Grass-fed fluid milk producer in Ohio takes on the big-dairy monopoly

This story about Snowville Creamery is originally from Graze magazine and appears on the Snowville Creamery website under the title “Grass-Fed Fluid Milk in Danger“:

Building a dream for grass-fed fluid milk:  Snowville Creamery wants to return taste and value to milk

By Joel McNair

Pomeroy, Ohio

The dream is big, the vision wide, the obstacles great. Warren Taylor wants nothing less than to resurrect American fluid milk quality and consumption from sorrowful depths.

Warren believes that a product that has become a standardized, industrialized and sometimes sterilized shadow of its former self can be returned to the wonderful food that so many mothers and children enjoyed in the days of his youth. Milk made with grain, hormones and stressed-out cows can instead come from contented animals grazing lush pastures.

He’s out to prove that milk toasted at high temperatures to achieve the shelf life required for long-distance marketing can instead be minimally pasteurized at the lowest temperatures and for the shortest periods of time – and someday not at all. Instead of arriving on store shelves days after processing, such fluid can be made available to local consumers less than 48 hours out of the cow. “Same Day Dairy” is the trademark he has registered to signify the importance of freshness to the overall concept.

In an industry where corporate giants stalk the marketing land, the little guy – the individual farmer, perhaps in concert with neighbors – would stand a chance, because the value provided by this milk would be obvious to mothers everywhere, and could not be copied by corporate methods.

Everyone – not just people willing to pay big bucks, travel many miles, or live in fear of legal authorities – could buy this kind of milk from their local supermarket. High-priced organic feeds, inefficient processing, far-flung marketing networks – all could be eliminated as factors that inflate the price of the final product while adding very little real value. The retail price for this milk could be targeted at roughly halfway between store-brand conventional and name-brand organic. Warren calls it “good food for all.”

“The consumer shouldn’t have to pay twice as much for the privilege of drinking good fresh milk,” he asserts.

The processing could be for the people, too. Warren envisions developing a national Same Day Dairy organization that would provide advisory services and processing and marketing templates to anyone with a desire to create relatively modest volumes of great fluid milk products, while realizing the “true value” of grass-fed milk. Farmers could brand their products with their own names and faces, establishing an important connection to the consumer.

“Milk made from grazing is a special product. It’s a product with more value than commodity milk, and there is a wonderful opportunity out there for the producer to be paid for that value. I want to help other pasture farmers gain access to this opportunity, and for consumers to enjoy this milk,” he says.

It has been 16 months since Warren’s newly built Snowville Creamery packaged the first such milk, and of course the dream is not yet fully realized. Warren, his wife, Victoria, and their allies in the project have had to contend with cost overruns and stone walls erected by corporate retail chains with cut-rate store brands processed by major dairy firms. Snowville Creamery has yet to turn anything resembling a profit, and there have been times when the red ink has been deep enough that Warren and Victoria didn’t know if they would make it to the next month.

Yet given half a chance, this milk moves. For instance, Warren reports that same-store January sales of Snowville Creamery milk increased 15% from December despite a retail price tag of $2.99 per half gallon of non-homogenized milk in a time of deepening recession. Warren says his milk is now the No. 1 seller at six Whole Foods Market stores in Ohio, and new opportunities with other chains are starting to open up.

This milk sells because it tastes good. Snowville receives a steady stream of messages from customers who thank the company for renewing their faith in milk. Warren regularly does ìtastingsî in grocery stores and supermarkets, and he is often struck by the emotions his milk brings to the fore.

“I seldom go a day at one of these tastings without at least one older person getting misty-eyed about our milk,” he says.

Warren’s dairy pedigree goes back to those old days.  His father, Bert, was a dairy technologist and organizer of dairy product judging contests who fought many a battle against clear plastic jugs and the role they played in compromising the taste qualities of milk.  Warren gained his own dairy technology degree from Ohio State University in 1974, and jumped immediately onto the fast track of emerging milk processing technology, working as project manager for the first computer-controlled fluid milk plant. Soon he was a leader in processing projects for Safeway’s Dairy Division, then the world’s largest fluid milk processor, building high-tech facilities and working with federal agencies to approve new ways of doing things.

But a couple of decades down this road, Warren started seeing the seamier side of the business. “Cost- cutting became the sole objective. Quality became secondary,” he asserts.

He gave up butting heads with his corporate bosses, and left to form his own consulting business. Eventually his ideas for plant efficiency and milk quality became irrelevant to industry bean counters. As fluid milk consumption declined and the heyday for building new processing plants passed, Warren found that his expertise was no longer in demand.

Meanwhile, he and Victoria had settled on an Appalachian hill farm in southeastern Ohio, where they became friends of dairy graziers (and Graze contributors) Bill Dix and Stacy Hall. Warren was impressed with how these cows were treated “the way they used to be – the way they were meant to be.”  He read the emerging science of CLAs and Omega fatty acid ratios from grazed cows, and started realizing there was an opportunity here to go back to the days when milk provided real value for the consumer dollar.

Sure, organic-certified milk offered a good alternative, but Warren – a pasteurization expert – feels that the ultra-high temperature (UHT) pasteurization done to most of this milk severely compromises both nutritional and taste qualities. He says organic rules are providing no real guarantee that the cows are consuming fresh forages, while excess costs in the organic procurement and distribution systems create sticker shock for too many supermarket shoppers.

“Organic hasn’t been concerned about continuously improving the quality of their product,” Warren asserts.

Many of the specialty farmstead-processed milks that have become available in recent years meet the quality goals, he acknowledges. However, Warren believes that the retail prices attached to these milk products put them beyond the range of the average consumer.

To Warren, the “Same Day” concept is the next logical step beyond organic in offering consumers an alternative to conventional supermarket milk. He says it is time to take all of the good things that grazing and milk from grazed cows have to offer – ranging from improved animal health and milk quality, to environmental and community benefits – and leverage those good things to do “what a billion dollars of ‘Got Milk’ advertising has not done in a decade: increase per-capita fluid milk consumption, particularly among our children.”

The plan Warren forged was bold and broad. He would construct a processing plant just down the hill from the newer of the two Dix/Hall milking facilities, with the milk sent directly into a holding tank and processed, packaged and often even shipped on the very same day it was produced by the cow. He hoped to pay Hall and Dix a steady price averaging above the conventional market for this milk. (This grass farm does supplement with grain, but grazing and harvested forages are more than 60% of the diet for the entire year.)

Warren would put into practice all of the facilities design and equipment efficiencies he had learned through the decades. Milk would be pasteurized at 165 degrees F. for just 17 seconds, barely above legal limits. The current industry standard is 175 degrees for a period of 30 to 60 seconds, while the UHT process employed for most organic fluid heats the milk to 280 degrees for just two seconds. Warren claims each 10-degree increase in pasteurization temperature increases the negative effects on milk by tenfold, meaning heat-related damage is a more than a million times greater in UHT milk.

“You’re just defeating the purpose of milk by doing this, because youíre taking so much of the goodness and clean flavor out of it,” he contends.

And if raw milk sales ever became more widely legal, the system was engineered with the idea that safe, high-quality raw milk could be produced for retail sale.

“I want to be the first raw milk dairy supplying grocery stores in the state of Ohio,” Warren proclaims.

The system would be made available to others in simple, highly efficient and low-cost modular designs  – Warren thought he could get such a facility up and running for half a million dollars or less.

Stamped with the date the cows were milked, printed with a “Not Treated with rbSTî”pledge, and sporting a drawing of Hall and Dix, paper cartons (glass bottles are expensive and allow in too much light) of cream line milk would be sold in Kroger’s Ohio outlets. Warren’s idea was that if the supermarkets gave their customers a chance to taste his milk, it would start selling in volumes large enough to keep per-unit processing and marketing costs at competitive levels.

Basically, this represented a return to the way fluid milk was made and marketed in the early and middle years of the 20th Century, when dairies within a few miles of urban centers served those local populations through small-scale processors and brands. Warren just wanted to modernize things a bit with some new technology to improve efficiencies while ensuring freshness, quality and taste due to minimal handling and “Same Day” marketing of grass-fed milk.

Pledging their farm as collateral for the project, the Taylors purchased one acre just below the Hall/Dix milking parlor, broke ground in late 2006, and packaged their first Snowville Creamery products in December
2007.

As might have been expected, not all has gone according to plan. Despite having some used processing equipment and attempting to cut costs by employing double-wide trailers for office space and a shipping container for dry storage, the cost to get the plant into operation ballooned to $1.3 million, or more than double the original target. Warren says that while a few expenses could have been avoided, the reality of the matter is that a fluid milk processing plant of this scale (20,000 gallons of weekly capacity) costs about that much today.

(Hall and Dix are being paid the conventional market price, although Warren has pledged to boost that when Snowville starts making money. Since the Hall/Dix herd is dried off each winter, Warren buys winter milk from Tom and Cris Hamm, who feed large volumes of haylage and no corn silage. The Hamms were paid $20/cwt. this past winter.)

Gaining access to markets has been a far bigger source of frustration, and it is here that the plan has confronted its biggest problems. Snowville Creamery has the advantage of being located near Athens, a university town that supports local farmers and healthy food. The local Kroger store and its customers are big boosters of Warren’s milks, as are smaller specialty stores in the surrounding area.

But Snowville needs far more customers than Athens can provide. Its primary target – the huge and wealthy capital city of Columbus – has been a major disappointment. Part of the problem lies with the fact that much of this metro area favors price over quality.  Food-conscious consumers do exist, but they shop smaller outlets that struggle to move the volumes that Snowville Creamery needs to keep distribution and marketing costs at reasonable levels.

The bigger problem in Columbus and other big markets lies with the steadfast refusal of the major chains to provide Snowville Creamery with adequate shelf space, or even an opportunity to prove that this milk deserves to be sold. Some outlets have opened their doors, but they shunt Snowville milk to spaces far away from the main dairy case. Others deny Warren the opportunity to run in-store tasting demonstrations, or severely restrict the hours he can conduct such tasting. Warren has repeatedly asked to just be given a chance to prove his product, and almost as often has been turned away.

This is a devastating blow for a business plan that was centered on the idea of selling relatively large volumes of good milk at small profit margins to common people within a relatively short drive of the farm where that milk was produced. Warren says he can sell plenty of milk if people taste it, but he canít even get in the door of these corporate-controlled supermarket chains.

He describes visiting one supermarket with 15 rows of dairy cases, each with five shelves. Of the 75 shelves, 73 were filled with labels processed by Dean Foods. It is this kind of situation that sends Warren to a boil.

“What I’m up against,” he charges,” is an absolute monopoly.”

Warren says that while Whole Foods wants him to expand beyond Ohio, his model simply will not work if it is spread too thinly. “We cannot travel all over to do tastings, and we can’t afford to ship milk all over. I can’t make money doing it this way,” he explains.  “I’ve got to find more stores closer to home. And besides, those markets should be served by their local dairies.”

The latest headache is emanating from a proposal to USDA by major dairy processors that would force currently exempt producer-handler dairies such as Snowville Creamery to send their fluid milk proceeds to federal order pools – a plan that Warren says could eventually put small fluid milk processors out of business.

The bottom line is that at just under 4,000 gallons per week in early March, Snowville Creamery was processing barely two-thirds the volume Warren figures he needs to sell just to break even, and far beneath the nearly 20,000 gallons he could run at full volume.  Over the past few months, the business has consistently been on the brink of financial failure.

But even with so many doors shut to him, progress is being made. Warren says Snowville Creamery volumes have more than doubled since last summer. A smaller chain of stores in Cincinnati recently opened its doors to Snowville, and a much larger supermarket group is allowing him entry to some of its Ohio stores.  If the new business comes through, Warren could surpass his breakeven volume. Maybe – just maybe – there is light at the end of this tunnel.

“All we need is to be allowed to get my milk to consumers.  If we’re allowed to do that, we will succeed,” Warren asserts.

Business success or not, Warren pledges to fight to the very end. This, he says, is more than about one individual’s business. It’s about the farmer’s right to obtain a better price for a better product. The battle, Warren asserts, is about everything from the future of American liberty and justice, to the health and well being of its people.

“This isn’t about what we’re doing now,” he emphasizes. “It’s about where we’re going. It’s about providing better milk and a better future for our children.”

A version of this article appears in the April 2009 edition of Graze, a magazine for pasture-based livestock producers.
For more information, contact Graze at 608-455-3311; graze@grazeonline.com; http://www.grazeonline.com