NORWICH – The Chobani Greek yogurt craze continues to put the spotlight on New York’s dairy industry and the controversial issue of supply and demand. With current input of $1.30 to $2 per gallon to produce, but only $1.50 paid at the farm gate, farmers of small to mid-sized dairies are going backwards and even out of business from a lack of profitability.
Chenango County’s farmers could be losing up to 50 cents or more per gallon. Cornell Cooperative Extension Director Ken Smith said that’s because their cost of production tends to be higher because the farms here don’t have the economy of scale when they go to purchase supplies. Most of the farms in Chenango County are small to mid-sized with fewer than 200 cows.
For example, dairy farmer and Town of Sherburne Supervisor Charles Mastro said his feed bill went up a whopping $800 last month. “The cost of production is at least what we should be paid,” he said.
Meanwhile, manufacturers continue to suffer from a lack of milk availability. Chobani has been forced to look for supply outside New York and even built a facility in Idaho in order to
guarantee product for West Coast markets. The yogurt plant ships over 1.7 million cases each week across the country and demands more than three million pounds of milk a day. New York dairies are so far only providing 85 percent of it.
A resolution adopted by the Chenango County Board of Supervisors this month encourages Gov. Andrew Cuomo to develop a strategic plan to help farmers produce enough milk to supply not only Chobani in the Town of Columbus, but all of New York’s dairy foods processors. Smith recommends a plan similar to Wisconsin’s, where the industry, the state, farmers and educational institutions vowed to grow Wisconsin’s annual dairy output by 30 billion pounds of milk by 2020.
“The Cuomo Adminstration and New York’s Ag and Markets, Farm Bureau, and dairy cooperatives need to sit down together and form a consensus on what’s best for farmers and dairy manufacturers,” he said.
The Wisconsin plan identifies loans and grants available to producers and beginning farmers, and outlines management and operational systems, business and legal structures, and herd health and milk production services. Milk production per cow can be increased with so called ‘cow comforts’ such as larger barns and manure pits.
During discussion, Supervisor Dennis Brown, D-Pharsalia, directed Smith to develop the strategy here rather than leave the decisions up to the “ivory tower” in Albany. When Smith said his office already had the plan in place and would be delivering it directly to decision-makers within the Southern Tier Regional Economic Development Council, Brown said he hoped “those people in Binghamton will listen to us.”
“In Chenango County, a small active farm is much more important to us than a non-resident’s money that buys the land to put in a driveway so they can come up and visit every once in a while,” he said. “We want ‘growth factor’ here for our kids. Chobani presents an opportunity for us to sell a lot of product and get back to the day when their was plenty of flow.”
Many supervisors have objected to the nation’s pricing system for milk and the need for government subsidies and programs, saying the market of supply and demand should create a milk premium. Smith said Wisconsin farmers, with their strategic plan, were able to increase supply to such an extent that manufacturers of dairy products now pay a premium that is over the federal milk order price.
The legislation was offered in the wake of Governor Cuomo’s surprise announcement last week that would enable small farms to grow their herds up to 300 cows without purchasing environmentally compliant, but costly feedlot infrastructure. If implemented, that development is expected to save dairy farmers as much as $2,000 per cow.
Meanwhile, Chenango County Farm Bureau President Bradd Vickers warns that the nation’s food supply is at risk while state representatives stall on the Farm Bill, which expires Sept. 30. Vickers and 5th District Promotion & Education chair Rainy Collins-Vickers and other Farm Bureau members from the Southern Tier joined agricultural leaders from across the country at the “Farm Bill Now” rally in Washington, D.C. to urge legislators to pass the Farm Bill.
While there, Vickers met with U.S. Sen. Charles Schumer, who had just returned from a trip in upstate New York where he promoted another tax incentive to benefit dairy farmers and manufacturers such as Chobani: Biodigesters. The machines, which would convert animal and food waste into methane gas or fertilizer, are something with which Vickers is very familiar. The Farm Bureau, a number of years ago, completed a feasibility study on powering the Chenango County Public Safety Facility with a digester.
“This actually fits in with an ongoing discussion following the Yogurt Summit,” Vickers said, adding that with the whey, a byproduct from making yogurt, a digester on site at Chobani could produce heat and electricity for the facility.
The down side, however, is if the digester produces more electricity than needed on site. “It becomes an issue with the grid and New York’s poor net metering regulations,” Vickers said.
In a conference call, Schumer acknowledged a digester’s extremely high cost, as much as $7 million on a large farm, but said a group of farmers or a municipality or business could apply for as much as a 30 percent tax incentive and that federal stimulus funds or grants and loans from the U.S. Department of Agriculture may be available to offset some of the cost,
“One of the main barriers family farmers face when expanding is the cost of disposing of manure. ... The initial cost is prohibitive, but it’s money maker once it gets going,” he said. “This would be huge opportunity to allow New York dairy farmers to accommodate the larger herds that could capitalize on the booming yogurt industry. This energy incentive is a key piece in the puzzle for the Greek yogurt industry.”
On the call, Schumer was joined by Lauren Toretta, vice president of CH4 Biogas and John Noble, president and CEO of Synergy Dairy, who discussed their biodigester projects. CH4 Biogas has at least three projects under active consideration: A digester under consideration in Lowville near Kraft Food’s cream cheese plant, which would convert the plant’s food waste and manure from up to 20 nearby dairies into renewable electricity and gas to heat the plant; one in Linwood that would be fueled by waste at the Noblehurst Dairy; and a third at a 3,000 cow dairy in Oneida County, which is approximately 30 miles away from Chobani yogurt.
Toretta said she had talked to Chobani about the potential to develop a digester project and would be very interested in talking further to Chenango County to support farms in the area.
The surge of Greek yogurt demand with New York as the epicenter had resulted in this and other dairy-specific initiatives from Sen. Schumer’s office, including a USDA reg changes that would put Greek yogurt in school cafeterias and a tax deduction on the purchase of cows.