic business. “If you can get $3,000 for a heifer, that’s really great,” he says. “If they’re not first place in Madison, then they are just cows now.”

MURANDA CHEESE

When Tom and Nancy’s three children were at Cornell, they realized they needed to diversify their income.

“We looked for opportunities outside of the dairy, and we started the cheese business out of that,” Tom explains.

According to Tom, they were in a position where they could either milk a few thousand cows to stay in business or figure out a new revenue stream to keep their business viable. They didn’t want to milk thousands of cows, but because of their location in the Finger Lakes region of New York, a cheese business worked out.

Farms across the country are facing similar decisions, and it’s critical to realize diversification can’t necessarily make a dairy viable, explains Jason Karszes from Cornell University PRO-DAIRY Extension, who has known the Murrays for two decades.

“Tom never diversified to keep the dairy afloat. He diversified to generate profit growth to keep the business viable and meet the family’s goals for owning their own business,” Karszes says. “The dairy still has to be a competitive dairy. But where he’s located, and because they didn’t really feel comfortable trying to grow their dairy much, they tried to think about how they would generate profit growth while still running as efficient a dairy as they could. How can they offset inflation over time without growing the dairy? This was completely different than saying, ‘OK I’ve got to start another business to subsidize my dairy.’”

The cheese is made by a cheese maker off-site and then aged on the farm, a decision Tom made after discovering how complicated and regulatory-ridden the processing industry is. In the beginning they were making 30 lb. every other month. Now they make close to a ton each week. Their success is largely driven by their location, Blane says.

“I think where we’re located is a huge part of why we are successful [with the cheese],” he says. “I don’t know how many cars drive by on our major highway here, but it’s a tourist destination from probably Memorial Day weekend all the way through Christmas. I don’t know how it would work out in the middle of nowhere.”

The success of their cheese business, which is currently paying most of the bills on their dairy, and the growth trajectory that it’s on wasn’t one Tom envisioned fully when he took on the risk and debt required to make this dream a reality.

“I really didn’t have any idea this business would grow like this, but I did have a vision that this area could use something like this if you could get started, get your pipeline full of product and be the first one out the gate and develop that brand that’s known throughout the Finger Lakes now as the as the premier cheese place, it could work,” he says.

THE BARN AT MURANDA

The most recent revenue stream the Murrays have added is an event venue they call The Barn at Muranda.

“We had an old barn behind our existing cheese tasting room that was on the older side and was mainly used to store things,” Blane explains. “At one point we had dry cows down below but when we built our heifer barn in 2014, we also added a maternity center and moved dry cows over there, so this barn sat empty for two years.”

At that point in the life of their cheese business they were needing more room to age cheese, so Blane says their initial thought was to clean it up and age cheese in coolers in the lower part of the barn and have a larger tasting room in the upper portion.

“As we were doing the barn upstairs, after we blew it out and power washed it, we realized how big the space was and that got the ball rolling on it becoming an event space,” he says. “We put a whole new floor in there, and it’s really beautiful. It came out of an old junky barn.”

Tom adds there’s nothing else like it in the Finger Lakes region, which is what has made it so popular. They now hold monthly concerts there and rent it out for private events.

According to Karszes, this is an excellent example of using an asset that you already have to develop a new revenue stream.

“What can you do to have better asset utilization of an asset you already own?” Karszes asks. “Tom already owned the barn. It was sitting empty. He used it to generate new revenue. Can you do something like that?”

NEVER GIVE UP

While you might see the photos in this article and assume otherwise, the road to success was really rocky for the Murrays. Tom says the secret to their success has been determination, hard work, grit and guts. “I think it’s a combination of things that make successful businesses everywhere,” Tom says. “But it is taking advantage of opportunities, taking risk, managing your debt and having a solid relationship with your lender that will keep you in the game.”

 

Comments