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Dairy looks to bottle own milk

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Posted on March 29, 2010 |
By Kathryn Flagg



web_milklady.jpg
CHERYL DEVOS, along with her husband J.D., are hoping to establish their own creamery to bottle and sell organic milk and produce other products like butter and ice cream. The North Ferrisburgh farmers hope the creamery will provide more stability than selling their milk at bulk prices. Independent photo/Trent Campbell

NORTH FERRISBURGH — One North Ferrisburgh dairy farm is considering reviving the dwindling tradition of bottling and marketing its own milk in the hopes of escaping the economic uncertainty of the bulk milk market.

Organic dairy farmers Cheryl and J.D. DeVos, who currently sell their milk to Horizon Organic, are moving ahead with a proposal to build the Green Mountain Organic Creamery. Though the organic milk market is more predictable than the volatile conventional milk system, the DeVos family said a creamery could offer stability and profitability in an otherwise precarious industry.

“(About two years ago) we felt like organic was not trying to keep up with the prices of producing our milk,” Cheryl DeVos said. “We were always having to rely on a national company. We might be one of the bigger farms in Vermont that produces organic milk, but we feel powerless, basically.”

The DeVoses hope that by marketing their milk and products like butter and ice cream directly to consumers they can bypass the middlemen in the bulk milk market and have more control over their prices. If the plan comes to fruition, Green Mountain Organic Creamery would be just the second organic creamery bottling milk in Vermont, after Strafford Organic Creamery in Strafford.

The plan, more than two years in the making, is taking shape as organic dairy farmers struggle. Northeast Organic Farming Association of Vermont (NOFA-Vt.) livestock and dairy advisor Willie Gibson said the last year and a half have been tight for many organic dairy farmers, many of whom entered the industry just a few years ago and incurred a lot of debt making the switch to organic.

Organic dairy farming has long been considered a sanctuary from the price swings of the conventional milk markets. Organic farmers sign a contract, agreeing to a set price per hundredweight (cwt) for their milk, whereas conventional dairy farmers are held captive to the highs and lows of the federal milk pricing system.

But major organic milk purchasers like Horizon Organic and the farmer-owned Organic Valley Co-op have been flooded with more milk than they can sell for the last year. As consumers cut back on more expensive organic purchases at the grocery store, Horizon Organic and Organic Valley had to sell some of their organic milk on the conventional market.

“The past couple of years have been a struggle,” DeVos said. In December, when the farm signed a new contract with Horizon, the Boulder, Colo.-based company asked the farm to make a 5-percent cutback in the amount of milk it sold each month.

There’s also concern among other dairy farmers who sell their milk to Horizon that the company may dial back the prices it pays to farmers. Gibson said Horizon is discussing the possibility of lowering the “cost of production” bonus it adds on to base milk prices in some parts of the country, a move Gibson said the company hopes would help Horizon remain competitively priced on supermarket shelves.

“I’m hearing from a few Horizon farmers that they’re quite concerned about that,” Gibson said.

The prospect also makes the DeVoses nervous. Their finances are not breaking even at this point, though if prices stay stable they said they could be “caught up” by this summer.

Though the prices that organic dairy farmers earn for their milk is substantially higher than what conventional farmers bring in (right now, the DeVos farm earns around $29 or $30 per cwt — roughly twice what conventional dairy farmers get) DeVos said the cost of production is tremendous. Feed costs in particular make up a huge part of the DeVos farm’s expenses.

“It’s what gets us every month,” DeVos said, adding that it’s not unusual for the farm to spend $40,000 every month on feed.

Currently, the DeVoses milk around 200 Jersey, Holstein, and Jersey-Holstein cross cows, and ship 320,000 pounds of milk every month. (That amounts to more than 38,000 gallons of milk.)

The plans for the creamery are still in fairly early phases. The farm earned a Farm Viability Program grant from the state to fund some of their business planning efforts, and the state also provided an $8,000 grant to help build an on-farm retail store if the creamery moves ahead.

Cheryl DeVos said the creamery would be a roughly $1 million project, and the farm is looking for investors to raise about half of the total cost of the facility. Finding investors will be important, she said, because banks are reluctant to invest heavily in capital-intensive agricultural ventures that might not hold their worth if the company fails. If funding comes through, the creamery would likely be built on the family’s North Ferrisburgh Kimball Brook Farm, though it could potentially be established in a building in Shelburne.

Gibson said that while some dairies in the state could potentially establish their own creameries, the hurdles are daunting. Between regulations and the cost of equipment, building a creamery is expensive.

Dairies also need to make sure that there’s a market for their milk. That, he said, is the tricky part: There’s only so much milk that can be sold locally in Vermont.

“It’s a very challenging thing, and it’s only going to work for a very small number of people who really have that entrepreneurial spirit,” Gibson said.

But DeVos said that local stores have been receptive to the idea of stocking local, organic milk, and some have expressed a willingness to pull national brands if a local option becomes available. She also said that she’s spoken with a chain of major natural foods store in the Boston area that is also interested in the product.

In addition to bottling milk, Green Mountain Organic Valley would also produce butter and possibly ice cream.

“Our dream, first and foremost, is to sell all of our milk, and then to start trying to gather in other organic dairy farmers, and create Vermont jobs,” DeVos said.

Reporter Kathryn Flagg is at kathrynf@addisonindependent.com.

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