Photo by Jeff Silker
Not many CEOs can say they grew up across the street from their current office and earned their first paycheck on the site of where their office sits today, but Mark Furth, 53, a CEO from New Ulm, can say both. His boyhood home was at 410 N. Broadway and his first paycheck, at 16, came from Madsen’s Super Valu at 315 N. Broadway. Today his office suite facing North Broadway is in the same building- and on the same spot – where he used to bag groceries. What magnifies the significance of both oddities is that Furth isn’t any ordinary CEO, but one that manages what could be the second largest business headquartered in south-central Minnesota, Associated Milk Producers Incorporated (AMPI), a colossus of a co-op, with 5,000 farmer/owners and $1.1 billion in sales.
He was hired by AMPI on his twenty-third birthday, fresh from earning an accounting degree at Mankato State College. Twenty years later, in 1990, he was named its CEO. Today, congressional leaders seek his counsel – Sen. Rod Grams most recently – and at least twice a year he has to testify before one congressional subcommittee or another about a bizarre, 1930s-vintage, federal milk marketing system that regulates prices based on distance from Eau Claire, Wisconsin.
To stay competitive in the butter, cheese and drinking milk business, AMPI must own a corporate airplane, a twin-prop Beechcraft Baron BE-58, that helps Furth and other company executives take the pulse at thirteen different manufacturing plants across the Upper Midwest. They can be at any company site within two hours. Without the airplane, and given New Ulm’s relative isolation from a major airport, AMPI would probably have to play a perpetual game of catchup with national co-ops such as Land O’Lakes and Dairy Farmers of America.
If he hadn’t been so rooted in New Ulm, having to play the role of the high-flying CEO at a $1.1 billion business could have hyperinflated his ego. He has survived this temptation by having both feet anchored solidly in terra firma. Unlike many executives, he rather enjoys it when the company plane flies home with him inside it – and not so much when he has to leave his wife, Pat, and five sons behind in New Ulm. Given his office location, Furth can’t help but stay down-to-earth: as long as he stays put at AMPI, his childhood memories of 410 North Broadway will always be outside the office window and his first job at Madsen’s Super Valu just below his feet.
CONNECT: Did you have any clue what you were walking into 30 years ago when you first started at AMPI?
FURTH: By late 1969, I was resigned to the fact that my wife, Pat, and I would have to move from New Ulm in order for me to land a decent job with my recent accounting degree. Then I interviewed with AMPI. When they hired me in 1970 they said they would be going through a lot of changes, which they certainly did in the early ’70s. The prospect of a good job in New Ulm was very attractive because both Pat and I were New Ulm natives, and it turned out to be an excellent opportunity.
I didn’t have a clue then that I would one day be the CEO. However, at the time of my hiring, I did see opportunities because it was a young company, just formed through the merger of four cooperatives less than six months before.
CONNECT: Do you think people in New Ulm, who knew you at high school and as the kid down the street, view you differently now that you run a $1.1 billion business?
FURTH: I hope not. I’ve tried to stay involved in the community as much as possible even though nearly all my job and business contacts are outside New Ulm. AMPI’s business is national but you wouldn’t have any idea of the scope by driving by our office.
CONNECT: Could you explain the federal milk marketing system that has Eau Claire, Wisconsin, as the center of the milk universe? It doesn’t make any sense to me.
FURTH: Congress authorized federal milk marketing orders in the late 1930s with The Agricultural Marketing Agreement Act. What these marketing orders do is price only the milk used for fluid consumption. They don’t apply to milk used for cheese and butter.
Parts of the U.S., such as the Southeast, were short of milk for fluid consumption. So milk had to be transported from surplus areas such as western Wisconsin. Eau Claire became the base point for pricing. By definition, dairy farmers in the Midwest end up with the lowest price, and everyone else a higher price for milk destined for fluid consumption.
Today there really are very few areas in the U.S. that don’t have a steady supply of milk for fluid consumption. Other parts of the country now have more surplus than the Midwest. Milk production has risen dramatically in New Mexico and Idaho, for instance. California alone produces as much milk as the entire Upper Midwest. Most dairy people in the Midwest think this old pricing system that was authorized in the ’30s is ready for the ash heap.
CONNECT: What has it done to dairy farmers?
FURTH: The system has made it more difficult for farmers in the Upper Midwest to compete with farmers in the rest of the nation. Conversely, it has encouraged a dairy industry in other parts of the country where dairy, without the pricing, wouldn’t be the best utilization of economic resources. It makes more economic sense to produce milk in western Wisconsin than it does in Florida, yet today Florida has a booming dairy industry – not because it is a logical place to milk cows, but because of its distance from Eau Claire.
CONNECT: What would happen if federal involvement in the dairy industry ended? Would prices rise?
FURTH: On average, probably not. We would see a more level pricing surface nationally, with Midwest farmers seeing a little higher price and the South and East seeing a little less.
CONNECT: How many times have you testified before Congress about the current system?
FURTH: I’m not sure. I might fly into Washington two or three times a year and testify at Senate, House or USDA hearings.
CONNECT: When you testify, what do you say?
FURTH: I’m always making the case for equity in pricing for Midwest farmers. When I’m there, I also make lobbying calls at congressional offices.
CONNECT: How big is AMPI? and what do you produce?
FURTH: AMPI today is 5,000 Midwest dairy farms, principally in Minnesota and Wisconsin, but also in the Dakotas, Nebraska, Iowa and Missouri. We have thirteen manufacturing plants scattered over the same territory, with nearly 1,700 employees. Our New Ulm corporate headquarters has 70 employees, and annual sales are $1.1 billion, which makes us at least the seventh largest dairy cooperative in the nation. Our butter packaging plant in New Ulm is one of the largest plants of its kind in the country.
CONNECT: Who are your competitors?
FURTH: We compete mainly with other cooperatives. We are the largest marketer of milk in our geographical area and represent about 25% of its dairy farms. Associated Milk Producers Incorporated is a private label manufacturer for the nation’s leading chains. We aren’t recognized as a brand by consumers, yet there isn’t a dairy farmer in the Midwest who doesn’t know about us.
CONNECT: What products does AMPI makes out of its milk?
FURTH: Most of the milk we market is converted into cheese. Some milk ends up in powder plants where we dry the skim solids and ship the cream to our New Ulm plant, where we make butter with it. A small amount of the milk, 10%, ends up as drinking milk. We are a major supplier to Wells Blue Bunny and Kemps.
CONNECT: When you come home at night, does it ever hit you that you’re directly responsible for the livelihoods of 5,000 farm families and 1,700 employees?
FURTH: It’s a pretty awesome thought, and I do have those thoughts. The realization of that is as much a motivation for my work as anything, especially those dairy farmers who are not only dependent on us for their milk check and a market for their product, but who are also the owners of AMPI. I feel personally responsible to every one of them.
CONNECT: In the same vein, does it ever hit you that you’re running a billion dollar business?
FURTH: High gross sales obviously don’t tell everything about a business. The size of AMPI, frankly, isn’t awe-inspiring to me when I’m at work or when I’m at home. My wife and kids aren’t impressed with the fact I’m a big company executive – and I don’t want them to be.
One thing about being in New Ulm is that our location makes it easier for me to spend more hours at work. My home-to-office drive is less than five minutes. Because the office is so close, it’s easier to go back to work in the evenings. In the Twin Cities you couldn’t do that because the commutes are too long. But the flip side is, Twin Cities executives have to take their work home. I never take my work home. When I’m home, I’m home.
CONNECT: Do you have a hard time recruiting people to New Ulm?
FURTH: Occasionally it is a little more difficult to recruit professional people, but conversely we don’t lose them as easily, either. We have long-term employees. Over the years we have found a few people perfect for a position, and had them interested, but they dropped out when they could not find comparable employment for their spouse.
CONNECT: But if you moved your headquarters to the Twin Cities you would have a labor pool that is larger.
FURTH: We have a great workforce in New Ulm. Plus, as a farmers cooperative, our owners are comfortable keeping AMPI in a rural area. We are in New Ulm because the local cooperative just happened to be one of the merging original co-ops in 1969. My predecessors, Carlyle Hanson and Don Gregg liked New Ulm and grew the business here.
Something as simple as having a company airplane has kept us in New Ulm, too. We have thirteen milk plants scattered over the Upper Midwest. By flying out of here we can be at most plants within an hour. In addition, our products are sold in 48 states. If our marketing team has to be in Bentonville, Arkansas, home to Sam’s Club, with a company plane we can fly there and back the same day. Without the plane we would have to fly commercial out of Minneapolis, make two stops before reaching Fayetteville, rent a car, then drive out to Bentonville.
CONNECT: Is there a large enough milk supply in the Upper Midwest to meet demand?
FURTH: Although the dairy industry in the Midwest isn’t growing, it isn’t dying on the vine, either. AMPI’s milk supply is very stable. We had a 10% growth in volume last year and don’t have any trouble keeping our plants at full capacity. However, up until five years ago, the dairy industry in the Midwest was not really willing, at the farm and processing level, to reinvest in itself. If that had continued, the dairy industry here would have lost out to other regions, mainly California and Idaho. Today I don’t see that happening.
CONNECT: When producers want to significantly expand their dairy herds tension between them and their neighbors often occurs. Many of your 5,000 members often have to go through that tension when they expand. What’s your take on herd expansion?
FURTH: Historically there has been tension between large and small dairy farms. The small farms saw the larger ones as being contrary to their interests, and the larger ones saw the smaller ones as non-progressive. A lot of that tension doesn’t exist today. Dairy farmers, for the most part, need each other, and see themselves as being in the same business. There are larger dairies going up all over the Midwest and most of them have been successful.
CONNECT: AMPI has grown considerably over the past two years. Why?
FURTH: Most of the increase was in market share. We’ve grown about 15% in the last two years. AMPI has a long history of steady growth. This past year we merged with Glencoe Butter and Produce Association, one of almost 70 mergers we’ve had over the past 30 years.
CONNECT: Could you explain what happened two years ago when AMPI split with its southern cousin?
FURTH: On January 1, 1998, the southern half of AMPI became part of a larger national cooperative. Our members in the northern half didn’t want to be part of it. The northern half retained the name, AMPI, and its autonomy.
CONNECT: What factors drive the price of milk? Is there overseas competition now that you didn’t have before?
FURTH: There isn’t much overseas competition. Of all the major agricultural commodities, dairy remains primarily a domestic industry. American dairy farmers don’t export much, nor do we as a nation import that much. Milk prices right now are fairly depressed, and that’s the result, of course, of production increasing faster than consumption. Dairy production today is out of balance by only a couple of percentage points. It doesn’t take much to drive down the price of a commodity. The daily consumption and production of milk makes its price subject to constant fluctuation, even when supply rises or drops just a percent or two.
CONNECT: How have American milk drinking habits changed over the past 30 years?
FURTH: Milk drinking habits have changed dramatically. The average milk consumed then was whole milk, with a 3.2% butterfat content. Today the average nationally is 1.5%. People have asked me what happens to all the fat. We’re consuming half as much fat today in drinking milk but the cows aren’t producing less. People are surprised to find out that they are still consuming the same amount of fat as before, but now it is in the form of more ice cream and cheese.
CONNECT: Are your products traded on the Chicago Board of Trade?
FURTH: Both butter and cheddar cheese are traded on the Chicago Mercantile Exchange. Butter trades three days and cheddar cheese five days a week. Our brokers are actively involved in the trading pits. As far as milk goes, the Chicago Mercantile Exchange has been involved in trading milk futures the last couple of years. Farmers can contract their production a year out by selling futures. Only a small number of farmers take advantage of futures.
CONNECT: Your board members are all dairy farmers. Normally, a company wants a board that has diversity.
FURTH: Our board is all dairy farmers because to be on the board you have to be an owner, and to be an owner you have to be a dairy farmer. But it is a very diverse group. We have farmers that milk 25 cows and others, 500. Our board members drive in from all parts of the Upper Midwest for the monthly meetings at the New Ulm Holiday Inn.
CONNECT: How is milk priced?
FURTH: The dairy industry today has Grade A and Grade B milk. Grade B isn’t good enough for fluid drinking milk, but does end up in manufactured products like cheese. Grade B is also referred to as Manufacturing Grade Milk, which makes up 10% of milk produced in the Midwest. The value for Manufacturing Grade Milk is determined by the market for butter and cheese and then Grade A is priced from that base.
CONNECT: You’re Chairman of the Board at Citizen’s Bank of New Ulm. In your opinion, with your unique insight into the dairy industry, and with your knowledge through your role at the bank, is there a farm crisis right now?
FURTH: Prices are lousy for most agricultural commodities, yet it certainly isn’t as bad as in the ’80s. Of course, that doesn’t mean it can’t get that bad. Dairy farmers, in particular, have done fairly well in recent years. The average dairy farmer is in fair condition right now, but can’t survive these prices for long.
CONNECT: You are on the board of New Ulm Economic Development Corporation. With low unemployment and a housing shortage in New Ulm, realistically, you can’t bring in a 500-employee company and not have a major fallout with other industries in town. But yet you want to grow New Ulm. How do you do it?
FURTH: We have discussed this issue many times. Our first priority is keeping New Ulm healthy. We aren’t out chasing new businesses that would require 500 employees because we don’t have 500 employees to spare. Brian Tohal, NUEDC director, has done a very good job at helping keep local businesses healthy and in attracting smaller businesses.
Mark Furth Biography
Current Position: CEO, Associated Milk Producers Inc.
Born: March 15, 1947.
Education: New Ulm Cathedral High School, ’65. Mankato State College, ’69.
Current Affiliations: Board member, Citizen’s Bank of New Ulm; Board member, Twin Valley Council, Boy Scouts of America; Board member, New Ulm Economic Development Corporation.
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