Earlier this month the Center for Dairy Excellence joined the Pennsylvania Department of Agriculture, American Dairy Association North East, Team Pennsylvania and others to host a Dairy Innovation Forum in State College. The forum drew about 60 representatives from the dairy processing, retail and production segments of the industry to inspire a mindset of innovation within our industry. It was really a great day, with discussions highlighting new products coming online, strategies for approaching innovation, and what we can expect from consumers in years to come.
Two companies – Fairlife, Inc., based in Chicago, and Turner Dairy Farms in Pittsburgh – shared how they have focused on innovation to grow their fluid milk lines, despite the national trend of declining milk sales. Most of us are familiar with the Fairlife story. However, I was just as inspired by the Turner story and their innovative mindset. It resonates with our culture of small family-owned businesses striving to succeed.
Innovation on the Homefront
Turner’s is a family-owned dairy company that procures milk directly from 39 farms in western Pennsylvania and sell fluid milk, teas and ice cream. Stephen Turner shared their story, which began in 1930 when his great grandfather began selling milk from his twelve cows. Today they have distribution across western Pennsylvania and into Ohio.
Recent innovations for this company included enhancing their labels to appeal to consumer trends, introducing a lactose-free fresh fluid milk and offering “limited edition flavors” of milk in each quarter since 2015. Some of the limited-edition flavors have included chocolate peanut butter, orange creamsicle and peppermint. Only offered for a short period of time, these limited-edition flavors have built hype for the entire Turner’s line and increased sales for them.
In his remarks, Stephen talked about the company’s product development team, which at any given time could have three to five product ideas that they are considering. No one person is dedicated to product development. Instead, they have people representing all areas of the business and all generations of consumers on the team to bring diverse perspectives to the conversation. They also rely on insight from outside the company on what consumer trends are coming and what new innovations are gaining traction in the industry.
In addition to Fairlife and Turner’s, the forum also included presentations from Dairy Management Inc. on some of the efforts the national Dairy Checkoff program was doing to encourage innovation in the dairy category and from Penn State’s Food Science Department on the research they were doing to meet industry challenges. The faculty who spoke also shared how they have food science students working with companies to develop new product concepts to meet market challenges and consumer demands. It was fascinating to learn about all the efforts focused on dairy innovation.
At the end of the day, Rick Naczi who is the chief executive officer for American Dairy Association North East closed the day with this challenge to the audience; “Whatever you do, do something.” He encouraged every person there to write down one idea they got from the day’s discussion and make a plan to act on that idea. They were to put it on a Post Note or on a future date in their calendar to ensure they don’t lose sight of that idea.
What Are You Doing?
Despite what many farmers believe, the dairy processing side of the industry is not that different from the dairy farm side. Very large-scale dairy processing companies exist in some parts of the US, just like there are very large-scale dairy farms in different regions of our country. However, many small-scale family-owned dairy processing businesses are in our state. In fact, Pennsylvania has more of these dairy processing businesses that exist in any other state, just like there are more dairy farms in Pennsylvania than in almost any other state. These processing companies, just like our dairy farms, are fighting narrow margins and declining milk sales to remain relevant and viable among their much larger competitors in other parts of the country.
The challenge to do something, anything, is one we all need to accept. 2018 marks the fourth year of milk prices that have been at or below breakeven levels for many Pennsylvania dairy farms. We can no longer wait for someone else to fix the problem at hand for us.
Unfortunately, price forecasts on the Chicago Mercantile Exchange don’t show much improvement in 2019. The latest USDA Milk Production Report shows milk production growth nationally starting to slow, up only 0.8 percent in October. The nation’s dairy herd is also starting to shrink. But product stocks, both domestically and abroad, are still at all time high levels, and uncertainty continues to cloud the forecast going into the new year.
At the center, we have received calls from farms looking at adding other agricultural enterprises, considering forming buying groups, and evaluating their options in value-added dairy. These are all good ideas worth considering. We are also receiving calls from folks who are just recognizing that they need help and aren’t sure where to begin. Just knowing they need help and being willing to ask for it is a good first step in the right direction.
So, as you move into this new year, I challenge you to take the advice Rick shared with the processors and others at the Innovation Forum this month. “Whatever you do, do something.” Sit down and talk with your family, look hard at your business’ finances and your ability to continue weathering low milk prices, and then brainstorm any and all options you have available to improve the current situation.
I know all too well how challenging it is right now on our Pennsylvania dairy farms. And in difficult times, everyone knows it is easy to stick your head in the sand and just hope for better days. But that is the worst thing we can do. The Center for Dairy Excellence, Penn State Extension and many others are willing to help. But you need to take the first step. Whatever you do, just make sure you do something.
Remember, the center is here to be a resource. Call us at 717-346-0849.
Editor’s Note: This column is written by Jayne Sebright, executive director for the Center for Dairy Excellence, and published monthly in the Lancaster Farming Dairy Reporter.