Struggling Dairy Farmers Find A 'Moo' Business Model

Published On : 6/25/2012 2:44 PM
By : JESSICA CAMILLE AGUIRRE
From : NPR
Categories : Business
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A year and a half after Aaron Bell lost his contract to sell milk to H.P. Hood LLC from his 45 cow dairy operation in Edmunds, Maine, he found himself leaving a voicemail with his lease agent.

"Hey Nina, it's Aaron, and I was just trying to catch with you regarding our lease payment, which is currently late... again... as of yesterday I believe. But like I said, I have that plan, as soon as we sell these turkeys we're going to be paying a large portion of that - maybe even half a year at a time. So, I'm really sorry about that, but things are just extremely tight around here."

It's a scene – shown in the world premiere of documentary, Betting the Farm, at the SilverDocs film festival in Silver Spring, Md. on Friday - that has played out thousands of times across the U.S. over the past four decades. Since 1970, the number of dairy farms has dropped by more than half a million.

Caught between ballooning feed costs, an uncertain economy, political gamesmanship and milk processors that increasingly value the efficiency of sourcing from a few large-scale producers, dairy farmers have become a dwindling lot.When Bell was dropped by Hood in 2009, along with nine other Maine dairy farmers, they decided to form a collective and try to market their product directly to consumers.

The idea is not exactly new. Milk cooperatives cropped up in the late 1800s to negotiate prices with dealers who were delivering to burgeoning urban markets, and they peaked in the 1940s. After that, dairy farms started to consolidate.

But cooperatives have recently regained traction as a viable business model, especially in the thriving organic foods market and among local food enthusiasts. The largest single supplier of organic milk – Organic Valley – is a 1,723 member cooperative established in 1988.

But for farmers like Bell, the hurdles that ultimately severed the Hood contract stymie membership in most existing businesses - namely the stark remoteness of the family operation. If his cooperative - called MOOMilk, or Maine's Own Organic Milk - is successful, it could be a beacon for other far-flung dairy farmers who find their market ties increasingly strained.

The fact that Bell was on the phone with his lease agent more than 12 months after MOOMilk was founded didn't bode well. In fact, the specter of failure loomed continually for the first two years, according to the documentary.

Now, things are looking up, albeit modestly. MOOMilk has been picked up by Whole Foods and Hannaford's, as well as by a swath of small purveyors across northern New England. Even with demand for organic milk booming, though, the cooperative is struggling to push past 5,000 gallons in weekly sales.

Part of the problem is that the group still has no marketing manager: Their main advertising campaign consists of CEO Bill Eldridge setting up a table in the milk aisle and handing out samples, according to the film.

Till now, the strategy has relied on word of mouth - and the farmers' faith in a growing public awareness of the links between sustainability and culture.

"The ways that people choose to spend their food dollars can make a huge difference," MOOMilk farmer Laura Chase tells The Salt. "It can literally change the landscape around them. If they support local farms and purchase from people that they know, they really can change the way things look around them. And then maybe we'll have more family farms crop up."

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