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March 9, 2012 - 12:02am

More Greek yogurt production in New York won't necessarily help small dairy farmers

posted by Howard B. Owens in business, agriculture, Le Roy, Pavilion, Stein Farms.

Even two new Greek yogurt plants in Batavia won't be of much help to small dairy farmers, which are finding it harder to survive in a globalized market and stringent regulatory environment.

Dale Stein, who operates a large dairy farm in Le Roy, said his heart is with the small dairy farmer, but knows they need to make some tough choices to stay in business.

"I have great sympathy for the small dairy farmer," Stein said. "We were a small dairy farm once. My brothers and I did the milking while my father worked in the fields. He went 20 years without a day of vacation."

The Batavian spoke with Stein Thursday and asked him about a New York Times story that said small dairy farms throughout the state are struggling.

How could Robert and Fred — who produce so much more milk than their dad — end up making less money? There are a number of reasons, some obvious, others less so. Milk went from a local industry to a national one, and then it became international. The technological advances that made the Fulpers more productive also helped every other dairy farm, too, which led to ever more intense competition. But perhaps most of all, in the last decade, dairy products and cow feed became globally traded commodities. Consequently, modern farmers have effectively been forced to become fast-paced financial derivatives traders.

In other words, if a dairy farmer doesn't hedge -- buying options to bet against an increase in prices -- they can't make money. (In hedging, if prices increase, the farmer profits; if prices decline, the farmer offsets losses on product with gains on the options.)

Stein said his farm is big enough to manage the fluctuations in commodity prices, but small farmers simply can't do it.

"Margins are tiny and getting smaller each year," Stein said. "The only way to survive is to sell more product, and if the size of your herd is limited, the less you have to sell."

EPA regulations define a small dairy as 199 head of cattle or less. If a farmer wants to milk a 200th cow, the amount of equipment, technology and infrastructure required to comply with government regulations would cost at least $250,000, Stein said.

Few small farmers want to take that chance.

Especially in today's labor market with fewer qualified migrant workers available.

"It's very difficult for them to compete for labor and for land," Stein said. "We started small. My dad started with two cows. We've slowly grown our business so we can employ more people and give everybody a middle-class wage. It's not that we wanted to be big, but we had to grow to survive."

John Gould, owner of Har Go farms in Pavilion, decided to go a different direction in his effort to keep a farm going that his father bought in 1956.

It's a decision many small farmers have made to survive, according to the Times article.

As tough as it might be to grow from a small dairy farm to a large dairy farm, Gould made the equally daunting decision to switch his farm to certified organic.

Making the switch, which he began in 2005, took three years. It involved building fences (because cows would graze rather than be confined to feed lots), put in water lines and pave drive ways. It takes time for the herd to adjust to a different diet -- corn and soy raised without pesticides or herbicides -- so milk production can drop to nothing for a time. Fields that once relied on chemicals to be productive must be slowly turned back into fields that are mechanically tilled for weeds and can tolerate a few bugs.

"You've got to think those things through and plan how you're going to handle all of that," Gould said.

But Gould said he got what he wanted out of the switch to organic: A profitable and viable small dairy farm.

"It seems to have been a good decision for us," Gould said. "It's certainly a different lifestyle from the type of farming we had been accustomed to, but we continue to make very high quality milk, which is very important to us and important to our customers."

Gould is philosophical about the choice for small dairy farmers -- spend the money to comply with environmental regulations or take a loss for three years and switch to organic.

"Nothing in this business is simple or automatic," Gould said. "That's the life we chose. If we're going to be in the business, we have to make those kinds of decisions."

Small dairy farms that decide to grow would indeed help New York meet the anticipated demand for milk created by two new Greek yogurt plants in Batavia. But Stein said obstacles to growth for small dairy farmers will hold back the industry.

Even now, before Alpina and Pepsi open their plants, the local supply of milk is limited.

"Chobani (operating a Greek yogurt plant near Albany) already uses so much milk that we don't have any extra milk now in our market," Stein said.

It would help the New York dairy industry tremendously, Stein said, if it were easier for the small dairy farms to grow and help meet increased demand.

"We all want to protect the environment, but current environmental regulations are stopping growth of the dairy industry in New York," Stein said. "Pepsi's milk may well have to come out of Michigan because they have enough milk and we don't, which is a shame, because we could use the jobs."

Linda George
Linda George's picture
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Last seen: 10 months 4 weeks ago
Joined: Mar 15 2012 - 11:07am

Sure--we can use the jobs, with “legal” help on the farms. Are you not aware of the 2000 cow dairies that have gone bankrupt in the past couple of years?
If you take 10 small dairies to supply milk to the market and one goes under, the market still survives. If you have one big dairy and they go under there goes the whole market…but, some people want self-gratification of wealth and power without any thought of the future. How about our youth that are interested in going into the agricultural field and owning their own farm one day?
Has NYS not learned how big business is not the answer---look at Bethlehem Steel, Trico, and Kodak and a list of others, that you thought were too large to fail! Look what they took with them from Booming to Bust. "I have great sympathy for the small dairy farmer," Stein said. That's nice. Because we have great sympathy for all of those you affect.
A new law should state, “If a farmer is going to have foreign help to help to milk their cows they should be held legally responsible for all their permissible responsibilities of the law, and not the taxpayer.”
Stein said obstacles to growth for small dairy farmers will hold back the industry. Aren't you already making enough money? You want it all, when there is enough for many. And the heck with the environment let the taxpayers find a solution for the concentrated waste. I conjecture there is no such thing as working together with your neighbor when one wants it all.

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