New York's Dairy Farmers Squeezed By Greek Yogurt Boom
Tuesday, September 03, 2013
Upstate New York has lugged around the Rust Belt identity for decades now.
But today, the region is trying on a new reputation as the king of yogurt — especially the high-protein Greek yogurt that consumers crave.
Greek yogurt leaders Chobani and Fage started the boom in 2007 and 2008, and production has tripled since then. Now there are more than 40 yogurt plants scattered across the state, surpassing even California's yogurt industry. Steve Hyde, who directs the Genesee County Economic Development Corp., calls New York "the Silicon Valley of yogurt."
But can New York's dairy farmers keep up?
New York Gov. Andrew Cuomo and the state Legislature have passed all kinds of programs to induce dairy farmers to meet the milk demand. There are grants for modern milking equipment, new business plans and anaerobic digesters that turn manure into electricity.
But even with all that, New York's dairy herd is no bigger than it was last year.
Mike Kiechle, a small dairy farmer, says he's one of the ones who would like to expand but can't.
One big problem is that milk doesn't obey the laws of supply and demand. A federal formula sets the milk price farmers are paid by region. And that price doesn't necessarily rise because there are a bunch of Greek yogurt plants looking for milk nearby. So to add, say, 50 cows, Kiechle's looking at a frightening risk.
"I'm going to have to have some more land," Kiechle says. "My equipment's not big enough. My barn's not big enough. And the return that we've had the last 10 years, you've got to think twice before you invest your money there."
Despite the challenges small farmers are facing, New York is producing about 3 percent more milk. Farmer Shelly Stein says that's because a lot of bigger dairy farms are milking smarter. They're encouraged by the Greek yogurt future, so they're investing in new technology and bigger, cleaner barns that make the cows more productive.
"I now have a stable market and a demand for our milk," says Stein. "It allows us to invest in growing our business, attracting our young people back to our farm businesses and showing a greater investment into what makes us efficient."
Hyde says in the town of Batavia, where two yogurt plants have opened in the last two years, Greek yogurt is just the beginning. The region is becoming a hub for food processing of all kinds, from Buffalo-wing-flavored cheese to frozen vegetables to fancy mushrooms.
But what if people get sick of Greek yogurt and move on to the next fad? Well, upstate New York isn't ready to think about another bust just yet.