William H. Johnson

William H. Johnson Will Retire Dec. 31; He Achieved a Revolution in Dairy Marketing

The end of 1985 will mark more than the end of a year for Mid-America Dairymen, Inc.

It will also mark the end of the 39-year career of William H. (Bill) Johnson as a prime moving force in cooperative marketing of milk and development of new manufacturing processes.

Johnson, the vice president and general manager of the Southern Operations of Mid-Am, will be succeeded by Sam McCroskey.

Johnson’s retirement at the age of 65 will mark an official severance with Mid­Am and its predecessor, Producers Creamery, that began in 1946. He has been responsible for or directly associated with virtually every major step forward in business conducted by Producers Creamery and the Southern Division of Mid-Am. This includes the areas of marketing, product development, facility development and acquisition, and relations with members, employees, customers and the public.

In those four seemingly simple areas the Southern Division stands second to none in either Mid-Am or any of the nation’s other major dairy cooperatives. The culmination of Johnson’s efforts the past 39 years adds up to and can be seen in the Southern Division’s huge annual dollar volume of business of nearly $400 million a year—or over $1 million a day.

It is a success story that did not enter Bill Johnson’s mind the day he was hired as a field service man by the late W.T. Crighton, general manager of Producers Creamery, in 1946.

It was a time of transition from hand milking to primitive bucket milking machines; from 10-gallon milk cans cooled in a spring branch or by a stream of well water to the first bulk milk coolers; and, from half a dozen can milk trucks running up and down the same road in search of milk to the first sleek bulk tankers.

Perhaps it was the inefficient production, procurement and transportation of milk that planted in Johnson’s mind the vision of better ways of doing things. He carried these ideas throughout every day of his work and communicated them to members and to his superiors.

The result was that he got his first chance to put his ideas to work in 1948 when he was tapped to organize and direct the startup of the Producers Creamery plant in Lebanon. That plant came on stream in February, 1949, and Johnson remained in charge there until June, 1957, when he returned to Springfield to work directly under W.T. Crighton in improving inter-cooperative relations.

“The cooperatives were fighting each other and they had to have somebody to sit down and talk once in a while,” Johnson recalled.

In 1962 he was promoted to director of contract accounts and this led to some of the most important business arrangements Producers Creamery ever had; and contacts that to this day materially benefit Mid-Am and all member dairymen through the production of infant formulas and adult nutritional products.

Suddenly the milking of cows for fluid milk and manufacture of butter and cheese alone took a great leap forward. Dairymen, through cooperative manufacture and marketing agreements, began to take control of their own business affairs.

In analyzing this period of development, Johnson said, “Whatever degree of success we have had to a large extent is due to common marketing agency agreements we have developed with other cooperatives for Grade A fluid marketing.

“And almost equally important are the marketing agreements we have developed with proprietary companies. This technique allows us to get milk to market in the most efficient manner. Everyone is involved—and cooperatives, proprietaries and farmers are not butting heads in the marketplace. ”

Anyone over 40 years of age in the farm community knows the multiplicity of companies that were in the business of milk marketing. We competed with every Tom, Dick and Harry in the marketplace and the dealers were interested only in buying the produce as cheaply as they could. So the only way to establish a market was to cut prices.”

This was particularly offensive to Johnson. He was born near Harrison, Ark., to T.J. and Lucy (Holland) Johnson. His parents were dairy farmers who found the going too tough in Arkansas. They moved to Polk County, Mo., where Johnson grew up on the farm during the Great Depression and developed great empathy for farmers struggling against weather, prices and politics.

Following graduation from high school at Bolivar he parlayed his FFA Jersey heifer project into a dairy herd of his own, trying to get enough money ahead to attend veterinary school. When that obviously became impossible he decided to stick to dairy farming-and did so until the chance opened up to become a fieldservice man for Producers Creamery.

Johnson believes that a lot of the success that came to the Southern Division has been due to the modem facilities that have been maintained in a high state of repair. Consequently, low-cost, quality operations have been made possible. Most Southern Division dairymen are aware of progress in these areas, because Johnson has missed no opportunity to keep members abreast of developments at the plants. Most issues of “The Mid-Am Dairyman” have contained some sort of message either from Johnson directly or from his associates and assistants. You will probably recall update articles about the plants at Monett, El Dorado Springs, Lebanon, Cabool, Springfield, Mount Vernon and others.

“Customers are attracted to us because of our proven ability to perform,” Johnson said. “You don’t always have to be the cheapest guy on the block to make the sale. Basically, we have integrity with respect to delivery of products on schedule, quality agreed upon and services added to the agreement. This may include central warehousing or trucking. We have 150 trucks or more in one particular service group that operates over 12 million miles a year. They go all over the country to deliver and return supplies to plants. It is a closed-circuit operation in regard to packaging and ingredients to a plant.”

Another area in which Johnson has taken extreme pride is one that, 40 years ago, was not considered significant in the operation of a dairy plant. It is that of environmental concern. Today, the Missouri Clean Water Commission and the federal Environmental Protection Agency enforce strict regulations regarding the discharge of wastes from industrial plants.

Thanks to Bill Johnson’s lead, Mid-Am in all of its territory is well ahead of the dairy industry in general. “It has cost a lot of money, but some of the wastewater pre-treatment plants in the Mid-Am system are capable of direct stream discharge within the standards of clean water, even though we are discharging through a municipal plant,” he said.

In regard to the dollars-and-cents aspect of operating the Southern Division plants, Johnson said, “The real test of a facility in my opinion is, can it produce a modern product in volume, and can it return new dollar cost-of-production back from the marketplace.

“What I’m saying is that industry has many products that won’t stand the inflated cost-of-production; it might be a little like the beef producer trying to sell calves off a cow-calf operation at 1985 costs and 1960 prices. We cannot afford to do that. We have got to have better returns. To some extent these are opportunities that are not pie-in-the-sky. They are a reality that can be accomplished.”

Johnson notes that in dealing with farmers over the years he sometimes sees suggestions that are but a recycling of ideas of the 50s, 60s and 70s. Generally they will not work in the 80s and 90s, he said. “We also see some of that in our competition. We see NFO, for instance, and others in the ‘passing parade’ trying to restructure themselves back into an era of no better ideas than those of the 60s, and they didn’t work then, either.

“The dairy farmer has got to have new dollar cost from the marketplace and it needs to be structured primarily from the fluid market. But he must also have returns from manufacturing operations that fractionate milk and enhance its value. This can be done by blending it with other items, or a dollar-added component that has profit in it that can translate back to the farm community.

“It can be done, but the challenge of this job is a daily one. We have to address new technology, new machinery, new methods and they must be applied within existing capital constraints. New technology must be successfully taken to the marketplace.

“True, some risk must be taken. And we need to win most of the things we start after. There is not a great deal of room for error. This job will never totally be done. In this regard, we are not unlike the modern dairy farm. Here we are talking of the situation in 1985 from the base of some degree of success. I would suggest interviewing Sam McCroskey in the year 2000. There are going to be the same uncertainties that there are now, even with the success story he will have back of him between then and now.”

That brings us down to “the people.” Johnson says, “The staff of this operation for the future must be highly qualified and responsive to change. They must be young, hungry, executive-type people. They must be people willing to work long hours, who have judgment and the experience to call the shots right the first time in the marketplace. Sam McCroskey and his staff have these qualifications and with member loyalty and support, continued success for the Southern Division is almost assured.”

Just as he is a skilled executive and administrator, Bill Johnson is also a philosopher who has never forgotten his roots or the experiences of life that shaped him. Comparing today’s tough economic times with yesteryear, he says, “As a kid I read a lot of things and became concerned about problems at the farm level and about market returns .We had some of the problems in our farm family of how bad economic problems can be. We saw the effects of it. I had an opportunity to read some of Bill Hirth’s (founder of Missouri Farmers Association) editorials. He was very concerned about farm income.

“I think if I read some of his stuff today it would be as appropriate as it was at the time he wrote it 70 years ago. So we don’t ever get to the point that market success is so pronounced that you can sit back and rest with the thought that everything has been accomplished. We never get it all accomplished.

“That is one of the reasons I have no trouble in retiring, in getting out of the way of these younger, aggressive, brilliant young executives so they can take over and do their thing. They can do it. They are willing to take the risks, they have the technical background I do not have and we cannot afford not to have it in modern management today.”

How was Johnson able to span the considerable gap from a small family farm background to doing millions of dollars worth of business a year?

“I have been lucky,” he said. “I have had the opportunity to work with such people as Bill Crighton and Wes Johnson, Gary Hanman and Ivan Strickler, Lee Renshaw, Albert Bos, Edgar Lampe, and a host of other fine farm people. I have had the opportunity to work with some highly-qualified technical people and I have a philosophy that is pretty basic.

“It is to ‘hire to your weakness.’ My point is that nobody is smart enough to run a business as complex as we do here 365 days a year. You must have a technical specialist, a guy that knows production, that knows transportation, purchasing, warehousing, materials handling. These guys are all available if you are lucky enough to interview them properly and to get them on the payroll. ”

“These guys are very opinionated, aggressive. Somewhere on the line you have got to put them together as a team. I basically like decisions made at the lowest possible level. People working for us have a lot of independence in running their part of the operation. But you’ve got to know when to look over their shoulder and redirect some efforts.”

“But all of this could not have been put together without the right board of directors giving us the capital that we thought we needed for a particular product. Imagine the apprehension the board had when I asked them to approve capital expenditures of $18 million to put reduced mineral whey on stream. That is probably the biggest thing we have done recently and it will be carrying on through the 1990s because it is a new major ingredient used in the production of infant formula. The initial production is under exclusive customer agreement and it is one of the most technical products we have ever produced. It has been in production since 1982.

“A lot of our success has been due to the modern facilities we have been able to maintain. Some are old, but they are in a high state of repair and contribute to low-cost but high-quality operation.”

Where has his myriad of ideas come from?

“As a matter of fact,” he said, “I don’t know where ideas come from. Maybe I steal lots of ideas and exploit them. If you allow a high degree of independence and have independent-thinking people, you get lots of ideas from them. You don’t walk in their shoes, and you do not see the things they see. They don’t walk in your shoes, and they don’t see the ultimate of what may be applied.

Out of this whole thing you should give a lot of credit to customers, too. One of the good things has been being able to rub elbows with top management brains in the country. They might be in the food business, in transportation or business management. One gets lots of opportunity to learn and observe.”

What parting advice does he have for dairy farmers?

“There are no simple quick fixes. We have got to develop some incentive to balance production with consumption. No outfit is brilliant enough or has facilities big enough to get the needed returns from · unlimited production. We have got to have some sort of control of production, with incentive, and government has got to be involved.

“I think that on the longer range a good dairyman can build himself a reasonable financial equity base. I think milk cows are going to give a better return than any other part of agriculture. We should hope and pray that the rest of agriculture gets satisfactory answers to their problems because if they don’t we will get new resources into dairying that we don’t need. But unfortunately, the whole thing means there will be fewer dairy farmers than there are now.

“To those that have some financial stress at present we are hopeful they will be given the option of a whole-herd buyout and they can salvage some equity and make decisions later about getting back into business.”

“I think the high-equity, well managed dairy operation of the future will be a good business for a family. Perhaps they have got to think in terms of more permanent debt. Most farmers have the objective of paying themselves out of debt and as much money as we have invested into today’s operations I don’t know if that is possible or necessary. We don’t have to refinance every generation. But farmers have got to have dollars enough to have a cash flow. And we have got to have a more modern farm credit vehicle.”

Johnson and his wife, Joanne, will continue to live in Springfield. Mrs. Johnson’s father, W.J. (Bill) Crews, was a prominent farmer in the Eureka Springs community and her Grandfather Crews came to that area well before 1900 to develop a large cow-calf and swine operation.

Johnson’s daughter, JoNell Beall, of Springfield, is a free-lance advertising specialist who has produced many of MidAm’s outstanding audiovisual presentations used at annual district meetings. She is the mother of two children, Bradley and JoLynn.

Johnson’s son, Thomas C. Johnson, is an architect associated with the Pellham-Phillips Architectural and Engineering firm in Springfield and he and his wife have a son, Matthew, and a daughter, Glenanne.

Bill Johnson was recently appointed to the board of directors of Springfield City Utilities. That and other personal interests will occupy much of his time in retirement.

But he promises never to be far away from Mid-America Dairymen, Inc., in general and Southern Division activities in particular. In a quiet, unassuming and always sincere manner, Bill Johnson has cut a wide swath for the dairy industry and for the people he chose to spend his life working for—dairy farmers.

He will be sorely missed, but long remembered and truly appreciated by his peers and associates.