041019_tct_hc_value_1

Dairy farmers Clayton Wohlk of Almena, left, and Jake Feltz of Plover listened closely to speakers at the “Add Value To Your Milk: Exploring On-Farm Dairy Processing” workshop in River Falls.

RIVER FALLS — Don’t look at an on-farm creamery as a way to save the dairy farm.

That’s the advice of Norm Monsen, dairy development consultant at the Wisconsin Department of Agriculture, Trade and Consumer Protection.

“Don’t build a cheese plant to save the farm,” he said late last month at an “Add Value to Your Milk: Exploring On-Farm Dairy Processing” workshop in River Falls. “The farm has to be profitable or you shouldn’t be doing it.”

Julie Keown-Bomar, executive director of the Wisconsin Farmers Union, said these are tough times for dairy farmers, and on-farm processing could be a viable way for some long-suffering farmers to add value to the milk they produce. However, it’s not for everyone.

On-farm processing is “as old as milking cows,” said Mike Travis, UW-Extension agricultural educator for Pierce and Pepin counties. Only in the past century or so has processing gone off the farm, with the building of cheese factories.

But over the past 90 years, he said, Wisconsin has lost 95 percent of its local cheese factories and more than 95 percent of its dairy farms. Wisconsin has 9,520 licensed dairy farms and 203 plants manufacturing one or more dairy products, according to the latest data. The state is home to 1,200 licensed cheesemakers.

Projecting the current trend line out, there would be no dairy farms by 2030, Travis said, but eventually, the exodus will level out. The time is right for farmers to again consider their own processing.

“What excites me ... is we’re in a time when people are more and more interested in local foods, and they’re interested in quality food,” he said. “People are beginning to realize there’s a plus to regional foods.”

The number of farmers’ markets in the U.S. has grown by almost 500 percent in the past 20 years, according to Travis. The same demand that has led to the exponential growth in craft beers and local breweries — there were about 5,000 active breweries in the U.S. in 2016, compared to 1,500 a decade earlier — could present opportunities for farmstead cheeses.

“People enjoy going someplace and having a taste of a beer they’ve never tasted before,” he said. “That’s the opportunity we have with local cheeses.”

Travis, who grew up on a 30-cow Guernsey farm in Augusta, said his dad made a living at it because he was a good manager and carried no debt, but circumstances are much different for many in the dairy industry.

“Wipe the slate clean and think through what do I really want to do?” he said. “Take in all the information. There are complicated ways of doing things and simple ways. The more we can simplify, the better off we are.”

Monsen said that, through much of the 1990s, there wasn’t much opportunity in the marketplace for new products; consumers were looking for Kraft singles, for example. But a dairy crafting renaissance occurred in the latter part of the decade and into the 2000s. The current dairy crisis, he said, has prompted even more entrepreneurship and “outside-the-box” thinking.

“The pain is hard, but we’re going to have some gain here,” he said. “I can sense the vision, I can sense the enthusiasm.”

Monsen said retailers and distributors take quite a chunk of the profit off a $15-per-pound block of cheese. Retailers charge 45 percent, charging 2½ times that cost, and distributors take 35 percent. The processing cost may be about $2 per pound.

“The only control you have over your milk price is to cross your fingers and hope you get a good price,” he said, but farmers may have an opportunity to cut out the middlemen through on-site retail, home delivery and other options. “Create some happiness and joy we don’t have in agriculture right now.”

“It starts with great milk,” he said. “If you’re making poor milk on your farm, it ain’t gonna work. You only get one chance in the marketplace.”

Monsen said a field day could be in the works for later this month when representatives from MicroDairy Designs and Pladot are in Wisconsin.

Prepare to pivot

Michelle Farner, dairy pilot plant manager at UW-River Falls, encourages farmers interested in processing their own milk to utilize the campus’s fully licensed, Grade A dairy plant as they create and test products.

Many people are unaware that this facility — now closed for renovation and expansion from 1,500 to more than 6,000 square feet — is available, she said, but farmers can lease it for a day or two at a time to test products in small batches and see if it’s something they can sell. The daily fee to lease the plant will run between $3,000 and $4,000.

Farner said they also offer short courses in pasteurization, cheesemaking and more, and she hopes the university will take on more cheese- and butter-maker apprentices in the future to help them get their required hours.

“It’s a diamond in the rough at the university here,” she said of the plant. “We need to utilize it to expand on value-added products and getting more value to the farmers.”

While fluid milk consumption has been on the decline, Farner said, overall dairy consumption is trending higher, presenting opportunities for farmers to make and sell their own products. Projected per-capita cheese consumption by 2026 is 38 pounds.

“There’s a lot of room in Wisconsin for up-and-coming world champions,” she said.

Retail prices have risen, while the farm price has dropped, according to Farner. “There’s room there to get in there and capture some of that money back. If you can sell more retail vs. wholesale, you can capture some of that money back.”

Farner encourages farmers to “think outside farming” and consider offering unique products such as gelato, cream cheese, yogurt, flavored fluid milk and ice cream, along with cheese. Perhaps tie in an agritourism component such as tours or a café as a way to further engage customers.

“Think about your region; how can you highlight where you live?” she said. “Make what you love. If you’re going to invest the time and the money, you better make what you love. You can find a way to make it profitable; you can find a way to make it unique.”

But before doing anything, she said, farmers should work through the licensing and certification end of the business with state regulators and tour other operations to glean ideas.

“Don’t minimize the time on your marketing plan,” Farner said. “It is very, very worthwhile to spend that time researching so you have the best ideas ... . Anticipate that you will need to pivot, and that’s a good thing.”

Plan for success

Joe Folsom, executive director of the Pierce County Economic Development Corp., encourages farmers and other rural entrepreneurs to take advantage of the many services available to help them with business planning. Folsom also is a small business mentor for SCORE in St. Paul, Minn. SCORE recently expanded to include agricultural producers.

He said entrepreneurs must start by developing their mission, or a reason that their business exists, then form their business model. As “the DNA of your business,” this should be a living document that’s tweaked as situations change — not just a plan submitted to a banker, then forgotten about.

“You need to know what you want your business to look like in order to write a business plan,” he said. “It would be unfortunate if you did a 15- to 20-page business plan and nobody wanted to buy your products.”

Folsom said many entrepreneurs tend to be wrapped up in their daily operations, but it’s key to take a step back regularly and work on business planning. Remember that customers and what they want, whether it’s goods or services, are the most critical part of any business.

“What will be your value proposition for your customers?” he said. “Get in the street and test it with real customers; get feedback. What will set you apart? Why should people pay attention to you?”

Also consider how best to reach and connect with customers, he said, and who to collaborate with to take the business to the next level.