Ryan Miller is the co-owner and president of Farmer’s Hen House, the Kalona-based company providing organic, cage-free eggs to the nation.
Ryan sits down to discuss how his family made their way into this business, why the egg business pulled him away from a career as a school guidance counselor, and what goes into a day in the life of a cage-free chicken. Ryan also shares an inside look at the economics of a premium organic product, how their partnership with Hy-Vee has been instrumental to their success, and why they’re branching out into a new venture: drinkable Greek yogurt.
I learned a lot, and I think you will too.
Sponsored by MidWestOne Bank, this is the latest edition of the CBJ’s Real Success with Nate Kaeding and notable Iowa business and cultural leaders.
Real Success with Nate Kaeding was named Best Business Podcast at the 2024 Iowa Podcast Awards.
Let’s start at the beginning. The business itself was started by an Amish farmer in 1997. Tell us that story and how your family got into the egg business.
Ryan Miller: Yeah. It is a crazy story. Eldon Miller, who is not related to me even though he has the same last name, started the business in 1997 but, earlier in the ’90s, he had started the first organic group of farmers in Kalona. He saw that as a way for those smaller farmers to be viable into the future and to add value to their products. He had a chicken house there and he got started with organic eggs. Then, in 1997, he acquired the facility where we are at now in Frytown that had been Country Lane eggs. They started grading a few eggs and selling them around. In 2000, he approached my dad about buying the business from him. Being an Amish man, he couldn’t own the facility and do all of that kind of stuff. I grew up just down the road from Elgin’s Farm. That’s how he knew my dad.
My dad took the plunge and did it. I was a student at UNI at the time, and I remember being home one weekend when he was like, “What do you think about this egg business?” I looked at it a little bit and I’m like, “Yeah, dude, whatever you want to do. I’m in school to be a teacher.” I had no plans to be involved.
So they started. The whole industry was pretty small back then. I mean, not too many stores outside of natural food stores were carrying organic eggs and it was just starting to grow a little bit. Eventually, my wife and I moved to New Orleans to teach in the public schools there, but we moved back home so I could finish graduate school. The business was growing. My dad was asking if I could come help him, and I was like, “Sure! This will work out great because I need a job during the day and I’m going to class at night. I’ve got two years of school, so I’ll help you out for two years and then I’ll be on my way.”
I never stopped working at the business. We’re still pretty small. I was a guidance counselor from the fall of 2006 until May of 2010. Basically, I needed to go one way or the other. I needed to be at the business more if that’s what I was going to do. So that’s when I went full-time with the Hen House and also started buying part of the business. I bought half the business at that point.
What was the scale when your dad bought the business? What did it look like in 2000?
Ryan: In 2000, it was probably about eight to 10 farmers with an average of 5,000 to 7,000 birds per farm. It was a couple truckloads each week of stuff. When I got there in 2004, we were probably at three truckloads. In total, in our network in 2004, we were probably at like 120,000 birds. Today, we’re just over one million. By the end of 2025, we’ll be at 1.2 million hens.
As a guidance counselor, when did it start to click that you wanted to go into this full-time?
Ryan: Right away when I got there, I kind of dove in. I started doing all of the pricing stuff and working with customers, and I found that I really liked that. It was pretty fun. Being a guidance counselor was also a lot of fun. Each one was kind of interesting. It was very different each day. But once I got into the business side, seeing how the food world worked was really interesting and I just kind of started learning as I went. Like I said, I didn’t have a business background.
Who were some of the early customers?
Ryan: Our first major customer was Hy-Vee. But a lot of what we did was act as a co-packer or a contractor for bigger egg companies that needed these specialty eggs to sell with their white eggs. So right away we were selling to a company in Denver, a company in LA, and a company in Pennsylvania, but we were pretty far removed from the retailer at that point.
What was your first big win?
Ryan: I mean, Hy-Vee has always been a great partner of ours, and I wish they would build a thousand stores. We ship a lot of eggs out of the state because we just don’t have as much population here. So a lot of our bigger customers in the beginning were some of the big egg companies in California that were feeding into the LA market. Where we really grew in the 2007-2011 range was when we did a lot of work for a company based in Minnesota. They had the national Target contract and Target started putting out organic and cage-free eggs. The company had no capacity to do anything specialty like that and they didn’t want to really deal with it. So they came to us to do all the packaging. Until 2011, they were half of our business and most of that business was the Target stuff nationally with the Target brand on it.
Then some things changed there with them which was actually good for us because we had to diversify our customers. We started doing a lot of work for a few different people. Around 2015, I started changing my focus to the branded side. By 2021, 30% of our business was branded.
In 2015, we started doing some work for Costco. That was a big one. We do a lot of work for Costco today. They don’t sell a lot of branded stuff, especially in the egg department. It’s all Kirkland brand. We work with them on supply and they determine where it goes. Funny enough, the eggs in the Coralville Costco usually come from Illinois or Michigan, and all of the Costco eggs that come out of our plant go to southern California and northern California.
What a fascinating world. People in California are eating Iowa eggs and people in Iowa are eating eggs from Indiana.
Ryan: The food world is very interesting in that I see all the logistics and all the work that goes into getting an egg in a carton, getting it to the distributor, getting it to the store, and I have a very keen appreciation now for any product that has ingredients in it or has been precooked or any kind of pre-preparation. We wash and grade the eggs. So it’s fairly simple and I know how complicated that is. So I’ll just look at the products on the shelf and think “Wow, there’s a lot that goes into this.” From the packaging to the ingredients, our food system is very robust in that it’s efficient. But yeah, there’s just a lot going on behind the scenes that we don’t think about.
Walk me through a day in the life of a chicken.
Ryan: Yeah. So a Farmer’s Hen House organic pasture-raised hen, and this would be true of all hens, needs 16 hours of light for optimal laying. They have a photo sensitive cell in the back of their head that can tell the light’s coming. So let’s say the lights come on at 5 a.m. in the barn. The lights come on kind of softly. Birds are perched on one of the perch bars or on the slats because there’s no cages. The birds can move around in the barn however they want. The floor comes down to where they can get in. It’s kind of like (artificial turf) on the bottom. So the feeders are going to run and they eat. Some of them start making their way to the nest box. So somewhere between when the lights come on and probably 11 a.m., she’s going to go into the nest box, crowd in there with her favorite friends and drop an egg at some point.
So the eggs are laid in the box. They roll out of the back onto a belt so they can be collected. There’s going to be about six or maybe seven feedings, and then they’ll always have access to water. Water is very important because about 60% of an egg is water. You’ve got to track how much they’re drinking every day. Eat, drink, lay an egg – that’s the morning. Then you’ll walk around and talk to your closest friends. You can walk wherever, sit on the perches, all that kind of stuff.
We have curtain sides that can open and let fresh air in. Then around noon, if it’s nice out, the side doors are going to open and you can go out. If it’s pasture-raised, each bird has 108 square feet outside. Inside the barn, they have 1.2 square feet per bird. That’s all determined by Humane Farm Animal Care, which is a third party auditing firm that we use. Then, when the sun starts to go down, you come inside. The lights stay on in the barn until you get to that 16-hour point, and then they’re going to go off. The birds are going to start to calm down. They’re all going to go up on the slats of the perch. The lights go off and they go to bed.
Now, when you contrast that with your normal white egg, you are going to be in a barn where there’s no curtain sides. You’re going to have artificial light all of the time. The food is going to come past you on a chain and trough which is going to be right in front of your cage. Your feet are on wire. You’re not having 1.2 square feet. A smaller barn would be 100,000 birds normally. It’d be like 200,000 or 300,000 birds in a barn, whereas our biggest barns are around 20,000 birds, which sounds like a lot, but if you see the barn, it is just longer and they all have that amount of space to move around.
One of the differences that you can easily see right away when you crack them open is the color of the yolk. The yolk is where the fat and stuff is, but that’s also where all of the vitamins, minerals, and all that good stuff is. We feel like if the bird’s healthier and more robust, the egg’s going to be a lot better.
So how does the pricing and economics behind organic eggs work?
Ryan: Usually there’s a three or four dollar difference per dozen. Sometimes it is more. Our pricing is pretty much consistent throughout the year. It’d be considered often for us to change price more than once each year. Conventional eggs are priced every day. Most retailers price them every week. So that can vary a lot.
Also, our costs are obviously higher at the farm level for the farmer to be able to make a living. That’s one of our big missions at Farmer’s Hen House. We use all of these individual family farmers. It’s something they can do. They can make a living on the farm. They could not be in the egg industry on the cage side. They just couldn’t do that kind of scale and make it work economically.
It’s better for everyone in that value chain because we’ve been able to get a lot of younger farmers started. It costs more at the farm and it costs a little bit more for us to process because we’re hauling the eggs in. Then we distribute them out. They don’t turn quite as fast as the commodity eggs, so the stores usually put a little bit more of a premium on them as well. Commodity eggs are often used to help get people in the door so the markup isn’t as high. So that’s really what drives that extra price.
When I first got into this, you mostly found our type of product at places like New Pioneer or Whole Foods, and now you can find specialty eggs all across the retail spectrum. More and more people are understanding where their food comes from and a lot of our customers obviously want the quality of the egg. They feel it’s a better quality egg. They’re also really thinking about how this egg was produced.
You’re branching out into drinkable Greek yogurt under the brand Pillars. Talk a bit about this diversification play for you. How did that start and where do you see that going?
Ryan: We added Pillars, the drinkable yogurt, to our portfolio in April. We bought it from the founder and his brother. We partnered with a private equity firm out of Chicago and they had been talking to the founder for a little while. When they brought it to me, we thought it’d be a good add-on being in the dairy category. We saw a lot of advantages there. One big advantage was that we had 60% customer crossover where we ship to who we talk to.
We just brought them in and we do all the back office stuff. We melded it with our sales team. We do the distribution and everything. We work really closely with the plant out there where we get it manufactured. But it’s great because it’s all natural. It’s not organic, but it’s all in how they strain the yogurt. There’s no added proteins and no added sugars. There’s a little bit of Stevia in there. I’m not a huge Stevia fan, but I don’t really taste it.
The founder, Eric, created it because he’s big in fitness and he couldn’t find something that was high protein and low sugar. It’s national in Whole Foods but that’s just been in the last year. So there’s a lot of white space left for that yet. So it’s been good.
