A Feasibility Study on How Affordable Micro-Creameries Can Help Manage On-farm Dairy Risks

Final report for FNE21-971

Project Type: Farmer
Funds awarded in 2021: $14,303.00
Projected End Date: 03/31/2022
Grant Recipient: Burley Berries and Blooms
Region: Northeast
State: New York
Project Leader:
Megan Burley
Burley Berries and Blooms
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Project Information

Summary:

This project aimed to study the feasibility of adding a micro-creamery to our fruit farm while collaborating with our families dairy farm.  For this project we toured several micro-creameries in the North East.  The tours provided us with details to create a fact sheet comparing the cost of equipment used and products at each creamery.  We also participated in 2 dairy processing courses at Cornell University.  During the project we developed a logo and marketing materials to aide in product development for our micro-creamery. In 2021 we will be adding a shipping container creamery to our farm where we will process cream line milk.  Our fact sheet was shared with the Penn State and Cornell Dairy teams.  We also participated in a Risk management online workshop through Penn State with 60 people in attendance. 

Project Objectives:

This project seeks to

  1. Research the successes, building design and challenges of 4 micro-creameries in the Northeast (2 in PA(Lanes End Farm, Brockway PA and Mitch Hill Dairy Farm and Creamery, Venus, PA), 1 in NY (Sunset View Creamery) and 1 in VT.
  2. Establish Base Market Research and study the feasibility of starting a micro creamery in western NY and present those findings at a dairy extension workshop for Penn State(Burley Berries has recently done a presentation for the PSU Dairy Team for their Women and Ag Series) and Cornell Cooperative Extension (Anika Gianforte, Harvest NY Dairy Specialist is the advisor for this project) and Develop a brand and marketing strategy for a micro-creamery at Burley Berries and Blooms
    1. Impact for other farmers: This study will provide an opportunity for farmers who are seeking this idea in other parts of the state a resource as they develop their own ideas for a micro-creamery
    2. Impact for other farmers: a video will be created following the steps of the project from start to finish
  3. Research cost effective Mico-Creamery Designs
    1. Impact for other Famers: a fact sheet will be developed comparing the cost of different micro-creameries and shared during the virtual presentations

 

Introduction:

The Problem

A local food movement has been at the forefront of consumer purchases over the last decade, which has helped small non-dairy farms remain viable for the past decade, particularly during the pandemic. Dairy farmers face unique challenges that hinder their ability to capitalize on the local food movement; namely their limited ability to market their own product as they often sell through cooperatives. During these unprecedented times, the need for new markets has never seemed more paramount. “By mid-April of 2020, the Dairy Farmers of America (DFA) estimated that the loss of school, hotel, and restaurant customers led to farmers having to dump nearly four million gallons of milk each day[3]”  

As price takers, “dairy farms, with their highly perishable product, have little choice but to accept the low prices paid by milk cooperatives, which are decreasing in number and increasing in size due to recent mergers.”[4]  The dairy industry is facing increasing consolidation of larger dairies, while smaller dairy operations are left to go out of business. Despite this trend, cow numbers and overall milk production has not seen a large decrease. Therefore, the laws of supply and demand do not allow the milk price to rise. Since 2018, anecdotal evidence shows that at least 5 different dairy farms have gone out of business in Wyoming County, NY.  Together the total cows milked at these farms was about 5,000. These 5 farms have been consolidated into two corporate-owned businesses.

External factors further complicate milk marketing concerns. For example, in 2017 Walmart began processing its own milk from their own farms, leading to the cancellation of 100 milk contracts. Upstate Niagara, a leading NY-based milk cooperative hasn’t accepted new members for the past 10 years. DFA is one of the last remaining markets for new and existing dairy farms, yet recently implemented policies have had a detrimental impact on their member farms. In May of 2020, DFA implemented a tier pricing program for milk. Members in the northeast would be paid full price on 85% of their base production (based on March production numbers) and the farmers would receive “whatever money the cooperative was able to get” for the remaining 15%.[5]  East Hill Farms, my husband’s family dairy farm was one of the farms impacted by this change. As a result of the base price program deductions in the monthly milk check, East Hill Farms has seen -$34,716 from June-October.   Another component of the milk check that has seen significant decrease is the Producer Price Differential (PPD). PPD is money available to farmers after calculating the milk price. Left-over funds are distributed to farmers and are pro-rated based on location. In October of 2019 East Hill Farms’ PPD was +$42,316. This year the current premium balance is -$163,886.    As a seasonal grazing dairy that does not milk cows 2 months out of the year, these changes have a large detrimental effect on our income.    A letter of appeal had to be written this year just keep the dairy in business to be paid for a portion of the milk the farm produces

The Solution

This project aims to research the feasibility of developing a micro-creamery (45 gallon vat pasteurizer and small packing facility) and to offer dairy farms a diversified market for their milk. If viable, the micro-creamery would allow a dairy farm to move from a price taker to a price maker. Markets analyzed through this study will include value-added products sold through the CSA model and through a retail on-farm store. The test cases will be Burley’s Berries and Blooms, an established western NY CSA with a great reputation and East Hill Farms. Due to land availability and labor costs, EHF would like to reduce their herd size, while increasing profitability via the Burley Berries farm micro-creamery. Fact sheets will be developed and information will be shared from this project with other farms in the northeast who are looking to change their marketing strategies and reduce their dependence on cooperatives for milk sales.

Description of farm operation:

Burley Berries & Blooms is a pick-your-own small fruit and flower operation specializing in strawberries,blueberries, and flowers. We are going into our 8th year of business and we are open during the fruiting season, June-October. The main portion of the business is the fruit and flower CSA located on 2 acres at 6335 Route 20A, Warsaw, NY, right next to the road front. Our current sales are to local consumers in the Wyoming County region, as well as travelers from Niagara Falls. We market our product utilizing social media, word of mouth, and yard signage. This year we began adding value-added products, including jams and jellies, handmade cow’s milk soap, and soy candles (these products are available through our online holiday shop, as well). We also added a fruit and flower CSA with a membership of 25 and a waitlist of 20 people. The Burley Berries business has expanded exponentially over the past 3 years with an income increase of 500%.
Ryan, my husband, is also a co-owner (along with his parents, Gary and Betty Burley) in another farming operation, East Hill Farms (EHF). EHF, established in 1981, is a seasonal grazing dairy that milks 700 cows, following a New Zealand system in which they milk cross-bred (Jersey Holstein cows) on a seasonal basis. In an attempt to diversify markets for their milk, Gary and Betty Burley opened East Hill Creamery in 2015, where they produce two specific styles of cheese. Building upon that model, but at a much smaller scale, we see a unique and fortuitous opportunity to leverage EHF’s access to high quality, grass-fed milk, to produce value-added products that meet our consumer’s demand and that are not currently available in our region.
Both Ryan and I were raised on family farms; Ryan on his family’s dairy and I on a diversified produce farm in Pennsylvania. Further, I am a graduate of Penn State, with a Bachelor's degree in Agricultural Science and minors in agronomy and horticulture.

Cooperators

Click linked name(s) to expand/collapse or show everyone's info
  • Anika Gianforte - Technical Advisor

Research

Materials and methods:

Objective 1: Researched the successes, building design and challenges of 4 micro-creameries in the Northeast 

  1. A questionnaire was developed (not really shareable as it was a handwritten list we created en-route to the location) to use to guide the tour of the micro-creameries.  Often we used this to help start conversation while ensuring all our questions were answered.
  2. Touring creameries in your area and surrounding states will help give you a good idea of what works and what doesn't.  We really realized that a lot of folks are building creameries in really rural areas.  Marketing can sometimes be a challenge.

Objective 2: Established Base Market Research and developed a brand and marketing strategy for a micro-creamery at Burley Berries and Blooms.

  1. We worked with a consulting agency to do some basic research.  29 Design Studios, a food and ag-focused agency that uses business intelligence, strategic insights and purposeful creativity to create and grow brands, located in Geneva, NY (29 Design has worked with Red Jacket Apple Orchards for their juice lines) worked with us to do a market analysis.  During the analysis we reviewed the current Burley Berries business and compared our social media presence with several other successful businesses. This gave us a lot of insight into what we are doing well and where we can improve. 

Objective 3: Researched cost effective Micro-Creamery Designs and Recipe Development

    1. At the beginning of the project I Attended the Cornell Food Science Course on pasteurization and dairy food safety.  This was a great place to start.  It provided intro to all the things you need to know to process dairy products.  I took a specialized course about vat pasteurization. Eventually I'd like to take the ice cream course. I would change the timing of these courses.  I think they make more sense to take toward the end of the planning to keep the information fresh.
    2. I reached out to companies in the North East who sell dairy processing equipment.  These folks were super helpful and provided lots of information.  Doing tours of the creameries helped us find equipment that we liked and didn't the built upon the information we received from Don's Dairy Supply and Micro-Dairy Designs. 

 

Research results and discussion:

Objective 1: Researched the successes, building design and challenges of 4 micro-creameries in the Northeast 

  1. A questionnaire was developed (not really shareable as it was a handwritten list we created en-route to the location) to use to guide the tour of the micro-creameries.  Often we used this to help start conversation while ensuring all our questions were answered.
    1. At Each creamery I took pictures.  These pictures have been super helpful as we continue our project.  Each creamery was unique and provided a different detail that we liked.  The pictures taken have been shared with our contractors to show design and build for each 

Objective 2: Established Base Market Research and developed a brand and marketing strategy for a micro-creamery at Burley Berries and Blooms.

  1. 29 Design Studios, a food and ag-focused agency that uses business intelligence, strategic insights and purposeful creativity to create and grow brands, located in Geneva, NY (29 Design has worked with Red Jacket Apple Orchards for their juice lines) worked with us to do a market analysis.  During the analysis we reviewed the current Burley Berries business and compared our social media presence with several other successful businesses. This gave us a lot of insight into what we are doing well and where we can improve.  We also worked students from the local SUNY university to do an overview of our social media presence.  We updated area that needed it and began to tell the story of the plan for a micro-creamery.  Social Media has been an important aspect for our fruit and flower business.  We are excited to use Instagram/Facebook as platforms to continue to tell our farms story.  I highly recommend if you are looking to do a project like this to learn about social media and try it out for your business. 
    1. Part of the discussion for the project was not to change the name of the business from Burley Berries & Blooms.  We are working to make The Creamery @ Burley Berries an extension of our brand not a new business.  This has been one of the most challenging pieces so far.  I also am working to tell to story to let customers know that The Creamery isn't a place to visit it will just be a processing plant to start.  

Objective 3: Researched cost effective Micro-Creamery Designs and Recipe Development

    1. We Developed a non-biased fact sheet from companies selling micro creamery equipment. The Fact Sheet was distributed to farmers participating in the virtual workshop via Penn State.  We have also made the fact sheet available to extension educators in WNY as well as shared with the Penn State Dairy Team.
    2. At the beginning of the project Attend the Cornell Food Science Course on pasteurization and dairy food safety.  This was a great place to start.  It provided intro to all the things you need to know to process dairy products.  I took a specialized course about vat pasteurization. Eventually I'd like to take the ice cream course. These classes helped me think through steps for product development.  We plan to focus our creamery products on cream-line milk (white, chocolate and seasonal flavors) eventually we'd like to add a line of coffee creamer.  In our research we could not find a local producer making coffee creamer. During my current offerings at Burley Berries I have done some boots on the ground research and it seems like our current customers are most excited about our creamers.

 

Research conclusions:
  1. Touring creameries was the part of the project where we learned the most. Each creamery was different.  We visited creameries that were built from the ground up as well as pre-fabricated.  Many made several different types of products and some were built to make different types of products but they couldn't keep up with their fluid milk customers.  Seeing these small dairies thriving gave us hope that a small dairy farm can still be viable.  Seeing these creameries also made us learn about different regulations required for NYS and we could compare cost of facilities to help make the best decision for our creamery.
Participation Summary
1 Farmer participating in research

Education & Outreach Activities and Participation Summary

10 Consultations
2 Curricula, factsheets or educational tools
1 Webinars / talks / presentations

Participation Summary:

50 Farmers
3 Number of agricultural educator or service providers reached through education and outreach activities
Education/outreach description:

Consultations:

  • Don's Dairy Supply-Creamery development, equipment information, building recommendations
  • NYS AG and Markets-Understanding of NYS regulations for micro-creameries in upstate NY
  • Mitch-Hill Dairy, Venus, PA- micro-creamery tour, multiple equipment/price consultations, this farm utilized Don's Dairy supply for a shipping container creamery
  • Lane's End Creamery, Brockway, PA- Micro-creamery tour, milking 7 cows, equipment overview, this farm built a 15 gal vat pasteurizer creamery using equipment from micro-dairy designs
  • Eden Valley Creamery, South Dayton, NY-Middle Size creamery tour, equipment overview, using equipment for cheese.
  • Stewarts Family Farm, Hornell, NY-Micro-Creamery tour, regulator information about building a creamery from scratch, produce goat milk, cow milk, and cheese. Equipment used included ANCO vat pasteurizer and holding tank.  Very informative and helped us decide to work with Don's Dairy Supply
  • Warsaw Penny Saver-Logo Design and Development
  • 29 Design Studios- Market analysis and strategy for new dairy products
  • Micro-Dairy Designs-Price Consultation, marketing ideas, equipment information.
  • Farm Credit East-Business Plan development and Funding 

Curricula/fact sheets

Webinar/online Talk/resources shared

  • Women in Dairy Penn State Dairy Team, the process of starting a micro-creamery
  • Business plan and fact sheet shared with Cornell Cooperative Extension Educators as well as Penn State Educators.  There is a lack of this type of data and I wanted to ensure I shared with folks who work in the industry to help producers make decisions.

 

Learning Outcomes

5 Farmers reported changes in knowledge, attitudes, skills and/or awareness as a result of their participation
Key areas in which farmers reported changes in knowledge, attitude, skills and/or awareness:

Farmer, Project coordinator, Megan Burley

With this project I learned so much!  I entered knowing minimal about dairy processing and after completing the project we will be building our own micro-creamery.  My main goal  has been to develop resources for others looking to do the same thing. There is limited information available about building a micro-creamery.  During this day and age it may seem unreasonable to milk 6-10 cows and make a living.  This project showed me it is possible and the folks in the dairy industry who are thriving are the ones who are taking their own milk and making it into something. It is possible to do and you don't have to spend millions of dollars to make it happen.  I have gained skills in processing my own product via workshops and trainings I've taken through Cornell Dairy Processing.  Working with the consultants on this project has been the most valuable piece.  Learning from those who are doing has really helped us make the decision to jump in and start our own creamery.

4 farmers reached out looking for more information from the PSU Extension Webinar.

I shared the fact sheet and contacts of the folks we worked with to complete this project. 

Project Outcomes

2 Grants applied for that built upon this project
1 Grant received that built upon this project
$20,000.00 Dollar amount of grant received that built upon this project
5 New working collaborations
Project outcomes:

After completing this project we will be starting our own micro-creamery.  As the dairy industry continues to struggle we recognize as producers that we can't wait for someone to fix the issues for us.  Building our own creamery will aide in the ability for our family to continue to milk our cows.  Having an already established business is key to the success of this project.  The creamery will be added to our fruit and flower farm and will expand our product offerings and open new market opportunities for our milk (milk and fruit are complimentary products).  Being able to use the funds from this study allowed us to think through all scenarios and make the best choice for our farm.  The farm tours we participated in gave us valuable information while also providing us with a network of farmers to answer questions as we continue to work on our own creamery.  

Assessment of Project Approach and Areas of Further Study:

Doing tours and consulting with other farms was the best approach to complete this project.  Something I would change would be to take the dairy science courses later in the project.  There was lots of information to glean from these classes that would be more easily remembered if taken later in the time line. We learned that consulting with the businesses who build/supply dairy processing equipment allowed us to understand the cost.  My husband is very knowledgeable about cooling/heating/building structures.  If someone were to do this without that previous knowledge it may be difficult to understand how all the equipment works and what the best options may be.  I also realized that using an accounting system like quick books would aide in project development because when you seek funding for a large project you need a balance sheet/monthly cash flow/ and projections.  Having Quickbooks would have simplified this process. We also learned that building a creamery in Pennsylvania is much easier than building a creamery in New York.  The regulations between the two states are much different.  If we could we would prefer to build a creamery in PA!  

Information Products

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.