Rising to the top: small Wisconsin specialty dairy co-ops finding new niche markets

Rural Cooperatives, July-August, 2002 by Pamela J. Karg

Editor's note: Karg is an agriculture communicator based in Baraboo, Wis., with extensive experience writing about cooperatives.

Dairy co-ops merging to create larger marketing operations has been a major news story of the past decade. But a number of new, small dairy cooperatives that service niche markets are also popping up in America's Dairyland. Their mission can be complex, but their message is simple: gaining a share of a growing dairy market for their members.

In a dairy landscape dominated by such large co-ops as Dairy Farmers of America, Land O'Lakes, Foremost Farms USA, Associated Milk Producers Inc., Swiss Valley and Alto Dairy, the new Scenic Valley Protein Producers Cooperative is barely a blip on the radar screen. But what Scenic Valley lacks in size, it makes up for in the dedication of its members.

Started 4 years ago, the membership now includes 11 farm families. They are primarily "colored breed" producers. That is, they milk dairy cows other than the familiar black-and-white Holsteins. Their president and field representative is Jersey producer Mike Gallagher of Darlington, Wis.

"Our goal is to earn more money for our milk," Gallagher explains. "With the cheese yield formula first proposed by the National All-Jersey Association and adopted by the U.S. dairy industry several years ago, we naturally were getting the full-value price for our milk. When we didn't have that available, we were getting approximately from $1 to $2 a hundredweight less than we're getting right now."

The Jersey cow

To understand Scenic Valley Co-op, one first needs to understand the Jersey cow. Compared to the five other major breeds milked in the United States, Jerseys give less milk. However, their milk is higher in protein and butterfat--important ingredients for cheesemakers. In Wisconsin, 85 percent of the 23 billion pounds (or 2.7 billion gallons) of milk produced on its 18,000 dairy farms goes into producing 300 styles and types of cheese. That makes cheese king in America's Dairyland, and it made the colored breed producers believe they had something of value they could capitalize on.

"Jersey milk, on average in a Cheddar cheese plant, will yield about 100 to 125 percent per hundredweight of what Holstein milk will yield. Thus, it is of more value to the plant and so, of course, to the owner," explains Mike Brown, general manager of National All-Jersey, the breed's national association, headquartered in Reynoldsburg, Ohio.

"We would meet at night, at least once a week, to brainstorm ideas and discuss business," Gallagher explains. "Finally, we decided it was time to try it."

What the original five families did was contract with a small, privately operated, family-owned cheese plant. Several times a year, milk from the Jersey producers is picked up and processed separately into cheese. Once aged, cut and wrapped into consumer sizes, the producers sell the cheese under their own label to retail outlets. They also offer the "Scenic Valley Jersey Cheese" products at holiday time, combining it with locally produced sausages and other foods in gift boxes.

"The most interesting thing last year, when orders came in, was to see where they came from," Gallagher says. "There were orders coming from all over the United States, and we did it by just telling our co-op story to customers--and then putting a brochure in every box we shipped."

Telling its story

Gallagher is one of five co-op directors. The others are Gene Dirksen, vice president, from Darlington; Steve Holland, secretary, from Gratiot; John Foley, Darlington; and Jonathon Primley, Blanchardville. Like their other four member-farms, none of these five members milk more than about 100 cows. The members pride themselves on the natural farming methods they use, pasturing or grazing their Jersey cows on green pasture about half the year.

That pasturing gives the cheese made from the milk a "more natural flavor," the co-op's brochure explains to consumers. Cheesemakers agree that milk shipped from different regions of the state or even raised differently--grazed vs. confinement--puts subtle flavors into the milk. As cheesemakers, their challenge is to then bring out and enhance those subtle differences to produce something consumers want. In fact, that is the basis for the growth seen during the past decade in the number of farmstead cheesemaking operations across the United States.

In addition, pasturing or grazing ruminants has also proven healthy for humans who eat their meat or dairy products. Those products have proven to be higher in conjugated linoleic acid (CLA), a cancer-fighting "good" fat discovered by researchers (see related story).

The Scenic Valley families have pledged not to use hormones in their herds. Neither is animal rennet used to make cheese. Rennet is the enzyme that makes the milk set up so curds can form. It occurs naturally in the stomachs of canes and some other animals. Therefore, Scenic Valley's contracted cheesemaker uses synthetic rennet. Coop members use only enough pharmaceuticals to keep their herds healthy.