Dairy farms pursue a new niche If you're tired of selling commodities and long for a shot at producing value-added products, pay attention to a new move among Maryland and Virginia dairy farmers.
Using Israeli-built pasteurization and cheese-making equipment tailored to small farms, they're branding products and pursuing niche markets in the Northeast. That niche-market concept could work for vegetable and fruit farms, too, says Don Thompson, director of marketing for Agri-Service LLC, Hagerstown, Md., who spoke at the recent Southeast Vegetable and Fruit/AgTech 2000 Expo in Greensboro, N.C.
Agri-Service, a dairy parlor equipment sales company, after observing declining numbers of U.S. dairies, opted to sell the Pladot mini-dairy pasturizing system and set up a marketing service so small dairies could sell their own branded ice cream, yogurt, cheese and fluid milk. The equipment is custom-built according to herd size and can be made to handle as few as 30 cows.
Big boys rule "Western mega dairies and corporate farms are beginning to dominate the landscape, and milk prices remain below cost for many family farms. The family farmers are living off their capital," Thompson says.
"The traditional dairyman does not need to add value to products. He does not know how to market his product. He has limited access to consumers and none of the necessary equipment."
Thompson says U.S. dairies will number about 75,000 in 2002, down from 100,000 in 1990. That number may drop to 12,000 by 2010, he says.
"Massive consolidation is going on out there. The family farmer needs marketing expertise and tools," Thompson says.
Agri-Service developed a new marketing concept called Creamery Fresh. It allows farms to retain their individual identity and even farm-to-farm flavor variations. Quality standards are uniform, however, and set at high levels.
The Creamery Fresh logo is optional and secondary to the farm's own label, but is placed on the entire line of packaging. That makes the products easily recognized by consumers.
Can have power "We've seen that small dairies can have marketing power. We give the expertise in all market distribution channels. We will help them learn about food service, chain retailers, retail markets, all the things producers of commodity products don't know about," Thompson says.
Education is a key component of the package. "People have to have a reason if they're going to pay 20 percent more for a product," he says.
Creamery Fresh provides promotional and advertising materials, a Website geared toward consumers, and help with agri-tourism projects. "We're also an advocate to government and industry," Thompson says.
Quality is the key High quality products are key to it all, though. "There's no room for a commodity product here. In a niche market, the product must be fresh. We watch somatic cell counts closely, We make sure there's adequate cooling for the product. We don't want to be down there with the commodity products. Each product has to meet a standard," he says.
After a year of planning, four dairies currently use the Creamery Fresh line. But one a month will be added through this coming summer.
"We don't want to come on too fast right now. There's no limit to how many dairies can be involved. Who really knows? If we can get America to catch on to this and say, hey, this is a quality product, there might be room for a lot of dairies in it," he says.
Five percent goal They're concentrating marketing in northeastern states, where 60 million people now live. "Over the next 10 years we'd like to shoot for five percent of that market. We'll let the big guys have 95 percent. We just want that five percent that wants a high-quality niche product. We're not fooling ourselves and saying we're going to change the market or change consumer tastes. We're not going to make yogurt eaters out of people who don't like yogurt. But we're going to go to those people who might like a special yogurt product," Thompson says.
"We're taking what's a miserable situation currently for dairy farmers and saying we will solve this problem for some of them. We're not just going to sell them stainless steel tanks and walk away. That's not conscionable today."
The Alabama Soybean Association will hold its 2001 annual meeting at the Holiday Inn Research Park in Huntsville on Saturday, Feb. 3. All farmers, agribusiness representatives and their families are invited.
The informational session this year will focus on production, with research and Extension specialists discussing the latest research and recommendations for efficient production.
Topics include precision farming, weed control, no-till production, soil fertility and general discussions in other areas such as marketing and disease control. CCA credits are approved for the meeting. Those attending the information program can receive credit for a total of two credit hours.
There is no registration fee and a complimentary luncheon will be served. The program begins at 8:30 a.m. and concludes with the luncheon at 12:30 p.m. The meeting concludes with a banquet Saturday evening featuring the famous Lawler Family as entertainment. There will be a small charge for banquet tickets. The motel features an indoor pool, and baby-sitting services are available Saturday evening for infants through 12 years of age. Call 1-800-845-7275 for room reservations or Allen Bragg at (256) 828-3611 for more information.