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Value Added Products Help Dairy Beat Problematic Milk Prices

By   /  August 19, 2013  /  2 Comments

When poor milk prices threatened the livelihood of the families operating Kingdom Creamery, they turned to the Farm Viability Program to help them create a new plan for success. Ice cream was the answer, and they were able to switch from bulk milk sales to their new product line with the help of Rose Wilson and a successful business plan.

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Last week, Rose Wilson introduced us to some tools for setting our own goals as a first step in planning for success.  This week, we’ll see how things are working out for one of her clients, Kingdom Creamery in Vermont.  You can skip straight to the embedded video, or you can read the summary here if your computer speeds are a little slow.

Kingdom Creamery of Vermont, hard at work business planning, and having fun while doing it!

Kingdom Creamery of Vermont, hard at work business planning, and having fun while doing it!

When Jeremy and his brothers decided they wanted to run the farm that has been in the family since the 1950s, their father told them, “You’re foolish!”  After all, they had all been sent to college in the hope that they would find something different.  But Jeremy says, “When it’s in your blood it’s hard to shake that.”  So they worked together to create a successful dairy.

But when the price for milk bottomed out in 2009, the Michauds knew they had to do something different in order for the farm to survive.  “There are flaws in the milk system” says Jeremy.  While prices to produce milk continue to go up, the amount paid to farmers for their product has not kept pace.  “It’s like rubbing pennies together to make nickels,” he says.  Their business had expanded to its limit in its current location.  They knew that if they continued to simply sell milk, they’d have to expand, which would involve a major move, and a huge investment, all to get the same commodity milk prices.  Noting that there was a booming market for local and value added products, the Michauds began to consider the option of changing what they sold and using their milk to make ice cream and yogurt.  But to make the switch, they needed an investment of a different kind: a plan that would successfully lead them to their new niche.

A porch full of happy kids!

A porch full of happy kids!

Writing a plan of that magnitude was something that no one in the family was familiar with, so they asked for help through Vermont’s Farm Viability Program.  Jeremy says, “It was the best decision we could have made, working with Rose [Wilson].”   As Jeremy describes it, “You start with a blank sheet of paper and in the end you have a 700 page business plan.”  The plan was tested by sending it to lenders and using feasibility analyses.  As holes were poked in the plan, Rose and the Michauds worked together to come up with solutions.  They knew that when there were no more holes to poke, they had something that would give them the best chance at success.

Without her help, the Michauds might have simply set the plan on the shelf.  But with continued pushing and finding ways to plan around challenges and road blocks, they made it.  As Rose says, “It’s their future, it’s their business plan.  I don’t come in and tell you what to do, but it’s a relationship and we continue to check in, because someone’s future is an important thing!”

With the start of their ice cream business, the Michaud’s learned to market their product.  Their business plan identified the need for this new skill and provided job descriptions for those that would be doing the marketing.  Now the Michaud’s are expanding their market by attending trade shows to tell their story and offer taste tests.  Leslie Michaud says:  “We are selling our story.  We have a farm family from Vermont and we’re working hard to make a quality product and we are succeeding at that.”

[wpcol_1half id=”” class=”” style=””]Hopefully, this story made you wonder what markets you might be able to sell your products to, or how a business planner like Rose could help you look at your business in a new way.  While we might be great farmers and ranchers, we may not know a lot about cash flow analysis, or sales and marketing strategies, or it might be that it helps to have an objective outsider help us pull all the pieces together.  To look for a business planner in your area, check to see whether your state has a Farm Viability Program, several do.  Another good place to look is your state department of agriculture, and your land grant college extension offices.  Additional organizations that often offer farm business planning are state community loan agencies, such as New Hampshire Community Loan Fund, and state small business development centers.  Programs from any of the organizations noted above are often funded in part by their respective organization, which means less out of pocket expense for participating producers.[/wpcol_1half] [wpcol_1half_end id=”” class=”” style=””]

Examples of Organizations Offering Farm Business Planning

• Maine Department of Agriculture, Food and Rural Resources Farms for the Future
• Maryland Agricultural & Resource Based Industry Development Corporation
• Massachusetts Department of Agricultural Resources Farm Viability Enhancement Program
• Minnesota Department of Agriculture
• New England Farmers Union
• New Hampshire Community Loan Fund
• NY Farm Viability Institute
• Vermont Farm Viability Program

The second national farm viability conference for farm business planners takes place this September.  We’ll have a more complete list for you then.
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Time is Running Out!

Strut your stuff with a free ad.  Tell us about your farm and link to your website.  Advertise a book, a DVD, or livestock, prizes your kids won at the fair or Goods and Services that your fellow graziers would be interested in.  It’s free, so you can use it for anything you’d like.  Don’t know how to get started?  Email Kathy at Kathy@onpasture.com.

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About the author

editor and contributor

Kathy worked with the Bureau of Land Management for 12 years before founding Livestock for Landscapes in 2004. Her twelve years at the agency allowed her to pursue her goal of helping communities find ways to live profitably AND sustainably in their environment. She has been researching and working with livestock as a land management tool for over a decade. When she’s not helping farmers, ranchers and land managers on-site, she writes articles, and books, and edits videos to help others turn their livestock into landscape managers.

2 Comments

  1. Rose Wilson is a great resource and we appreciate that she is also working on this side of the river in NH. NH does not have a Farm Viability program, but we at the NH Community Loan Fund are a private non profit and have private funding partners that enable us to offer cost-sharing so that more NH farms can benefit from good business planning. Please contact Charlene Andersen at 603-856-0773.

  2. Kim Olmstead says:

    What a nicely done video. I didn’t know farmers had resources like that to help them do their business planning better. I love the way they talk about strengths first to open up the communication and give respect to the farmers first. Well done.

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