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Farmers Business Network Salary – The number of dairy farms across the country has plummeted by nearly 20,000 over the past decade, but one corner of the industry is doing well:
The Illinois-based nonprofit promotes milk, cheese and other products — spending nearly $160 million a year in fees it collects from dairy farmers through federal mandates.
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In 2017, with 503 dairy farms closed in Wisconsin and 1,600 across the country, IRS records show that 10 of the group’s executives were paid more than $8 million — an average of more than $800,000 each .
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A Milwaukee Journal Sentinel investigation of the group’s spending found that the group’s CEO Thomas Gallagher’s compensation tripled to more than $1 million from 2013 to 2017. The most recent year for which data are available. His compensation includes money to get first-class travel and pay part of his taxes.
Dairy Management Inc.’s Thomas Gallagher (second from right) at an event in 2014 to announce more than $500 million in partnerships with seven major companies. farm magazine
Some officials and board members took a trip to the Super Bowl. Senior executives can receive “health club benefits under the Executive Flexible Benefit Account,” according to a filing with the IRS by Dairy Management.
An affiliate group, GenYouth, based on Madison Avenue in New York City, even hosted a fundraiser in 2017 for the decommissioned aircraft carrier USS Intrepid, which is moored on the Hudson River.
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Dairy management officials said the event was paid for through corporate sponsorships and table sales, but the spending and salaries angered farmers — including some former board members — who struggled to balance their checkbooks every week.
“I often leave meetings and cry on the way home,” said Sarah Lloyd, a Sauk County dairy farmer who served on the Dairy Stewardship Council from 2013 to 2016.
“These high-priced marketers are sitting in their fancy offices in suburban Chicago driving luxury foreign SUVs to meetings,” Lloyd said. “When farmers’ children eat lunch for free and reduce lunch, they are using my money and (other) farmers’ money.
Dairy Management is funded by one of nearly two dozen federally mandated agricultural inspection programs, covering everything from avocado and Christmas tree growers to cattle ranches and pork producers. The idea is that by joining forces, farmers — including many small family-run businesses — will receive more marketing dollars.
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According to USDA records, dairy farms contribute significantly to the write-off program. An analysis of the records by the Journal Sentinel shows that the program has placed a heavier burden on dairy farmers than pork and beef producers.
Last year, the programs raised a combined $895 million to promote a variety of merchandise. Of this, more than $420 million (47%) came from dairy producers.
Dairy farmers must pay 15 cents for every 100 pounds of milk sold. Ten cents for state and territorial marketing programs, such as Dairy Farmers in Wisconsin. A penny goes to state programs such as dairy management.
Checkout payments are calculated differently for dairy, pork and beef producers. When the three are compared on a per-$100 basis, individual dairy farmers end up paying a larger share of the income than their pork and cattle industry counterparts.
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At current prices, dairy producers pay 80 cents for every $100 sold into the checkout program. That’s double what pork producers pay (40 cents per $100) and more than 10 times what beef producers pay (about 7 cents per $100 sold).
Dairy marketing efforts are known for the long-running “Is There Milk?” A campaign launched in 1993 by the California Milk Processing Commission, and a buddy campaign featuring celebrity milk beards.
However, per capita milk consumption in the U.S. has fallen or been flat every year since 1985. Dropped 24% during the national “Have you got milk?” The event ended in 2014.
With milk prices falling for the fifth year in a row, the percentage of farm closures — especially small family operations — is higher than at any time since the Great Depression.
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The Sentinel offered Gallagher two weeks for an interview, but he declined to answer questions over the phone or in person. In response to questions, Dairy Management spokeswoman Heather Aldani released a statement defending the executive suite pay scale:
“Compared to peer companies, the DMI board conducts a comprehensive annual review of CEO compensation. Overall, executive compensation is within the compensation competition for similar positions in the public and private sectors.”
Gallagher, 67, has been the head of Dairy Management Inc. since the nonprofit started in 1995. According to all nonprofit organizations must report to the Internal Revenue Service.
Gallagher’s compensation package was more than double the median paid to CEOs of large nonprofits in 2015 and 2016, according to nonprofit analytics firm Candid (formerly GuideStar).
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Peter Harding, an outspoken critic of the dairy checkout program, noted that there are significant differences between the leaders of federally mandated checkout organizations and other nonprofits:
Pete Hardin, editor and publisher of dairy industry publication The Milkweed, at his home in Brooklyn, Wisconsin. Mark Hoffman/Milwaukee Sentinel
“These guys are just sitting there, reaching out for the promotional checkout to guarantee cash flow,” said Harding, owner and editor of The Milkweed, a Brooklyn, Wisconsin-based dairy newspaper that covers the dairy industry.
A review by The Sentinel found that over the eight-year period starting in 2010, Gallagher earned an average of $976 and $744 a year. The compensation package includes a supplemental retirement plan, which Aldani said was scrapped in 2016.
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That’s nearly double the amount paid to the head of the National Cattlemen’s Beef Association over the same period. The two men leading the beef group received an average of $523, $327.
While Gallagher made just under $900,000 in 2017, Kendall Fraser of the Beef Association made $507,619 in 2017. Fraser’s predecessor, Forest Roberts, earned $712,199 the year before.
Like milk, beef sales per capita in the U.S. have been on a long-term downward trend, although beef sales have been increasing since 2015.
“(Dairy) farmers are losing their shirts, and they’re seeing executives make over a million dollars,” said Mike Eby, president of the National Dairy Producers Organization. “Farmers need every penny right now; I mean the value of milk is so low.”
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“In my years in farming, over 17 years, I spent over $40,000 at the checkout,” Eby said. “I don’t mind putting $40,000 in a reserve somewhere. … That’s a decent number.”
As Secretary of Agriculture to President Barack Obama, former Iowa Gov. Vilsack oversees various verification programs. In this role, he appointed members of various commodity committees.
In addition to serving as executive vice president of Dairy Management, Vilsack now runs the American Dairy Export Council, an affiliated group he joined days after leaving the Obama administration.
As a cabinet member, Vilsack earned about $200,000 a year, about a quarter of what he received in his first year at Dairy Management.
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“It’s an insult to me to be asked that question,” Vilsack snapped. “The dairy industry came to me and offered me the job – I didn’t seek the job. I didn’t ask for the job.”
Seven-figure pay: Gallagher wasn’t the highest-paid executive at Dairy Management in 2017. His compensation was dwarfed by executive vice president Gregory Miller and chief financial officer Carolyn Gibbs, who made $1.5 million. Left the organization in July 2017. She was paid nearly $1.2 million.
Rising administrative costs: The Sentinel found that from 2010 to 2017, salaries for dairy management executives rose by nearly 40 percent. In 2010, eight executives who had to be listed on their tax returns because of their high salaries received $5.8 million in compensation. By 2017, two executives had been added to the list. Nationally, the median pay for the top executive positions (excluding CEOs) was $269, compared with $436 in 2016, the most recent year for which Candid/Guidestar data is available.
High-paying contract workers: Former Fox Business News anchor Alexis Glick received a nearly 30 percent raise in 2017, bringing her salary to $259, $584. She is CEO of GenYouth, a dairy management affiliate that works with the NFL, and others promote physical fitness and dairy products to teens. Despite being listed as a full-time employee, Glick, like several other GenYouth executives, is an independent contractor. MKTG LLC, a company linked to two GenYouth executives, received $345,600 in 2017, up from $275,689 the previous year.
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Public Relations Spend: From 2013 to 2017, Dairy Management paid Daniel J. Edelman Inc., the world’s largest independent public relations firm, nearly $55 million for “representative services.” In the relationship between the two entities: Aldani, executive vice president of dairy management, left a similar position at Edelman to join the nonprofit in 2017.
In an email response to questions about public relations spending, Oldani said Dairy Management works with “leading agencies like Edelman to ensure we reach people by sharing relevant and engaging content about dairy and dairy farmers’ stories. “
All told, the Dairy Stewardship Council is made up of 81 people appointed by the U.S. Secretary of Agriculture or by regional agencies, who receive checks.
Critics of the Agricultural Check Program focus on its coercive,
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