AcresUSA.com links

Navigating the Dairy Crisis: Hope in Organic Dairy

At a time of profound hardship in the dairy industry, the few farmers optimistic enough to start new cow dairies are going the route of organic dairy. The name of Clover Bliss Farm refers to the contentment its abundant pastures bring to its bovine residents. It also sums up the aspirations that dairy farmers Chris and Samantha Kemnah have for the 190-acre spread and the old tie-stall barn in South Argyle, New York, that they took over from a long-retired farm couple.

Chris and Samantha Kemnah at Clover Bliss Farm, their 190-acre spread in South Argyle, New York. Photos by Joan K. Lentini, JKLentini Photography

From the time they started about two years ago, the Kemnahs have been supplying organic “grass only” milk to Maple Hill Creamery. Maple Hill, which now collects organic milk from 150 farms across upstate New York, pledges to its customers that the cows producing its milk consume only pasture, hay and other forages, rather than corn, soy and other common dairy feeds.

Two years ago, organic production still stood out clearly as a bright spot that might offer long-term economic stability for dairy farmers. In contrast, the price of milk paid to conventional dairy operations had already fallen into what would become a protracted slump, setting off yet another period of economic distress that has reached a crisis point.

Farmers, advocates and policy wonks disagree on how, and even whether, to address the challenges facing the dairy industry. But there’s no dispute about the overriding dynamics behind the sector’s crisis. Milk production continues to increase, yet Americans’ consumption has been falling. Industrial-scale dairy farms, with greater labor efficiency and capitalization, have been the engine driving the increased production, and they’ve been adding cows and land as smaller family farmers give up and leave the industry.

Lately, some of the same economic forces that have plagued conventional dairy farms are showing up in the organic market as well — putting pressure on farmers like the Kemnahs.

There is now too much organic milk as well, and organic farmers have been hit with steep cuts in their pay price. At least one important organic milk buyer has imposed strict production limits. And in a parallel to the conventional milk market, some major organic milk buyers are unable to take on new farms, creating another barrier to the entry of younger people into agriculture.

Even so, new producers are breaking into the organic milk market locally. In June High Meadows Farm, a new organic dairy in the town of Hoosick, a mile from the state line with Vermont, started shipping milk. The farm is the creation of Eric Ziehm, who comes from a nearby conventional dairy farm that he and his brothers have grown from 50 to 1,200 milking cows over the years.

Ziehm’s ambitious entry into the organic market hinges on investors and a team of partners and employees, brand new facilities for a 200-cow operation — and a highly advantageous “cost-plus” milk contract with Stonyfield, the organic yogurt maker based in New Hampshire. Such contracts are virtually unknown among small organic dairy farms.

The stories of Ziehm’s and the Kemnahs’ farms reveal some of the promise of the organic dairy sector, but they also show that it isn’t immune from volatile prices and other problems that have long plagued conventional dairy operations.

Fewer, Bigger Farms

The economic pressures that have driven many small and mid-sized dairy farmers out of the business have been under way for decades. In the late 1970s, the nation had 1.4 million dairy farmers; today, there are barely 40,000 left.

But the pricing situation of the past few years has hastened the trend toward fewer, larger farms. This year is the fourth in a row in which the price paid to conventional farmers for their milk has stagnated at levels well below the average cost of production. The current price has been hovering around $15 per hundredweight (a unit equal to 100 pounds or approximately 11.6 gallons). That’s a price older farmers a remember receiving several decades ago — even though productions costs have steadily risen since then.

“What is happening now is really destructive to individual farm families and rural communities,” said Patty Lovera, the policy director of Food and Water Watch, in a recent conference call with reporters covering the dairy crisis. “The status quo is not working for anyone but the largest farmers.”

The situation has grown so dire that in February, the dairy co-operative Agri-Mark, which owns the Cabot cheese brand, enclosed with its members’ milk checks a listing of area suicide hotlines. Three of the co-op’s 1,000 members had taken their own lives in the past three years.

Over the last 10 years, New York farmers have been leaving the dairy sector at the rate of two to four a week. Since 2006, more than a quarter of the state’s dairy farmers called it quits, and the number of dairy farms statewide has dropped from nearly 6,000 to 4,400. In Vermont, the number of dairy farms fell from 996 in 2011 to just 749 this year, a decline of nearly 25 percent, according to state figures. These downward trends appear likely to continue.

But even if the number of dairy farms in New York shrinks to 500, we would still have milk in the supermarket, Cornell dairy economist Andy Novakovic said. The industry’s consolidation into larger farms with fewer owners isn’t causing an economic problem, Novakovic said, though he acknowledged that there were other costs to “the hollowing out of rural America.”

Many dairy farmers don’t believe this needs to be our trajectory. For them, concentrated ownership in agriculture is part of the problem, not the solution. Some point to Canada’s 55-year-old supply management system as a model of a more equitable approach.

In April Ralph Dietrich and another board member of the Dairy Farmers of Ontario travelled to Wisconsin to speak about supply management at a series of farm forums around the state. Some of the meetings drew standing-room-only crowds of farmers. Supply management uses a cost of production formula that allows farmers to have an adequate income. It’s working for farmers and processors, consumers and the government, he said.

“On May 1, 2018, we reduced our quota in Ontario. With a quota cut, everyone takes a bit of a hit,” Dietrich said. When there’s too much milk in the U.S., processors stop taking some farmers’ milk.

Novakovic dismissed supply management as something that Canada bought into but that’s at odds with “the American competitive spirit.” The conversation should be about selling more milk, not limiting production, he maintains.

“Farmers have a strategy for dealing with low prices for one year, but no one has a strategy for three years in a row,” he said. Novakovic, who grew up on a 28-cow dairy farm in Wisconsin, said many farmers are still hanging on because of “an accumulated expectation that it will turn around soon.”

Though sales of cheese, butter, ice cream and whole milk remain relatively strong, children and adults alike are drinking less beverage milk every year. Regardless of demand, dairy farms in the state, and nationwide, continue to ramp up milk production. According to state figures, in 2016 New York farmers cranked out 21 percent more milk per cow than they did a decade earlier. Despite a slight dip in the total number of cows, total production increased by 18 percent in 10 years. Very large farms generally produce considerably more milk per cow, and those farms are milking more and more of the state’s herd. The same trend holds nationally.

That pattern also holds for the farm that Ziehm, who started the organic dairy High Meadows Farm, came from. Dairy Herd Improvement Association records put Tiashoke Farm in the highest producing tier in the county; it’s also one of the largest. Last December its 986 Holsteins averaged 28,682 pounds of milk a year, more than 2,700 pounds greater than the state average. Similarly their Jerseys and crossbred cattle had very high herd averages for their type.

Seeing Hope in Organic

At a time of profound hardship in the dairy industry, the few farmers optimistic enough to start new cow dairies are creating organic ones.

To produce milk without grain, Clover Bliss goes above and beyond organic norms. Grazing dairies typically give their cows new pasture after each milking, morning and night, but Chris often moves the cows on pasture three or even four times a day.

In July a pair of regional agricultural organizations held educational events at two of these new organic dairy farms. The Agricultural Stewardship Association, a farmland preservation group, hosted a visit to Clover Bliss Farm. A week later, the Northeast Organic Farming Association of New York put on a field day at High Meadows Farm.

At Clover Bliss, Chris and Sam Kemnah told their story and discussed their philosophy and practices as committed grass farmers while Jersey cows grazed placidly in the background.

At High Meadow, Ziehm, who’s 40 and is a fourth generation dairy farmer, was among those who spoke to an audience of about 25. Milk cows milled around in the brand new free-stall barn, occasionally munching on feed. When a Jersey cow wandered outside to graze in mid-afternoon, a portion of the herd followed her lead.

When the Kemnahs established Clover Bliss Farm, they were already seasoned farmers, who were, in the words of Chris, who’s 42, “tired of living like college students with a family.”

In 2007, the year they started a community-supported agriculture operation in Greene County, Sam gave birth to Alex, the first of their four children. For seven years, the couple grew vegetables as CSA farmers, eventually adding meat, poultry and eggs to their offerings. They stuck with the livestock after they quit raising vegetables.

“With vegetables, we were working so hard and not making any money,” Chris recalled. So the Kemnahs went looking for a more financially stable and remunerative path that would allow them to stay in agriculture.

Organic Dairy: Better Prices, Healthier Demand

The Kemnahs said Maple Hill Creamery was a crucial factor in their decision to milk cows, as the company rewards its farmers well for certified organic, certified grass-only milk. “What saved us was the really high pay price for our milk,” Chris said.

When they had just started in July 2016, Maple Hill paid them $38 per hundredweight. In the winter, they also received a grass-only premium.

“With grass only, you’re not making as much milk, and it takes more feed to make it,” he explained. The problem is a lack of energy, or calories, in the feed. Cold weather only exacerbates the deficit because the cows need a lot of energy to stay warm, especially when they’re outdoors in the winter.

Five months after they began shipping milk, the Kemnahs received a notice alerting them of a future reduction in pay price. “We took a 20 percent pay cut, not quite a year after we started,” he said.

Similar cuts have hit farmers throughout the organic dairy sector. The price paid to farmers by the Organic Valley co-operative, for example, dropped more than 27 percent from January 2017 through June of this year, from a base price of $34.55 to $25.19 per hundredweight, according to one member farmer. Last fall, the co-op also instituted a $2 per hundredweight “inventory deduction.” And for the last two years, members haven’t been paid what had been a standard $3-per-hundredweight premium for winter milk.

Finally, because organic processors need skim milk even less than conventional companies, on July 1, Organic Valley raised its minimum butterfat content to 4.1 percent, up from 3.5 percent, and also set a higher minimum protein content. Organic Valley had imposed production caps on farmers earlier in the decade.

Novakovic, the Cornell economist, described the co-op’s action as “a pretty bold decision that stands out against the industry’s practices.” By implementing a quota system on its dairy farmers, Organic Valley “spread the pain around,” he said.

One Organic Valley member, who didn’t want to be identified because the co-op bars its farmers from publicly discussing pricing information, said the co-op imposes a penalty of $20 per hundredweight for any milk produced beyond a farm’s quota. (The quotas are set based on each farm’s past production levels.) Such a steep penalty acts as a powerful deterrent.

Love of Food, Farming

Chris Kemnah grew up making hay and milking cows for a neighbor in New Baltimore, a half-hour south of Albany in Greene County. But the farmers there, all older men in their 60s and 70s, urged him to steer clear of farming and get an education instead.

He took their advice and went to college and graduate school. He ran his own landscaping business and later got a job at the U.S. Geological Survey, but he missed working outside and growing food. For three years, he worked at Honest Weight Food Co-op in Albany, where he started the meat department and prepared to become a farmer.

Because Chris and Sam originally were drawn to agriculture by their concerns about genetically modified crops and a desire for healthful food, they knew from the beginning that their dairy would be organic. Similarly, the idea of a grass-only operation aligned with their values. It’s how they had raised beef cattle and family cows in the past, and it meshed with their understanding about what’s best for ruminants — and for the people who eat the animals’ flesh and milk.

What scared the couple was making the commitment that dairy farming entailed, Sam recalled. They put all their resources into the business and borrowed money for the first time in their farming careers. “We had tried to farm without taking out any debt,” Sam said. With their CSA operation, they farmed on a shoestring, making do with borrowed land. As they sought a better situation, they got listed on Hudson Valley Farmlink, which aims to connect farmers and would-be farmers with agricultural landowners.

In the fall of 2015, Janet Britt of the Agricultural Stewardship Association told them about the Argyle farm where Bob and Ruth Zink had retired from milking cows around 1990. By the following spring, the Zinks and the Kemnahs were able to work out an arrangement that both parties felt was reasonable, and Clover Bliss Farm was born.

Although the farm now has about 130 dairy animals, they’re mostly young stock. Chris currently milks 32 cows. But with 20 dry cows and heifers due to calve in the fall, by the end of the year they expect to have 50 head in milk.

Two fellow Maple Hill farmers had warned the Kemnahs that they would never be really happy milking cows until they had cows they raised themselves. Finally, Chris can see that day approaching. “Our home-raised, first-calf heifers will start freshening in August, and we’re both really excited about that,” he said.

Kemnah said he has had to buy three Jersey herds to get where he is today. Two years ago, he located a herd of 30 cows on a Vermont organic farm that had been struck by tragedy: A drunken driver had hit and killed the farmer. By the time the Kemnahs acquired them, the cows were thin and needed extra food and attention to bring them back to health.

The second herd came from a neighbor who had transitioned to organic and was ready to retire. Although this farmer’s registered Jerseys go back for up to 10 generations, they originally came from two well-known confinement dairy farms and thus were not selected for a grass-only grazing setting. Chris also bought a group of cows from an organic farm a couple hours north.

“One thing we learned is that not every cow is made for our system,” Sam said.

To produce milk without grain, Clover Bliss goes above and beyond organic norms. Grazing dairies typically give their cows new pasture after each milking, morning and night, but Chris often moves the cows on pasture three or even four times a day.

The Kemnahs believe it’s very important to them to raise calves in a way that the animals reach their potential. All their heifers get milk for at least six months. They also let heifer calves nurse on a mother cow for at least two months — and sometimes for twice or three times as long.

A Growing Partner

Clover Bliss was the 70th farm to sign up with Maple Hill two years ago. Sam said it’s a very good company to work with. “As they do better, they pass it along” to farmers, she explained.

Maple Hill founders Tim and Laura Joseph had never milked a cow when they bought a farm in 2003 and started a dairy. Before long they left conventional farming behind and went organic and 100 percent grass-fed. In 2009, they began marketing yogurt they made from their milk in a former barbecue restaurant, and Maple Hill Creamery was born. When the yogurt caught on, they started buying milk from two other organic farms. Exponential growth in sales has enabled Maple Hill to partner with more and more New York dairy farms; it now has more than 100 farms supplying milk for its brand.

The company is looking to sign up more grass-fed organic dairy farms and even has a waiting list. Maple Hill varies the price it pays farmers depending on the time of year, thereby providing a financial incentive for farmers to produce at more difficult times of year, such as in winter.

Only certified grass-only milk goes into the company’s expanding list of products. Having outgrown its first two processing plants, Maple Hill works with co-packers, like Byrne Dairy in Syracuse, which retooled its plant to make Maple Hill’s cream-top and drinkable yogurt in containers.

As perhaps the only grass-fed organic dairy farm in Washington County, Clover Bliss Farm’s milk goes on a blended truck (with organic milk from cows that are also fed grain), so the Kemnahs’ milk doesn’t actually go into Maple Hill products yet. The company sells this mixed organic milk to other processors like Stonyfield and Byrne Dairy, which bottles surplus Maple Hill milk under a private label.

Starting on a Bigger Scale

In comparison with Clover Bliss Farm, Ziehm’s concept for High Meadows Farm assumes a bigger, costlier operation from outset. “The goal is to milk 200 cows, but the total could go as high as 250 to 300 cows,” Ziehm said, describing his intentions for his new organic farm.

Partners of High Meadows Farm Sam Cottrell and Eric Ziehm stand among their herd of cows. The partners recently purchased the farm to revitalize its use as an organic dairy farm.

With a more financially ambitious farm in mind, Ziehm structured his farm as a partnership with investors and assumed the role of managing partner. His main investor is Tiashoke Farm, the 1,200-cow conventional dairy that he and his brothers Brian and Stuart run with another partner. With seven children between them, the three brothers have an interest in opportunities that will allow the next generation to join the family business in the future if they desire. “I was able to branch out and do something different,” said Ziehm, who continues to be involved at Tiashoke “on the financial side and with the big picture.”

Ziehm also brought in Sam Cottrell of Hos-Cot Builders in Hoosick Falls as a partner. Cottrell, 70, said he was “tickled” to be asked. As a teenager, Cottrell saw his life taking him in one of two directions, milking cows or operating a successful construction business. He has done the latter for more than 40 years, specializing in agricultural buildings. For the farm’s startup phase, he has been an important asset.

The farm has several employees as well as an intern from a Vermont dairy farm. Matt Hansen moved his family from western New York to work as farm manager and they live in the farmhouse. (Ziehm and his family do not live on the farm.) A couple works part-time. High Meadows also hired Greg Luke, the son of the farm’s former owners, and Bruce Moseley, who grazes a group of their heifers on his farm, which they rent.

The Ziehm brothers grew up on their parents’ 50-cow dairy farm nearby. Their father and grandfather had moved the farm from Albany County to its current location less than an hour north in the early 1970s to obtain more productive soils, find adequate water and get away from suburban development. Eric Ziehm and his brothers graduated from Cornell and each later returned to the family farm. After the family decided to expand the operation, they began acquiring additional farms and growing the operation to its current size, among the largest in the area.

A pivotal change occurred in 2007-08, when the family sold the development rights to their 244-acre farm in Buskirk and 343-acre farm in Easton to the Agricultural Stewardship Association. These transactions protected their farmland from development forever — and also gave the farm business an infusion of cash. The next year, Frank Ziehm turned over management responsibilities to his three sons, and over time they became full owners of Tiashoke Farm.

At Tiashoke Farm, Eric Ziehm initiated a grazing program a dozen years ago that has grown to include many of the dry cows and young stock. He said an organic dairy would give him an opportunity to do much more with pasture management. “I like the fact that the cows are out there harvesting their own feed and there’s less machinery investment,” he said.

He also sees benefits for his family. Even if they don’t decide to join the business, he said, he’d like his two children to have the experience of being involved in farming, and “a pasture-based dairy is a beautiful atmosphere to have my kids work with me,” he said.

But he acknowledged that a major motivation in developing an organic dairy is economic: He was seeking a better alternative to the rock-bottom milk prices paid to conventional dairies. The past three years of depressed milk prices have been “an everyday challenge” at Tiashoke Farm, Ziehm said.

“We do the best we can to be efficient and cost-conscious,” he said. “But you got to wonder where this is going … Twenty years ago I never thought we would need supply management.” Now he’s thinking, “if we want to preserve farms, we need to take a look at it.”

For Ziehm, steeped in the world of conventional milk production, the organic sector seems to operate more rationally and with more foresight. “Organic won’t sign up new farms if they don’t need them,” he said.

Troubles in Organic Dairy

It’s true that some parts of the organic dairy sector have tried to balance supply and demand without harming the farmer, but the story is more complicated than that. Ed Maltby, executive director of the Northeast Organic Dairy Producers Alliance, said that there used to be “a working relationship between organic producers and milk buyers who would not take on more farms until the demand was there.” But those relationships were damaged by a glut of organic milk, he said in a conference call with reporters in May.

Between 2012 and 2014, the United States experienced a shortage of organic milk, he said. When the price paid to farmers went up, large industrial dairies in states like Texas, Colorado and California took advantage of a loophole in the national organic standards and transitioned conventional cows to organic production. As a consequence, organic milk flooded the market. Milk buyers cut the farmers’ price by 25 percent in a matter of months. That dynamic is still at play.

A March 23, 2018 article in the Milwaukee Journal Sentinel drives home the magnitude of the impact wrought by industrial-type organic dairies on organic family farms. “Wisconsin’s organic dairy farmers are getting squeezed by mega-sized farms that are shipping milk here from more than 1,000 miles away,” screams the article’s subtitle.

Citing USDA’s Dairy Market News, it states that 6 organic dairy farms in Texas produced 481 million pounds of milk, 23 percent more than all 453 organic dairy farms in Wisconsin combined. And the average income of those industrial size farms exceeded that of the Wisconsin farms by almost 100-fold — $27.4 million per farm versus $287,000.

Many smaller organic farmers, as well as groups such as the Cornucopia Institute, a Wisconsin-based organic watchdog, contend that organic sector has been hijacked by industrial-scale operations that are incapable of complying with the spirit or even the letter of the USDA’s national organic standards.

These standards require that organic dairy cattle have pasture access for at least 120 days a year. Fresh grass grazed by the animals must make up at least 30 percent of their diet. And farmers get a one-time transition for adult cows; after that, all animals must be raised from birth under certified organic conditions.

On eight visits in 2017 to investigate Aurora Organic Dairy in Colorado, the Washington Post found only sparse signs of grazing. A high-resolution satellite photo showed only a few hundred cows on pasture of the dairy’s 15,000-cow herd.

Regarding the overproduction of organic milk, Jim Goodman, a Wisconsin dairy farmer and president of the National Family Farm Coalition, proposes a simple solution. “The difference between organic and conventional is that there are rules. Enforce the rules,” said Goodman, who began milking cows in 1979, has been organic for 20 years.

Making Organic Milk Under a Cost-Plus Contract 

Ziehm completed the purchase of High Meadows Farm about 18 months ago. The previous owners of the nearly 300-acre farm were Bert and Eileen Luke, who sold their cows in 1993.

Ziehm said he was able to transition the farm to organic standards in one year because the farmer who had been leasing 40 of the acres now in pasture hadn’t planted corn there for two years.

In 2016, before the sale was actually concluded, Ziehm seeded that land into a pasture mix. And last May, he selected a group of heifers from Tiashoke Farm to make the transition to organic — Jerseys, smaller Holsteins and some crossbred animals. This year, he bought two organic herds of about 40 cows each so he would have lactating cows by June 1, the date the farm was scheduled to begin milking.

But getting the cows and the land ready for a new organic operation was not Ziehm’s first order of business. “We actually investigated the milk market before we found the farm,” he said. He and his partners were able to enter into an unusual arrangement with Stonyfield known as a “cost-plus” contract. Such contracts eliminate price volatility and guarantee the farmer a profit — two core issues that ordinarily represent a huge struggle for dairy farmers.

Ziehm said the cost-plus contract involves a third party auditor who determines the farm’s costs. Stonyfield pays those costs plus an agreed-upon margin. With this contract, Ziehm anticipates that he and his partners will be able to pay back their substantial investment in the farm in a reasonable period — the buildings in seven years, and the real estate in 15 years.

“It all centers around sustainability for the milk market and sustainability for us,” he explained. “It helps Stonyfield, because they’re assured to have our milk.” Stonyfield also set up a cost-plus contract with another Hoosick-area organic farmer, Eric Sheffer, who milks 200 cows, Ziehm said. It’s easier for a milk processor to deal with fewer, larger farms and it simplifies milk pickup as well.

Ziehm’s cost-plus contract came about after Kyle Thygesen, Stonyfield’s director of milk sourcing and procurement, heard that his old friend was considering starting an organic dairy. The two men met as youngsters in the 4-H program in Washington County, where they both were raised.

Group Danone, the French food products company than owns the Dannon yogurt brand — and which purchased an interest in Stonyfield in 2001 and later became its sole owner — pioneered the use of cost-plus contracts in dairy with McCarty Family Farms, whose large conventional farms in Kansas and Nebraska milk more than 8,000 cows. Dannon required that McCarty use feed crops that aren’t genetically engineered so it would qualify for the Non-GMO Project Verified label. (Last year, Dannon sold Stonyfield to the French dairy conglomerate Lactalis.)

Asked about grass-only dairying, Ziehm referred to his need to produce a certain volume of milk, which he said would not be feasible without grain. At High Meadows Farm, about 80 certified organic cows are currently producing about 3,500 pounds of milk a day.

Last fall, Cottrell started construction on a free-stall barn that can accommodate 200 milk cows. This year, they built the milking parlor with radiant heat in the floor for human and cow comfort in the winter. The space is insulated, and windows provide ample light. As at Tiashoke Farm, labor efficiency is a high priority for Ziehm. “We’re set up for one person to keep up with 16 cows,” he said. “We would love to be able to milk 90 cows per hour with good quality milk.”

After having so much of their energy focused on construction so far, Ziehm said, “now we need to focus on pasture management.” Faced with a dearth of moisture — a half-inch of rain in close to 30 days — coupled with some wicked heat spells, Ziehm was caught off guard when pasture plants seeded out or stopped growing. “I thought I had more than enough pasture,” Ziehm said. Part of his solution involves converting more of the hay fields into pasture. And for the first time, irrigation is on the table.

In the freestall Ziehm’s cows each get 15 pounds of organic corn meal, soy and canola along with hay and minerals. When the grass stopped being palatable in late June, balage was added to replace pasture intake. With so much feed in front of them in the freestall, High Meadows cows aren’t going out on pasture with the motivation of empty bellies.

Ziehm tried a laissez-faire approach with the herd. “We had the gates open to see what the cows will do on their own. They’d be out and come back by late morning … If the cows need to be in the barn, we spent plenty of money on it. By having the ability to feed in the barn, we have that as a fail-safe,” he said.

A few weeks later, rains had returned and pasture growth resumed so they started locking the cows out at night to graze. At Clover Bliss, except during those exceptional periods when Kemnah has to break into his stored winterfeed, pasture is the only dinner. Those cows are eager to partake.

By Tracy Frisch. An earlier version of this story was published in the August 2018 issue of the Hill Country Observer.

Tracy Frisch is a journalist, advocate, and subsistence gardener in upstate New York who has been involved with the organic movement for more than 30 years.

, , , , ,