Episode Transcript
Host: You're listening to the Levy Inspiration Grant Program podcast where we share stories of business students following their entrepreneurial passions to every corner of the world. I'm your host, Tyler Seybold. Through the program, students at the Kellogg School of Management can travel to any country of their choosing to immerse themselves in a particular topic. When they return, they sit down with me to reflect on the experience and share what they learned along the way.
Growing up on a dairy farm in India, Noor Johal witnessed the ebbs and flows of a family business with her own eyes. In her early career, she kept the dairy industry in the back of her mind, and when she got the chance to explore it on her own terms, she decided to investigate a mythic place she had always heard about as a child. THE place to learn more about dairy farming: Switzerland, of course. While there, she was able to meet with dairy farmers to learn about their experiences and ways they were innovating within a longstanding and traditional profession.
This is her Inspiration Grant story.
Noor: So for anyone who knows India, they might be familiar with the state of Punjab, which is in the Northwest part of India. I am from that state and that state is known as the state of farmers and my family itself was dairy farming.
So growing up, pretty much on a daily basis, from 5 a. m. I would see my family, as well as all the workers are on the farm, get up, start milking the cows, start processing the milk a little bit, and then basically have a sort of a retail outlet right outside our house to be able to sell that milk to the community. That would happen pretty much every day for the first 12, 13 years of my life.
If anyone is familiar with the dairy industry they can tell you eventually it's a very low profitability industry. In the state of Punjab, where consumers would buy milk from like a dairy seller like us, when consumers started buying milk from shops, all of a sudden it just started to not go as well. So eventually from having like, 40 or 50 water buffaloes we started like selling them one by one and eventually what was a very booming source of livelihood completely just stopped just because it's so expensive to take care of the animals that if you're not able to sell it, it leaves nothing for you.
We were clearly not successful in it and so many people that I further know were not, but clearly some people still are because they're doing it. And it almost made me just want to study them a little bit more to be like, what is the difference between yourselves and us? It's not the level of hard work, it's not the level of dedication or the willingness to learn or like adapt and all of that. But I was like, there clearly are differences and honestly I wanted to be able to study them, so that is what led to my interest to go to the country of Switzerland.
In dairy farming, you are generally seeing a lot of farmers exit every year. When I was looking at it, Switzerland is having some of that, but surprisingly not as much.
Surprisingly, new generations of farmers are not entirely wiping their hands off the business. They are finding ways to innovate it. And then doing a little bit more research into that made me go, okay, this country is clearly doing something right. This made me want to really understand how is it that they are successful when a lot of European and of course developing countries are not at all successful.
Something that really surprised me was they actually have data agencies that track, on an anonymous level, reports that show the farmers what their cost is, but that also show them costs of other farmers with the same level of cattle or with the same level of land in a similar region.
So one of the farmers he was telling me that I try to be extremely lean. As much as he would like new machinery, new form of grain storage, or even new cattle, one thing that he always uses those reports to do is monitor his costs. And what that allows him to do is really invest in his farm, not in terms of invest financially, but invest in taking care of it.
It makes him very much more conscious with his cattle. Because he knows that his costs are average, but his revenue is actually a little bit higher. There's basically one factor that leads to it: it's the quality of his cattle. What he was telling me was that he actually invests a lot in them. Some of the ways that he does this is he monitors their health very closely. He invests a lot in his cattle because he knows that year six or seven of their life when they have already like had maybe three or four kids, he's like that's when my cattle actually give the best milk. A typical farmer after five years will be like, “there's more chance of the health deteriorating, okay, I'm done here.” But he's like, “I try to get as much life from my cattle as I can because I know that my volume of milk is highest til like year seven.” Again, he's able to be so conscious of his costs because he uses some sort of data. To me, that was something really surprising and really clever because I think the report cost is like 70 euros per year.
So I met one of the farmers in this area called Unterseen, his wife's family had the farm and it was not at all profitable. So what he started to do was he said, okay, my house is next to Interlaken, which is a very famous area. What if I start selling my own cheese, but instead of going through a retailer and paying that commission, what if I start producing my own cheese, I invest really highly into the quality of it, into the methods of it, and then what if I start asking the price that I want?
He basically has like some sort of a vending machine right in front of the house with a sign, "Really Premium Cheese: If you're not happy with it, come return it." He said that 85% of his cheese revenue is from that one vending machine.
He has found customers that instead of buying cheese from the co-op, which is a retailer down the street, they will actually come to him and buy it. And he does not advertise, he does not market, all he has are certain signs in the tourism office to say, " Cheese sold at this address,"and all of a sudden the fact that 85% of his revenue is coming from like a vending machine, that he's just advertising at such a small scale, I think that was something that really surprised me.
Without being too optimistic, I wanted proof of being able to self-sustain in an industry that's not entirely meant to be very supportive towards you, so I was very happy and very surprised to see proof of that.
The most successful people that I saw in this industry are the people who are willing to take a step back and think about doing something new. It surprised me so much how innovation was often not in the bigger and fancier things. It was in the simpler things and it was in things that affected a lot more people, like a lot more individual small-scale farmers. The idea of innovation is often considered as something that's really big and powerful. I often saw examples of it that were a lot smaller, that were a lot less investment-heavy, and that were a lot more tangible. Like their impact wasn't a million-dollar savings. Their impact was it would make life easier for 20 farmers. So I think that was something to take away, that innovation in this case was never big. It was so small and so minuscule that you would miss it until and unless you talk to the people that directly were impacted by it.
Host: The Levy Inspiration Grant Program is made possible through the generous support of Larry and Carol Levy and is managed by the Entrepreneurship program at the Kellogg School of Management at Northwestern University. To learn more about the Levy Inspiration Grant Program and other ways we support student entrepreneurs, visit our website at kell.gg/entrepreneurship. That's kell.gg entrepreneurship. I'm your host, Tyler Seybold. Thanks for listening.
