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State of the Industry

State of the Industry:
New York’s diverse industry seeks room for expansion

By Rena Archwamety

Editor’s note: As part of our new monthly “State of the Industry” series we take a look at the cheaese and dairy industry across the United States. Each month we are examining a new state or region, looking at key facts and evaluating areas of growth, challenges and recent innovations. This month we are pleased to introduce our second “State of the Industry” — New York.

MADISON, Wis. — New York’s cheese culture is nearly as diverse and long-standing as its inhabitants, and many dairy executives exude a sense of pride when talking about the state’s dairy roots.

“New York’s very proud of its position, dating back to Jesse Williams who opened the first commercial cheese facility in the mid-1800s,” says Jed Davis, marketing director of McCadam Cheese Co., which was founded soon after in 1876. “Cheesemaking came out of the kitchen and became a product specifically made in a more commercial setting.”

In addition to its claim as the birthplace of the modern cheese industry, New York has long held as the nation’s third largest milk producer and turns out more cottage cheese than any other state, just under 300 million pounds each year. The state also is strong in other soft products such as cream cheese, yogurt and ice cream, and it takes special pride in its Cheddar.

“New York is one of those states where Cheddar cheese is pretty common,” Davis says, adding that McCadam’s Extra Sharp Cheddar took grand prize at last spring’s U.S. Championship Cheese Contest. “But we see good support and acceptance of all our products. New York is a cheese state, and there’s a fair variety to it, whether Italian, American-style or cottage cheese.”

With abundant resources and steady demand for a variety of dairy products, most companies are happy to continue calling New York home.

“We’re very proud of our Cheddar cheese here in the state, and we’re holding our own,” says Bruce Krupke, executive vice president, New York State Dairy Foods Inc. “There’s always pressures to move West, but the cost of fuel and transportation is negating some of that advantage of going West. We have the ability to produce, manufacture, process and distribute here in the Northeast. There’s a big demand and a huge import/export market. From Washington, D.C., up to Maine and Pittsburgh on east, there’s a huge population base.”

The population density in the Northeast provides a steady consumer base and demand for dairy products. On the other hand, urban and suburban sprawl is posing tight competition for space and real estate as New York dairy producers look for room to expand.

“Probably the biggest constraint to significant growth is the lack of land. Coming up with 1,000 to 2,000 acres is hard to do,” says Mark Stephenson, senior extension associate, Cornell Program on Dairy Markets and Policy.

“Along with that, we have this population that is a plus, but it also has the potential downside of neighbor relations,” Stephenson adds. “Many times you have farms that have been reasonably stable. Then you have developments with people moving out there, complaining about manure spreading and dust. This wasn’t a problem before.”

The increased demand for land also has pushed the cost of setting up a farm past what many can afford.

“Our tax base is high, and we’ve lost a lot of agricultural support,” says Linda Smith, president, New York State Farmstead and Artisan Cheese Makers Guild, and owner of Sherman Hill Farmstead cheese. “New York still ranks high as a dairy state, but we are constantly losing farms. People from out of state think of New York City and the abundant marketplace. But property is high; anything within a two-hour distance from New York City is very expensive.”

New York contains a fairly even mix of farm sizes, with 50 to 60 percent of them small farms with 50 to 100 cows per herd, Krupke says. And while you won’t find the extra-large concentrated animal feeding operations seen in the West, more mid-size farms are growing, with 200 to 500 cows to a farm.

“We’re seeing a mild acceptance of the farming community’s need to grow, expand and find ways to be a low-cost producer,” Krupke says.

The number of farms as well as dairy pasteurizing plants has decreased significantly over the past decade, in part due to consolidation. However, production numbers have managed to remain steady as technology and efficiency continually increases.

The state had 47 milk pasteurizing plants in 1990, a number that dropped to 36 by 1997 and to 28 in 2007, according to the New York Department of Agriculture.

In 1993 New York was home to more than 10,000 dairy farms. In 2007 there were less than 6,000 remaining. The number of milk cows dropped from 699,000 in 1997 to 627,000 in 2007. But total milk production continues to rise and was up to more than 12 billion pounds in 2007, compared to approximately 11.5 billion in 1997.

“The number of producers has declined, not unlike the rest of the country,” Krupke says. “We’ve seen a decline every year in the past decade in number of farms. But production per cow and per farm is still strong.”

“Overall productivity is increasing,” says Kathryn Boor, professor and chair of the Department of Food Science at Cornell University. “We have more educated farmers and producers applying the latest information on farm management, nutrition, housing and cow comfort. Our total number of farms has dropped over the last decade, but total milk production stayed the same.”

Despite challenges to New York’s dairy industry, milk production continues a slow but steady increase, and the state’s industry professionals are hoping to continue in that direction.

“As a state we are very interested in growing our industry,” Boor says.

“It is an old industry, it’s been here a long time,” Stephenson says. “It’s not in retrenchment, though we see other regions growing more rapidly, so the market share is getting smaller. There are rather unique obstacles to its growth.”

To overcome these obstacles the nonprofit New York Farm Viability Institute last year launched the New York Center for Dairy Excellence. The center is modeled after a similar organization in Pennsylvania and funded through legislative appropriations to the New York Department of Agriculture and Markets. It aims to create a more unified industry that will help improve productivity and increase profitability of dairy operations.

Some of the center’s projects include profit-focused discussion groups by agri-service professionals, the distribution of articles on environmental management and a consumer information campaign informing the public about the importance of New York’s dairy industry to the state’s economy. New York also is working with neighboring Pennsylvania and Vermont to address issues confronting the regional dairy industry.

“The region is working together to try to stimulate the dairy industry and lower the barriers for growth,” Stephenson says.

“I think New York faces some of the same challenges any state does that has a good portion of the population without an agricultural background,” Davis says. “There is an underappreciation of the contributions of the dairy sector to the overall economy of the state. We are lucky enough to have politicians and civic leaders that have worked to support the dairy industry.”

While many farmers and milk producers are leaving or dropping out, cheese and dairy businesses both large and small continue to move into New York, expand and diversify.

“We still have a good varied cheese industry,” Krupke says. “Not only cow’s milk, but now sheep’s and goat’s milk cheeses are coming out stronger. There’s a strong demand for organic products. We have a huge market with New York City that draws in opportunities. Artisan cheeses are still strong, still flourishing. So are commodity products like Mozzarella, and specialty products.”

Great Lakes Cheese Co. is undergoing an $86 million expansion project that will include a larger cheese plant in Adams, N.Y. Greek dairy giant FAGE recently opened a new yogurt plant in Johnstown, N.Y. to meet increasing state-side demand.

Artisan and specialty cheesemakers also are growing in New York, which is home to nationally-distributed Coach Farm goat’s milk cheese and Old Chatham Sheepherding Co., as well as thirty-some more local and regional farmstead cheesemakers.

“It’s growing but still in its infancy. Ninety percent only began since 2000,” Smith says of New York’s artisan cheesemakers. “I get several calls every week, many pertaining to ‘how do I get started?’”

Smith says the growing interest may be due to the amount of press recently given to artisan cheeses. The inquiries range from farms looking for a new way to use their milk to people in mid-life seeking a change in profession.

The demand for local and diverse dairy products is growing as well in New York.

“We have some pretty high-income families over here in the Northeast looking for new and different experiences. Cheese has become quite popular,” Stephenson says.

“Vermont has developed a cheese trail, and processors are trying to entice people from the metropolitan area to come up and tour,” he says. “Retailers like Murray’s and Artisanal (in New York City) are quite happy to take products that are locally produced. They can tell the farm story along with the cheese.”

Stephenson also says that with data now indicating that one in four people in New York City are foreign-born, a demand is emerging for more diverse, ethnic-based dairy products. Examples he cites are FAGE Greek yogurt or Kosher milk.

“We do have quite an ethnic diversity when it comes to the metropolitan areas,” Stephenson says. “A number of other markets more recently have been identified where people would like to be provided with products they consumed in their homeland. These are people who have a very strong memory of what they had in other countries, and they would like to have it here.”

Wide open spaces might come at a premium but the New York’s dairy industry leaders are willing to face that challenge in return for what the state has to offer in opportunities and resources.

“Climate, terrain, quality, everything about New York is well suited to the dairy and cheese industry. It’s a climate that is very reasonable for dairy animals. People think of New York City, but the upstate region has a very strong agricultural base. Milk and milk products have long been, since the mid 19th century, a stalwart of that region,” Davis says.

“There’s a decent supply, a decent quality of milk available,” Davis adds. “The other benefit New York enjoys is that we do have New York City right in our boundaries. That’s a lot of cheese-loving hungry people!”

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