Dr. Sam Simon didn’t come to dairy farming the usual way. Although he was born and raised on a New York dairy, he left the farm and became a surgeon. When he retired in his 50’s, he bought a farm in Pleasant Valley, New York, and developed the herd of Holsteins into award-winners, noted for quality and production standards and sought after for their genetic standards. Some of his cows even won top prizes at local and state fairs. But none of that shielded him from the reality that all dairy farmers face – the federally-set milk price was leaving him as much as $40,000 short of his production costs at the end of the year.

“I knew I needed to think outside the box,” Simon said. That meant figuring out how to get customers to appreciate that “not all milk is created equal,” he said. Some milk, like his and that from a handful of other farms near his, is better tasting and more nutritious, thanks to management practices and quality control standards that don’t apply at the Midwest dairies with thousands of cows that supply most of the nation’s milk. He struck on the idea of forming a dairy cooperative that would give the farmers an opportunity to showcase their products, the customers a chance to enjoy the quality, and the farms a way to survive.

Following Through on a Vision

At a time when U.S. dairy farms are closing at a rapid pace, and the remaining ones are struggling with pay prices that don’t cover the cost of production, nine dairies in New York’s Hudson Valley are now thriving thanks to Simon’s vision, because they’ve banded together to have more control of how their products are processed and sold, and to “preserve the agricultural heritage of the Hudson River Valley and promote it as one of the premier food regions of the United States.”

Founded in 2005 with three farms, the mission of Hudson Valley Fresh (HVF) is to produce and sell premium dairy products and pay its farmers a fair price for their milk, Simon said. By bottling, marketing, and distributing their own milk, these dairies are no longer at the whim of a long supply chain and an archaic federal system that sets commodity milk prices based on demand, with no regard for what it actually costs farms to be sustainable.

The Jackson family at Shenandoah Farm

While dairy co-ops are not a new concept and are hardly uncommon – the vast majority of U.S. dairies are part of co-ops, producing about 80 percent of the nation’s milk – most are marketing co-ops, blending milk from hundreds of farms into store-branded or other generic label products. Not so for HVF, which keeps its farm’s milk separate from that from other dairies so that the co-op has more control over its products and can stand behind their quality, since they know that every drop of milk with their label came from their own cows.

Joining Requires Meeting High Standards

To join the co-op, farms must meet stringent milk quality standards. Their milk must have a bacterial count of less than 5,000 colony-forming units per milliliter (the allowable limit under the U.S. Pasteurized Milk Ordinance [PMO] is up to 100,000), and a somatic cell count of less than 200,000 (the PMO allows up to 750,000). Before farms can join the co-op they have to demonstrate these quality standards for a full year. The farms have herds ranging from 45 to 600 cows, are all family-owned and -operated, and all commit to not using bovine growth hormones in their animals.

Jim Davenport with his favorite cow Sassy at Tollgate Holstein.

Their milk goes to Boice Brothers Dairy, a local plant that is New York’s oldest family-run dairy processing plant, where it is made into a range of products, from fluid milk, cream and half-and-half, to ice cream mix, yogurt and sour cream. “Thirty-six hours from cow to store” is one of the co-op’s mantras, and Simon said customers quickly notice the difference in taste between HVF products and generic milk. The milk is not ultra-pasteurized, but rather pasteurized using lower-heat methods that retain the flavor and nutrient qualities of the milk.

Their whole milk is not standardized to the 3.5 percent butterfat that most whole milks are, but simply left in its natural state without further processing, meaning that it is usually richer than generic whole milk, thanks to the Jersey, Brown Swiss and Guernsey herds in the co-op and their high-butterfat milk. As a result, their whole milk sales have been increasing significantly each year, the opposite of national trends, something Simon is particularly proud of. “As an orthopedic surgeon I can tell you that whole milk is important,” he said. “Vitamins D and A are fat-soluble, and you also need that fat to absorb the calcium in milk.”

And, unlike most milk in the United States, HVF’s products don’t travel very far. Much of the co-op’s milk is sold within a 40-mile radius of the farms, with the rest being sold in New York City, still only 100 miles from the bottling plant. That helps customers feel connected to the products, Simon said, and to feel good knowing that with their purchases they’re helping to sustain local dairies, which together steward 7,000 acres of active agricultural land in their communities.

Federal Influences

While the independence of the co-op is beneficial to the farms, they still can’t be entirely free of the intricacies of the federal milk system. Because their production is above the required threshold, their milk still must be sold into the federal milk pool and so is bought at the federally-set pay price. And because they produce more milk than they currently sell, the nine dairies are also members of Agri-Mark, one of the largest dairy cooperatives in the Northeast, meaning that the milk the HVF farms produce above what goes into their labeled products goes into Cabot cheese and other Agri-Mark products.

Members of HVF families staff the office, calling customers, taking orders, and coordinating deliveries. The co-op employs seven drivers who keep five trucks busy delivering their milk around the region.

The variety of dairy products from Hudson Valley Fresh.

Co-op farms make up the organization’s management as well, overseeing the business operation and meeting annually to set the price they will earn for the milk they sell with the HVF label. They set it based upon what it costs to produce the milk, Simon explained, and the price has gone up gradually over the years, and is currently at $23 per hundredweight. Each member owns an equal share of the co-op and so receives an equal payment based upon products sold under the HVF label. With the high pool prices of 2014 there wasn’t much of a premium for co-op members, but as prices have declined the benefit of membership is significant, with co-op prices as much as 40 percent above federal pay prices.

Growth Rapid and Ongoing

The co-op’s growth has been fast and steady, Simon said, because they’re meeting the demands of a growing customer base looking for locally- and sustainably-produced foods. The milk is priced somewhat higher than store-brand milk, but lower than organic. “It’s priced so farmers can survive,” Simon said, “rather than racing to the bottom to compete with generic milk.” Being vertically integrated and eliminating the number of subcontracted steps between the cow and the consumer allows the co-op to return most of that premium to the farmers, he explained.

HVF products appeal to consumers who care about quality and flavor, he explained, and who understand that the somewhat higher price is helping farmers survive. Thanks to customer demand, HVF products can be found in Whole Foods stores in the tri-state area, as well as coffee shops in airports, dining halls in colleges, and even in grade schools in the Hudson Valley, thanks to a campaign by local parents who wanted the best for their children, Simon said. Farm families visit stores to make sales calls, offer tastings and check on existing customers, building relationships with store managers and customers that Simon says are critical to the success of the co-op. It’s also helpful to have those relationships when it comes time to collect payments for products, he added. “Farmers don’t need help losing money.”

Despite the trend toward consolidation and declining profits in agriculture, member-owned and -controlled co-ops have grown in size in recent years in the United States, employing a growing number of people and seeing steady increases in sales. The HVF dairies are unique in that most of them have children who have grown up on the farms and are interested in keeping them going, something that will be far more appealing and feasible thanks to the benefits of the co-op.

All photos by Hudson Valley Fresh.