Unique alliance between producers and co-op seizes market opportunity
Years of trying to market milk closer to consumers have brought eight western New York dairies to a defining moment: In 2014, their very own on-farm cold milk separation plant will spin and whir into production.
"The industry has morphed away from the traditional milk, cheese, butter, and powder products to more niche products. In discussions with DFA (Dairy Farmers of America) and Rick Smith, CEO, we realized new opportunities to meet the needs of a changing marketplace are now available," says John Noble of Noblehurst Farms, York, N.Y., where the plant is under construction.
In a unique alliance, the dairy farmers’ group—called Craigs Station Ventures—and DFA have invested in the $12 million plant with high hopes for setting a new course in the marketing of more local, sustainable, traceable dairy products. The project, called WNY Enterprise LLC, will allow the dairies to reduce the risk associated with being a one-commodity producer.
What makes this collaboration between DFA and Craigs Station even more intriguing to Northeast dairy manufacturing customers is that it offers a farm-direct supply relationship that is backed by the security of a multi-billion dollar dairy cooperative.
"This will cause some anxiety (here) for a period of time," Noble acknowledges, "but change is occurring in this marketplace, and in the long term, having more places to market and process our product is good for all producers."
"[Indeed] this disrupts the status quo," emphasizes Smith of DFA. "However, we’re operating in a global industry now, and milk price is determined by weather conditions and (food preferences) in New Zealand and China. Personally, I’m somewhat risk averse, but this strategic agreement is extremely exciting."
Powered by the green energy of an adjacent manure methane digester, the new 14,000 sq. ft. plant will send its effluent back to the digester to produce more electricity. As many as 10 new jobs will be created by the enterprise, and local businesses will provide materials, construction and engineering services for the project.
Craigs Station Ventures started with dairies that had a close relationship of sharing management and marketing resources. They rounded out their group with other high quality businesses in the area that had similar aspirations and passions.
"We wouldn’t preclude expanding the group because there is potential for doubling the volume (handled by the plant) to 2 million pounds," Noble says. "But we’re asking folks to take enough risk with this first step. We have to start somewhere." Investment in this partnership is split 60/40, with each of the eight dairies contributing 5% toward the new milk plant.
Without support and teamwork from town, county and state officials, Noble says the plant project would never have become a reality. Named for a nearby 1800s railroad stop where cream was loaded for markets in Buffalo, N.Y., Craigs Station Ventures adds a new chapter to the long history of successful agricultural operations in the area.
Wegmans Food Markets, a high-profile, family-owned chain serving the Mid-Atlantic region, has also cheered on the milk plant project, saying the company believes in a direct relationship with farmers and agricultural business in the Finger Lakes region. Bill Strassburg, Wegman’s vice president of strategic planning, says, "We look at agriculture as a low-risk, high-reward partner."
Nobody anticipated the amount of patience needed to abide the long, slow process required for obtaining variances and permits. "Farmers are used to running with an idea," Noble says. Along the way, however, the group learned volumes about local zoning, engineering details, milk processing and quality, as well as food safety requirements.
Looking ahead, Craigs Station Ventures will put effort into branding their product, giving it a unique identity in the marketplace.
Weather conditions will dictate when the plant is ready for its first shipment of milk; plans indicate it could be the third quarter of 2014. Passersby may mistake the plant for just another dairy cow barn, though.
"We purposefully designed the plant with a peaked roof to make it look like a barn," Noble explains, "because we want it to blend in with the architecture of the rest of the farm buildings." Windows across the front will invite neighbors and visitors to see what’s going on.
In equal measure with risk management is the pleasure of creating opportunities that attract successive generations to stay in production agriculture, Noble says. Many of the Craigs Station farms are second- and third-generation operations. "We truly enjoy the enthusiasm generated when working with the people in these businesses—it’s what drives progress," he says.
Local, fresh, traceable milk from these eight farms will move to the plant and back out to nearby yogurt, cheese, ice cream, cream cheese and bakery markets in the same day.