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Aspiring Dairy Processors: Are You Asking the Right Questions?
By Lance E. Gegner, Agriculture Specialist, National Center for Appropriate Technology
Dairy farmers can add value to their milk by processing and marketing their own products, such as cheeses, yogurt, butter, ice cream, and farm-bottled milk. Many consumers are willing to pay a premium for locally produced, high-quality, farmstead dairy products; organic certification may further enhance the market potential. Developing a product line, production facilities, and a niche marketing strategy will take time, money, and commitment.
It is unlikely that the enterprise will be profitable in the first three to five years.
Additional skills beyond producing milk will be required. Here are some basic questions dairy producers need to ask themselves before they get into processing and marketing:
- Do I have the resources to do this?
- Do I really want to do this?
- Do I have the experience, people skills, and information to do this?
- How much profit potential is there with this enterprise?
- How will I market the product and what is the customer base available?
- Do I have the financial resources needed to support this enterprise during the start-up period?
Regulations
Dairy food processors-including small farms adding value to their own dairy commodities-are subject to a dizzying array of state and local regulations and inspections. Aspiring processors should check carefully with regulatory authorities for specific requirements during the planning stages of the enterprise, and once again as the equipment is ready to be installed. Some states may have training requirements for persons intending to process dairy food products.
State and local regulatory agencies have primary responsibility for enforcement of sanitation requirements on dairy farms and at dairy processing plants. Producers must contact their Department of Agriculture (Department of Health in Arkansas) for specific regulations and requirements before proceeding with any other steps. The National Association of State Departments of Agriculture has a directory at http://www.nasda-hq.org/nasda/nasda/member_information/gen_main.htm.
Law professor Neil Hamilton's 235-page Legal Guide for Direct Farm Marketing is a good source of information about laws on marketing products directly to consumers and to retail and wholesale buyers. It was written to address producers' questions about the legal aspects of direct farm marketing. The book provides many contacts and resources across the U.S., including state and federal inspectors, organizations, and others.
Organic Milk
At the time of this writing, the National Organic Program (NOP) is scheduled to begin implementation of the Final Rule for national organic standards. As of this date, any producers seeking initial certification will have to comply with the requirements of the Final Rule. Producers who are already certified (by an agent that has received USDA accreditation) will have to achieve compliance with the NOP standard at their next annual inspection. For additional information on organic certification, request ATTRA's Organic Certification & The National Organic Program or visit NOP's website and review the Final Rule's standards for organic dairy production at http://www.ams.usda.gov/nop/nop2000/nop2/finalrulepages/finalrulemap.htm.
Demand for organic milk and milk products continues to grow nationwide. The Organic & Natural News article "Return to the Golden Age of Dairy" states: According to SPINS/ ACNielsen, the organic dairy industry has experienced tremendous grow thin almost every category it tracks. Other categories have made incredible leaps as well. Sales of organic cottage cheese and ricotta have risen 53.58 percent with packaged organic cheese, organic butter and organic sour creams trailing closely behind; all posted increases in the 30-percent range.
The growing demand for organic dairy products is driven primarily by consumers' belief in the higher quality and safety of these products, and their awareness of the positive environmental, animal welfare, and ethical impacts of organic agricultural practices. Many are concerned about the use of antibiotics and of RBST (recombinant bovine somatotropin), a genetically engineered Bovine Growth Hormone that is injected into an estimated 30 percent of lactating cows in conventional dairies. These are some of the reasons why consumers choose organic dairy products despite higher prices.
Organic milk comes from cows that are not given any hormones, antibiotics, or pesticides. They have access to open pastures and are fed 100-percent organic feeds-grown in fields that are chemical-free for at least 3 years. Organic milk must be handled separately from conventional milk and never intermixed. Organic milk and milk products must be processed, either on-farm or off-farm, in a certified organic plant.
This article was originally published on http://attra.ncat.org (©2004 NCAT).
Lance E. Gegner is an agriculture specialist for the National Center for Appropriate Technology's ATTRA National Sustainable Agriculture Information Service. He has worked for more than 18 years promoting sustainable and organic systems, supporting organic farming, alternative crop and livestock production methods, small-scale food processing, and cooperative marketing, as well as other forms of alternative marketing. For article feedback, contact Lance at lanceg@ncat.org
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