Go Local, Go Direct Gonsers'' customer-direct dairy earns a whopping $38-$40/cwt

June 7, 2009 07:00 PM
The Gonsers will open a second store this summer near Everson, Wash., and hope to launch a third in Bellingham sometime later.

Four years ago, Elena and Mike Gonser of Everson, Wash., sold their long-time dairy herd to start a new adventure: selling less milk--but higher quality--directly to consumers. Today, their Breckenridge Farm milks 74 Holsteins.

Under their Dairy Best brand, the Gonsers process, market and distribute milk and dairy products. The couple received their license to sell their own milk in 2007. "I think it was the last time I had a day off,” Elena says. Here, she shares details of her customer-direct dairy business.

Why we went direct: We had several issues with conventional farming. We'd been at goal numbers for years and were a little bored. Even with a top-producing herd, when milk was under $11/cwt., we kept asking ourselves how long it was worth it to lose money month after month. Controlling our milk price by selling directly to consumers seemed like a relatively easy route to go. We pictured a 40-cow herd supplying milk for our small community and doing much of the farm work and processing ourselves.
Now with the benefit of 20-20 hindsight, I don't know that we would have had the guts to start up our own processing plant, distribution network and retail outlet. Installation costs and ongoing repair and maintenance of the plant are significantly higher than expected.

Knowledgeable repair folks are few and far between and darned expensive. Way more management time is required than we expected, and lots of bookkeeping time, too.

Finding markets: We realized early on that we needed to get our milk out there so folks could see how much better slow vat pasteurized milk was compared to high-temp/short-time or ultrapasteurized. Hence, the delivery business. We have the truck out about five days a week distributing to restaurants, bakeries, convenience stores and other retailers. The routes count for about three-fourths of our milk sales. Our store does the remaining quarter.

The farmers market was a huge time and energy investment. It gained lots of business for the store, and we did sell about $10,000 worth of product at the market last year, but we opted not to attend the market this year. The per-hundredweight price of $120 to $130 was awesome, but the volume was really small.

Milk is too heavy to pack around (even though the largest size we sold at the market was a half-gallon). The warmer the weather, the fewer the sales. As a means of acquainting potential customers with our products, the market was awesome. We are about 17 miles out of town, so while some of the market regulars make the trek out to our store, there are still a lot of customers from Bellingham that we have to rely on our retailers to service.

Second to the market is the hundredweight price we average at our store. Not counting butter and sour cream, we average $38/cwt. to $40/cwt. We sell butter at $3.55/lb. and sour cream at $2.50. Our gallons range from $2.25 for fat-free to $2.95 for nonhomogenized cream top. Our 2% is the most popular, at $2.85/gal. Eggs are the only thing we sell other than our dairy products.

Running the herd: Our herd has grown a bit; we're milking 74, with 87 total Holstein cows. We have 79 heifers ranging from one week to 22 months. Our rolling herd average has declined a bit with our need for less volume and more butterfat. We are averaging 4.65% butterfat and around 28,500 lb. Our somatic cell count averages about 85,000.

I don't know the "girls” nearly as well as I used to, but I still know every cow as an individual. I do most of the herd health and heat detecting, but I've got lots of help with the milking and calf feeding.

Mike does every 2 a.m. milking and all the feeding of the cows and big heifers. I usually get the new babies started, because I can't resist. It's one of those magical things to get a new life started on the right track. We have one full-time and one half-time worker on the farm. They mainly concentrate on milking and keeping the barns clean.

The recession's impact: The recent proliferation of $1.99 gallons of milk at every grocery store has definitely hurt. We've had to reduce prices to some of our retailers, and each of our delivery customers is being approached by every competitor out there. We have lost some business as a result of the economic downturn. Restaurants, casinos and coffee shops have all experienced a reduction in sales.

We are still torn between dropping our store prices, in hopes of regaining some price shoppers, or maintaining the current pricing structure because many of our customers would gladly pay more for what they believe is a superior product.

Practical advice: As challenging as it has been, I would still recommend direct sales to consumers as a means of creating a stable, sustainable dairy farm. To keep a full-time processing staff, we had to process milk from twice as many cows as we first expected.

It actually worked out well, because startup costs were so much higher than expected and the greater cash flow allows us to pay that back sooner. I would recommend having a really good relationship with a banker going into processing.

Everything costs three times as much to install as the piece of equipment itself. We employ four people in the plant, three full-time and one part-time. We've found shorter shifts work out best at the store, so we have four part-time workers there, and I also work the store a few shifts a week.

Customers' response: The end result to our community has been the addition of good-paying jobs and a popular dairy store. I can't tell you how many compliments on the products I get every time I work the store. Lots of seniors especially appreciate getting milk the way it "used to be," and kids are discovering milk is a treat.

Favor the flavor: We try to keep things as simple as possible, so our products are made the old-fashioned way. We use a powder mix for our chocolate milk, and just a probiotic culture to make our premium pure sour cream.

Our buttermilk, half-and-half, and whipping cream are particularly popular, but our butter is what folks drive miles out of their way to get. We churn the fresh cream and add just a touch of naturally sun-dried Pacific Ocean sea salt.

We are just releasing Smooothies, a drinkable yogurt made from milk, sweetened fruit purees and culture. I think my favorite is banana berry, but the strawberry mango, orange cream and peach berry are really good, too.

What's next: We hope to close on a property in a nearby town within the next few weeks to open our second store. Plans are in the works for a third store, in Bellingham, but I believe that's a little further down the line. We are working on creating a soft-serve ice cream base, and plan on selling ice cream cones at both stores this summer.

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