Yesterday, in recognition of National Dairy Month, Secretary Vilsack took time to recognize the uncertainties faced by the nation’s dairy farmers. Though he didn’t say so explicitly, I believe his comments were directed more toward commodity milk producers who sell their goods at market prices to mega-bottlers and processors. Traditionally, these kind of dairy farmers are price-takers. The Secretary’s comments briefly summarize the historic effects of that status.
The life of a dairy farmer is tough for me to contemplate. Not only must they contend with the hard work of farming, they have to anticipate months ahead what kind of prices they will get for their product and build those shaky estimates into their business plans.
This New York dairy cooperative is an excellent example of a viable alternative to commodity production. Hudson Valley Fresh chose a legal structure which allowed them to gain some control over the destiny of the products produced by its members. Agricultural cooperatives are exempt from federal and state antitrust laws. This allows several different independent farmers to work collectively on a regional pricing and production strategy. It also allows them to collectively cover the costs of marketing to consumers an alternative to commodity milk using a single, coherent message.
This strategy has helped Hudson Valley Fresh break out of the price fluctuations endemic in the milk industry. They have used the cooperative form to penetrate several niche markets; local, premium, sustainable, no artificial hormones, kosher. It is more costly and time consuming for Hudson Valley, I am sure, to carry out the extra effort. Running a cooperative is exactly like running any other business. The reward is stability and independence from the commodity price cycle.
