Dairy Farmers of America (DFA) is the nation’s largest producer-owned dairy marketing cooperative, with nearly 21,000 members and 2005 sales of almost $9 billion. Recognizing that benefits strengthen the cooperative’s relationship with its milk producers, DFA offers its members a variety of programs and services beyond milk marketing. Because dairy farms are typically small businesses (a large farm may have only 15 to 20 employees), they don’t have the same access to many benefits that are available to larger organizations. By joining DFA, these small business farms can enjoy big-business benefits.

DFA wanted to expand its suite of benefits by adding a 401(k) retirement plan. After creating a safe-harbor 401(k), DFA hired Milliman to administer this new benefit program and provide customer service. The plan would be modeled after an agricultural cooperative 401(k) plan that Milliman has successfully administered and grown over the past 12 years.

High value, easy to maintain

For DFA, the challenge was to design a 401(k) program that would rival a Fortune 500 plan and still be easy to communicate and use.

To maximize benefits while keeping costs down, Milliman focused on features that could easily be deployed to farms scattered across the country. Program highlights include:

• daily valuations of a participant’s account
• the ability to trade in and out of mutual funds on a daily basis
• a variety of low-cost, high-performing funds to choose from
• Web access for sponsoring farms and their employees
• call center with English and Spanish-speaking representatives

Educational Web tools allow participants to calculate ways to reach their retirement savings goals, execute trades, and access their investment portfolio.

To handle the transfer of monies between DFA and the trustee, Milliman built an electronic interface to execute trades for contribution and distribution requests. DFA deducts 401(k) contributions from the farmer’s milk payments and the funds are wired to the trustee and invested accordingly.

Communication key to success

With features established, administrative processes in place, and the back-end technology developed, Milliman was ready to roll out the 401(k) plan to member farms. To lay the groundwork, Milliman created a direct mail campaign to introduce the product and also used print media and radio interviews to publicize the plan.

A key component to the rollout was involving DFA’s field staff in promoting the new benefit to members. As such, Milliman traveled the country to meet with the seven chief operating officers, field staff, and various area councils about the plan.

The 401(k) plan was officially rolled out at DFA’s annual meeting on March 21, 2006. From the client’s perspective, the design and implementation of this product is an absolute win. Milliman pulled the 401(k) program together on time, introduced it successfully, and generated excitement about this new benefit that will further solidify the relationship between the cooperative and its members.

Managing for future growth

As the 401(k) record keeper, Milliman handles the day-to-day management and record keeping of the plan. This includes producing the participant documents, staffing the call center, maintaining the Web site, driving the education efforts, leading ongoing marketing tactics, and producing the compliance documents on behalf of participating members.

Milliman has continued its marketing efforts with the intent of educating members about the value of offering a structured retirement plan to their employees. Examples are milk check “stuffers,” attendance at events such as the World Dairy Expo, conference calls with DFA field staff to address frequently asked questions on a national basis, radio interviews, and placement of articles in DFA’s news magazine, DFA Leader.

The key to continued growth of the program is ongoing education about its benefits—and the cooperative has an army of 300 people on the ground to help communicate. The project is a long-term venture for Milliman, DFA, and its member producers.