Marketing an incubator for farmstead cheese making

Final Report for FNE06-588

Project Type: Farmer
Funds awarded in 2006: $7,900.00
Projected End Date: 12/31/2006
Region: Northeast
State: New York
Project Leader:
David Randles
Argyle Cheese Factory
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Project Information

Summary:

The purpose of the project was to determine the viability ofa value-added operation
added to an existing small dairy farm and along with sharing it with other farmers. A
business plan was written and the processing plan was built. Outreaches to farmers were
accomplished by, written articles, workshops and tours. Argyle Cheese Factory, LLC is
an active growing business making cheese and yogurt. There production and sales have
increased each year. A premium is paid for the milk used in the process, which has a
positive affect on the cash flow of the family dairy farm, Randles Fairview Farm.
The four main results we learned were:
1. The project cost more and took longer then was projected.
2. Making cheese and yogurt and selling it is a lot more work then we expected.
3. To add a value-added process is to an existing operation successfully, there has to
be deep commitment by all parties involved and there needs to be one person as
the lead person who has very limited responsibility outside of the value-added
operation.
4. There is great market potential for high quality farmstead products in our area.

Introduction:

Farm Profile:
The grant application was submitted under the name of Highland Cheese House. It was a
partnership between two neighboring farms; the Randles (David and Marjorie) and the
McDougalls (Robert and Mary Ellen). Both dairy farms are about the same size, milking
herds of 50-60 cows and have been in their respective families for more than 150 years.
Shortly after the application was filed the McDougalls withdrew from the project because
of family health issues. The Randles decided to go ahead with the project on their own
and renamed the business Argyle Cheese Factory LLC (ACF), with a dba of Argyle
Cheese Farmer. The SARE office allowed the grant to continue with the change of
name and ownership.
David Randles is a partner with his brother William Randles in the family dairy farm, '-~
Randles Fairview Farm (RFF). They are the fourth generation to operate the farm since it
was purchased in 1860 by their Great-Grandfather. They milk between 45 and 50 cows
on 250 acres of some of the most fertile soil in Washington County. They raise all of
their dairy replacements and grow all of their own forages that they feed the cows.
Marjorie and David Randles own ACF and operate it as an LLC. ACF and RFF are two
separate and different entities.

Cooperators

Click linked name(s) to expand
  • Sandra Buxton

Research

Materials and methods:

The grant set out to answer the question: "Why are small dairy farmers not adding value added
products to make their operations more profitable?" We identified four reasons
(hurdles) that keep farmers from adding value-added products to their businesses;
1. Time
2. Money
3. Lack of Knowledge
4. No Marketing Experience
In an attempt to show how we planned to overcome or get around these hurdles we wrote
a business plan. The time commitment to research and write the plan was great; Marge
estimated that she spent over 80 hours during a three month period. The plan has been
revised/updated three times since the original was finished in 2006. Having a written
plan has proved to very valuable as we walked through the process of building the
business, both physically and marketing plan. When a business decision needed to be
made we would look for direction from the business plan. This process kept us on track
to develop a business that we wanted, because we had a plan to follow.
The project had two major activities, to start manufacturing cheese and create a
marketing plan. ACF started making cheese and yogurt in the new "cheese house" in late
October of2007. This date was over a year later then first planned. The amount of time
and money that was needed to build the plant was almost double what we had originally
thought. A number of small details that were part of designing and building the plant
were unknown when the plan was written. These details became some of the biggest
issues and took time to research and find answers to. It turned out that there were very

few "small, simple issues" in the project.
An example of one of these small issues was: How would the steam flow from the boiler
to the cheese vat? This seemed like secondary, small issue, because the big issues were,
what would we use to heat the milk, what equipment would we need to make the heat and
what type of fuel would we use to heat the water. We decided on steam heat using a
boiler fueled by LP gas. What we did not see after we ordered all the equipment and
spent 5 months finding and waiting for a plumber who understood steam and was willing
to work with us in applying his knowledge to our goal of making cheese, was we had a
placement problem of where the boiler was in relationship to the vat. Bottom line is that
steam cannot flow up hill and be pushed down hill with a return of water to the boiler.
The path of the steam had to take was going up over a door frame and down to the vat.
After several attempts to find a way it would work, we moved the boiler to a separate
outside building about 20 feet downhill from the cheese house. A well-insulated tube
was built between the boiler house and the cheese house that would move the steam to
the vat along with electricity to the LP gas to the boiler house. Of course this all took
time and money to build this additional structure and rewire and re-plumb so the system
would work. The delay of an additional couple of months was very frustrating at the
time, but has returned great benefits. The steam heating process has worked very
efficiently and does a great job heating the milk. The steam heat also allows us to make
yogurt and other products that require the milk to be heated to a higher temperature. By
moving the boiler to a separate building there was room to build a "yogurt closet". This
well insulated room is equipped with a heat exchanger that allows the air to be kept at a
set temperature so that up to 125 gallons of yogurt can be incubated at one time.

Research results and discussion:

As stated above we did start processing the farm's milk in late October 2007, with the
blessing of NYS Ag and Markets. During the period of October 2007 through March
2008 (the end of the grant period) ACF purchased 23,453 lbs. of milk from RFF for
$5,051.94. ACF used the milk to make 2,593Ibs. of cheese and 5,049Ibs. of yogurt.
The products were marketed through three main channels;
Farmers' Markets,
Wholesale Accounts, and
On-Farm-Store
A majority of the product was sold at farmers' markets. We were accepted at two local
markets, Saratoga and Troy. Both of these markets operate year round so it gives us an
outlet throughout the year. The biggest wholesale account has been another local farm
store at a dairy farm. This farm started processing their own milk and bottling it shortly
after we started processing our milk. It has been a great cross marketing partnership, they
sell our yogurt and cheese curds at their store and we sell their bottled milk in our store.
Our farm store is a small entrance room with a cooler in it. It is self-service so we leave it
open 2417. Many people are amazed that we can operate without manning the store, but
it seems to work. A new customer once asked if we have "ever been ripped off'. A

customer who stops in on a regular basis was in the store at the same time, and told the
"newbie", "I make sure I put in the right amount of money, if not more, because I want
this store to stay open." We have been pleasantly surprised by the traffic through the
store, when we are located on a town road, off the main highway.

Research conclusions:

The process of adding value-added products to an operating dairy farm is much more
complicated and costly (both in time and money) then we anticipated. It takes a lot of
perseverance and work to be successful in the addition of a new business to the existing
farming operation. There needs to be one main player, totally committed to the process
and not be responsible for the everyday operation of the farm so they can be totally
focused on the project.
In 2005 we visited a farmstead cheese operation in Vermont. The farmer made a
statement that Dave and Marge have repeated through the process of building ACF. He
said, "Lots of people come here and want to start a cheese making business. I tell them it
is a lot of work, but they don't understand hard work, but you are farmers, you know
what hard work is." Dave often tells the story and adds that we knew it would be a lot of
hard work, we just didn't know how much more.
Even with all the work ACF has continued to process milk and make cheese and yogurt.
Dave and Marge have made a large commitment of time, money and energy; they will
continue to grow the business not only in size but in profitability. Their hope is that one
of their four children and families will return to continue the business when they retire.
They also hope that RFF will continue as a family farm operation, supplying the high
quality milk needed to make the cheese and yogurt.

Participation Summary

Education & Outreach Activities and Participation Summary

Participation Summary:

Education/outreach description:

During the time we were building "the cheese house" there was much interest from our
neighbors and friends in what we were doing. There was some interest from local
farmers, but all seemed interested to watch but no interest to jump in.
Our biggest outreach has been through an annual event "The Cheese Tour". It is a self
driving tour in Washington County visiting five different cheese makers' operations.
During the two day event each September for the past three years, we were visited by
more than 1,000 people interested in the cheese making process and the farm. The
visitors have come for various reasons, a cheese buyers from Boston and NYC looking
for artesian cheeses, families wanting show their children a real farm, neighbors that want
to see what we do and several farmers interested in the process. We always encourage
the farmers to come back and spend a day with us when we are making cheese. Attached
please find a brochure for The Cheese Tour.
Marge has presented a program on building a business plan for value-added- products.
She presents the workshop not only as a cheese maker but also as a financial planner,
owning, The Practical Planner, a financial planning practice. She did one workshop in
2008 in Vermont at Taylor Farm. She worked with Peter Dixion who was putting on the
multiple day workshop, a part of it talking about the importance of writing a business
plan. The second presentation was done with Sandy Buxton in 2009, helping individuals
looking to start small businesses on their farms. I have attached the hand outs for the
workshops.
An article was written about the planning process in Small farm Quarterly, Fall of2007.
Two other articles have been written about the farm over the past 3 years in our local
newspaper, The Glens Falls Post Star.
We continue to reach out to farmers when they show some interest, but at this point do
not have any future cheese makers lined up yet.

Project Outcomes

Assessment of Project Approach and Areas of Further Study:

Potential Contributions

We will continue to process milk at "the cheese house". In 2009 ACF purchased and
processed over 105,000 lbs. of milk. The markets for the products are growing and
interest in our product seems to be growing as well. As we grow our markets our product
line grows as well. In 2009 we have ventured into a new line: frozen desserts, which
include gelato, frozen yogurt and sorbets. Expanding into this new area will expose our
product lines to new markets and new consumers.
The partnership between ACF and RFF has also been positive. During 2009 with the
depressed milk prices being paid to the farmers, RFF was able to make it through the year
without borrowing any money, partly because of the premium that ACF was paying for
the milk.

Future Recommendations

We will continue to process milk at "the cheese house". In 2009 ACF purchased and
processed over 105,000 lbs. of milk. The markets for the products are growing and
interest in our product seems to be growing as well. As we grow our markets our product
line grows as well. In 2009 we have ventured into a new line: frozen desserts, which
include gelato, frozen yogurt and sorbets. Expanding into this new area will expose our
product lines to new markets and new consumers.
The partnership between ACF and RFF has also been positive. During 2009 with the
depressed milk prices being paid to the farmers, RFF was able to make it through the year
without borrowing any money, partly because of the premium that ACF was paying for
the milk.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.