FEATURES
Cooperative Optimism

by Richard Triumpho

Milking in the Hudson Valley

PHOTOS COURTESY OF RICHARD TRIUMPHO. Sam Simon holds a bottle of HVF whole milk and HVF chocolate milk.

Cockeyed optimism is hard to come by these days when milk prices are falling off the cliff, but eight dairy farmers in the Hudson Valley of New York are whistling a happy tune on their way to the bank every month because their premium milk price of $21 per hundredweight is guaranteed well into the future.

These eight farmers—John Conklin, Peter Coon, Brian Donovan, Jennifer DeForest, Vern Jackson and Sam Simon of Dutchess County, along with Jim Davenport and Bill Kiernan of Columbia County—(with a combined total of 800 cows) are members of Hudson Valley Fresh (HVF), a nonprofit milk cooperative that four of them formed in 2004. Vigorously promoting their high-quality milk through local milk tastings and emphasizing its freshness (their milk is processed, bottled and in the stores within 36 hours of leaving the farm), HVF is building a loyal customer base from Albany to The Big Apple.

It didn’t happen overnight, Simon, HVF’s president says, but they have come a long way. “During our first week of business in 2006, we sold $37 of milk,” he said. “Last month [June 2009], it was $64,000. We’re growing at nearly 10 percent per quarter.” Despite the economy, HVF has seen no slowdown and will market 1.5 million pounds of milk this year.

Quality is key

From the beginning, HVF capitalized on quality that is better by far than industry standards. For all eight farms, the somatic cell count averages below 100,000, plate counts are under 15,000 and bacteria counts below 3,000. “Milk with those counts isn’t just generic milk,” Simon points out. He affirms that milk of such quality doesn’t need UHT pasteurization to maintain freshness for up to three week, therefore, HVF is pasteurized for only 22 seconds at 165 degrees. “Our milk tastes better because the protein isn’t altered by high heat. And, we leave all the fat in our whole milk so it averages 3.9 percent butterfat.”

Sam Simon purchased this Plankenhorn Farm near Pougkeepsie.

From day one, HVF concentrated on hosting taste testings. “Locally, we began at Hannaford’s, got permission from the dairy manager. Either I or my wife, went in, or one of the farmer’s wives. We set up a table with whole milk, chocolate milk, skim milk and cookies to meet the public for three or four hours. When they compare our skim milk to anybody else’s, our milk wins hands-down. Because of our minimal pasteurization; because of the hay and grass diet our cows are on, there are more solids in the skim milk,” Simon explains.

How it all started

Simon is the driving force behind this farmer-owned cooperative. He grew up on a 200-acre dairy farm in Middletown, N.Y. For 30 years he was an orthopedic surgeon, and when he retired 10 years ago he bought a dairy farm from one of his former patients. In short order he discovered what dairy farmers have endured for 60 years: it cost more to produce milk than he earned selling it through standard industry channels.

After five years of declining milk prices and rising costs, he got fed up. “For 10 years I’ve been getting awards for super high-quality milk,” he says, “but, the awards don’t pay my farm bills—and I have no debt. So, how are farmers with debt handling it? By cutting corners and losing equity!”

Many are going out of business. In Dutchess County, only 26 farms remain from 275 that existed in 1970, a loss of more than 90 percent. “Everyone is concerned with the idea of saving open space by purchasing ‘greenways,’ which I personally don’t buy into,” Simon says.

HVF whole milk and chocolate milk have a richer taste and contain more fat soluble vitamin D and Omega 3s.

Simon knew there were three other dairy farms in the area with high-quality milk, so he began investigating the probability of a business plan with them. During a meeting with New York State Assemblyman Patrick Manning, Simon sketched out a plan for the four farmers to sell milk under a Hudson Valley label. The milk would be defined by its quality, and the farmers would set the price based on cost of production plus a percentage for a premium. “If you keep the farmer on the land, you won’t have to worry about buying open space,” Simon told Manning. “If the farmer can make an honest living, he will be the steward of the land.”

In order for the business plan to work, Simon stressed two key points: “We needed to find a processing plant that would not co-mingle our milk with milk of lesser quality, and we needed a refrigerated truck to move the bottled milk to market.”

So, Simon also talked to Agri-Mark, since his milk and the other three farmers’ milk was under contract to them. He explained to Agri-Mark, “We want to do this project with a portion of our milk,” and asked for their help. Agri-Mark didn’t want to lose the farms, so decided to work with them. For an administrative fee of $2 to $4 per hundredweight, depending on volume, Agri-Mark agreed to haul HVF milk to the processor in a separate tanker-truck.

“Agri-Mark is happy because their tanker is only traveling a 20-mile radius and then unloading,” Simon says. “That’s a lot better for them than driving to Middlebury, Vt., or Georgia.”

The business plan gets off the drawing board

Cornell Cooperative Extension assisted the four farmers administratively in creating a not-for-profit 501 C-6, including a board of directors, with by-laws. “I had to get a lawyer to set the whole thing up,” Simon explains. “Assemblyman Manning got us a grant from USDA to cover that cost.” Then they were a legal entity, Hudson Valley Fresh, Inc.

Simon began marketing door-to-door to local delis and grocery stores. “My plan was to stay local, where we’re known, and grow from there,” he says. From May to December 2006, he delivered the bottled milk from coolers in his pickup truck. Meanwhile, he applied to the Industrial Development Association of Dutchess County for a grant for a refrigerated truck.

“I told them that HVF’s mission was to save open space and provide farmers a fair, sustainable price,” Simon says. “And, their response was, ‘Well, we’re not going to subsidize farming!’ I told them, ‘I’m not asking for a subsidy. I’m asking for a grant for a specific item, a refrigerated truck.’” It was critical to have a refrigerated truck to pick up the milk from the bottling plant, deliver it and have a driver to make sure it gets put in the cooler in the store. They got the grant.

In December 2006, HVF got a boost from the Dutchess County Chamber of Commerce, which was hosting a breakfast for 300 students from one of the school districts. HVF provided 300 bottles of chocolate milk for the event. Chamber of Commerce president, Charles North, ceremoniously poured chocolate milk from a champagne carafe and proposed a toast to Hudson Valley Fresh. “What a boost that was for sales,” Simon says.

Taste testing wins customers

The biggest challenge is public awareness and people realizing HVF is truly local milk, particularly since those eight dairies are the closest farms to New York City. “All eight of our farms are 20 miles from each other,” Simon points out, “and the Boice processing plant in Kingston is only 18 miles from here, so our carbon footprint is small. All those catchy phrases people are hooked on, HVF has got them all in this project.”

In New York City, HVF continues to host taste testings at Whole Foods, Union Markets and other places two or three times a month. “It’s time-consuming, but it’s effective,” Simon admits. He acknowledges it took some coercion to bring farmers to the mindset that they have to go to the tastings and meet customers face-to-face. Simon adds, “We as farmers are so focused, so busy, how can we find the time? So, somebody in the family who can interact with the public is essential. Our farmers finally realized that the time they spend to host tastings in New York City allows us to write them a $1,500 check every month.”

In New York City, HVF sells through two distributors: Baldor and McMann Farm. Now HVF is setting its sights on big institutions such as colleges. HVF milk is in Vassar College, Bard College, NYU and the Culinary Institute of America. “We tried hospitals, but that’s competitive bidding,” Simon points out. “I’ll compete on quality, but never on price. Why won’t I compete on price? Hey, all that cheap milk is why farmers are going out of business!”

Simon is staunch in asserting that the paradigm has changed in this respect: “We as farmers always thought the customer was the tractor-trailer that backed in and pulled the milk out of our tank. That’s not our customer. The customer who buys the milk off the shelf is our customer.”

The HVF farmers still contribute to the dairy promotion check-off. “Nobody has severed ties with anything,” Simon points out. “We just brought another entity into the picture, to bring a supplement to income.”

The author is a freelance contributor based in St. Johnsville, N.Y. Comment or question? Visit www.farmingforumsite.com and join in the discussions.