Iowa Public Television


Dairy Cooperative Gives Producers Options

posted on February 27, 2004

A premium-beef producer in Kansas has become the first U.S. meatpacker to volunteer to test for Mad Cow disease, every animal it processes. Officials at Creekstone Farms say they have assurances from their Asian customers that they would accept the packer's beef products if it tests every carcass.

It may be an important step. While the government and much of the beef industry claim such widespread testing is unnecessary, countries like Japan are insisting on 100 percent testing before reopening markets to U.S. beef imports.

Clearly, it's a time of adjustment for many in the livestock business, and not just in the beef industry. Dairy producers, too, are seeing dramatic change, with fluid milk prices at historic lows and imports from foreign competition threatening domestic markets.

Dairy cooperatives serve an important role in helping producers cope. And in that regard, the Cabot Creamery is an example of how success can be found through the proper set of survival strategies. David Miller explains.


Dairy Cooperative Gives Producers Options

It is late afternoon and milking time at Conant's Riverside Farms near Richmond, Vermont. The hired hands are working with some of the 350 cows that make up the herd owned by Kim and Dave Conant.

The Conants are fifth generation dairymen. They do the work not so much for the income, but the satisfaction that comes from doing a job they enjoy.

Kim Conant, Conant's Riverside Farms: "When you're receiving ten dollars and fifty cents a hundred weight for your milk and your cost of production is fourteen dollars a hundred weight, it doesn't take long to figure out, ends don't meet. And it has been pretty rough for the last two years. It really, it hasn't been fun to be honest with you. It's much more fun when you can make a living doing what you like to do and that's been pretty tough for the last couple of years."

Though market prices aren't what the Conant's would like, they have managed to stay on the farm by making and following a business plan. That plan includes the continuation of a ten year relationship with Agri-Mark, one of the premier dairy cooperatives in the nation.

The Conants' animals produce more than one million gallons of milk annually. Being part of the coop gives them the benefit of having a guaranteed outlet for their milk.

Kim Conant, Conant's Riverside Farms: "...if you are an independent, you really, you don't have a say in what's happening down the road. Belonging to a coop and being involved in it we really do have a say in what's going on and where the future of our coop is going and that's nice."

The milk is going up the road to one of two processing plants operated by the world renowned Cabot Creamery, Agri-Mark's branded products division. In 1919, 94 farmers banded together to form the Cabot Creamery Cooperative. They paid $5 per cow and contributed one cord of wood to fuel the boiler. After its merger with Agri-Mark in the early 90s, the group grew from 250 to more than 1450 and gained control of some 300 million gallons of fluid milk. Those 300 million gallons represent nearly 40% of all milk production in the Northeastern corridor.

Members receive market price for their milk but there are other benefits to being part of the coop. Premiums are paid for productivity and elevated levels of butter-fat. And there are laboratory services available to give members feedback on characteristics like bacteria count or butter fat content.

In 2002, Cabot/Agri-Mark made $550-million in sales, returning $24 million in premiums and profits to its members at years end, enabling producers like the Conant's to stay in business.

Before Cabot and Agri-Mark merged, both cooperatives experienced financial difficulties. In the early 90s, Vermont-based Cabot was on the verge of going out of business and the Massachusetts-based Agri-Mark Cooperative was having some major fiscal problems. The two groups began a self assessment. Agri-Mark controlled a large percentage of the bulk milk that was bottled for regular accounts in the northeast but it had no consumer name recognition. Cabot had consumer name recognition but not enough financial power to get out of debt or expand its reach. Both groups decided there might be mutual benefit in joining forces.

Jed Davis is Cabot's Director of Marketing.

Jed Davis, Cabot/Agri-Mark: "...a lot of people I think were scratching their heads saying, how are you going to take two ships that are not exactly right and make this into a bigger ship that's going to sail in some positive direction. I think what people missed were some of the synergies. ...And by pulling the two together there were efficiencies in terms of balancing milk supplies plus there was this exciting new availability of funds and foundation to support the Cabot brand.

Agri-Mark was able to bolster its bulk milk sales while Cabot continued to make its standard line of products, like butter and sour cream, as well as its signature cheddar cheese.

Over the past 11 years, a few smaller cooperatives have been acquired and several facilities have been upgraded or refurbished, and there was enough financial security to build a brand new processing facility for whey protein products used in the creation of items like baked goods.

Cabot has continued to branch out doing custom work for store brand dairy products, as well as creating various flavored cheeses.

The entire Cabot line is now available in all 50 states through either gourmet boutiques, the internet, or major supermarkets like Shaw's, a grocery chain with 193 stores in six Northeastern states.

Cabot has also received numerous awards and honors, including being named World's Best Cheddar in 2001 at the Biennial World Championship Cheese Contest in Green Bay, Wisconsin.

All the work makes farmer members like the Conant's proud to be part of Cabot and Agri-Mark.

Kim Conant, Conant's Riverside Farms: You know, you walk in and you see Cabot cheese, Cabot butter, Cabot whipped cream, whatever and yeah, it gives you a good feeling to the point where when somebody goes to reach and grab a different package of cheese or whatever, you almost want to walk up to them and say, now, why are you choosing that over the Cabot brand? There is a lot of pride in that product being on the grocery store shelf, very much so."

For Market to Market, I'm David Miller.


Tags: agriculture co-op dairy Mad Cow milk news