Business
3:15 am
Tue September 3, 2013

New York's Dairy Farmers Squeezed By Greek Yogurt Boom

Originally published on Tue September 3, 2013 12:01 pm

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.

Copyright 2014 North Country Public Radio. To see more, visit http://www.northcountrypublicradio.org/.

Transcript

RENEE MONTAGNE, HOST:

The Empire State can now claim a new title: undisputed king - or queen - of yogurt. New York is now the No. 1 producer of yogurt, surpassing even California. In the last five years, New York's yogurt plants have nearly tripled in production, with partial thanks to a high-protein Greek yogurt, which is taking over diary departments everywhere.

The big question is whether New York's cows can keep up. North Country Public Radio's David Sommerstein reports.

DAVID SOMMERSTEIN, BYLINE: There's an old pumpkin patch in the city of Batavia, halfway between Buffalo and Rochester. In just two years, not one but two new, gleaming yogurt plants have displaced the pumpkins; this in a town where people are used to factories closing, like the Sylvania TV plant in 1980.

Two companies, Alpina and Muller Quaker, have invested $225 million total and created more than 160 new jobs so far.

(SOUNDBITE OF CLANG OF DOOR CLOSING)

SOMMERSTEIN: And the industry believes there's a lot more growth to come.

ROGER PARKHURST: We're now entering into a room that sounds like a cave...

SOMMERSTEIN: Alpina's pasteurization room looks like any modern industrial room - disinfected tiles, stainless steel pipes and valves - just that it's kind of empty. Alpina's industrial director, Roger Parkhurst, in sanitary whites and a hairnet, says 75 percent empty, to be exact. The plan is to fill it.

PARKHURST: So it sounds like a big echo chamber because there's hardly anything in this room 'cause we've got it ready for expansion, which we hope to be doing in the next couple years.

SOMMERSTEIN: Production has ramped up so quickly, Alpina has hired in one year the number of employees it thought it would in four. The company's already bought more land outside, to build even bigger.

It turns out, Greek yogurt and upstate New York are a perfect match. Steve Hyde directs the Genesee County Economic Development Corp., which brought the yogurt plants to Batavia.

STEVE HYDE: When you looked at the big picture and you said, hmm, the market of consumers from Batavia, N.Y., is 125 million people from a day's drive.

SOMMERSTEIN: Chicago, New York City - the whole Eastern Seaboard. Meanwhile, New York is the country's fourth biggest milk-producing state. And voila.

HYDE: You say, oh, my goodness - New York is now the Silicon Valley of yogurt.

SOMMERSTEIN: Greek yogurt leaders Chobani and Fage started the boom in 2007-2008. Now, there are more than 40 yogurt plants scattered across the state. 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.

(SOUNDBITE OF MACHINERY)

MIKE KIECHLE: I'm in the group that they're targeting.

SOMMERSTEIN: And?

KIECHLE: And I'm not expanding.

SOMMERSTEIN: That's Mike Kiechle, a small-dairy farmer on his tractor, spreading manure. One big problem is, 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.

KIECHLE: It's just not the 50 cows I've got to buy. It's - I'm going to have to have some more land; 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're going to invest your money there.

SOMMERSTEIN: What has happened is ,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.

SHELLY STEIN: I now have a stable market, and a demand for our milk. 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.

SOMMERSTEIN: Back in Batavia, economic developer Steve Hyde says Greek yogurt is just the beginning. The region's becoming a hub for food processing of all kinds, from Buffalo wing-flavored cheese to frozen vegetables to fancy mushrooms.

HYDE: And so you really have this huge - like, rising tide lifts all boats going on.

SOMMERSTEIN: 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.

For NPR News, I'm David Sommerstein in Canton, N.Y.. Transcript provided by NPR, Copyright NPR.