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Coca-Cola gives New York the nod for new fairlife milk plant

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Officials say it will be Northeast’s largest milk plant, using 5 million pounds of ‘locally sourced’ milk per day

By Sherry Bunting, published in Farmshine, May 12, 2023

WEBSTER, N.Y. – New York got the nod this week as the “preferred location” where The Coca-Cola Company will build its new fairlife ultrafiltered milk processing plant in the Northeast.

New York State Governor Kathy Hochul made the announcement Tuesday (May 9) that the company selected a site in Webster, Monroe County, New York for the $650 million project, expected to break ground this fall and be operational by the fourth quarter of 2025, pending final due diligence and appropriate approvals.

The 745,000 square-foot facility is expected to create up to 250 new jobs and “utilize an estimated 5 million pounds of locally sourced milk per day, making it the largest dairy plant in the Northeast,” the NYS Governor’s announcement stated.

Founded in 2012 through a “strategic partnership” between Select Milk Producers cooperative and Coca-Cola, with early grants from Dairy Management Inc (checkoff), fairlife is now wholly-owned by Coca-Cola since 2020.

Calling the fairlife project a “major opportunity for New York,” Gov. Hochul said it will “drive economic impact, particularly in the Finger Lakes,” and it will “position New York to regain its spot as the 3rd largest producer of milk in the U.S.”

“The Town of Webster is well situated between high-quality dairy cooperatives in the Rochester and Niagara regions, with a surrounding workforce that has the relevant manufacturing and food and beverage experience, making it the ideal location for fairlife’s expansion,” said fairlife CEO Tim Doelman in a statement at the company’s website.

He noted the new facility will allow the company to “significantly increase capacity and deliver fairlife to more households.”

Empire State Development (ESD) is providing up to $21 million in assistance for the fairlife project through the performance-based Excelsior Jobs Tax Credit Program in exchange for the job creation commitments.

Monroe County Industrial Development Authority (IDA) is expected to apply to the ESD for a separate $20 million Capital Grant, to provide adequate power and infrastructure services to the site. Also collaborating on the project are the Town of Webster, Rochester Gas and Electric and Greater Rochester Enterprise, and NYS Ag and Markets.

ESD Commissioner Hope Knight highlighted Upstate New York’s farm and dairy infrastructure, and Assemblyman Brian Manktelow observed the increased demand for local dairy production and transportation would be additional economic benefits on top of the creation of in-facility jobs.

NYS Ag Commissioner Richard Ball said the decision “highlights the excellence of our dairy community whose farmers will be supplying the milk.”

New York Farm Bureau president David Fisher, a dairy farmer, said the news “is needed for the long-term success of our dairy farms.” He noted the state has 3500 dairy farms, milking 620,000 cows and producing over 15 billion pounds of milk annually with “abundant resources, good land, access to water, and innovative farmers.”

“We were in tough competition with other states,” said New York Gov. Hochul, noting her own heritage coming from a family of dairy farmers in Ireland.

One of the states competing for selection was Pennsylvania.

“While the outcome of this selection is not what we hoped, the Shapiro Administration remains strongly committed to supporting Pennsylvania’s dairy industry and attracting processors to grow here,” said Pennsylvania Ag Secretary Russell Redding in an email response to Farmshine questions Wednesday (May 10).

Redding noted that Gov. Shapiro and teams across agencies were engaged in this project “allowing us to meet fairlife’s criteria for tax climate, resources, utilities, permitting, and incentives.” He reported that Pennsylvania currently makes $15 million in tax credits available annually for dairy manufacturing companies to expand processing in the Commonwealth.

“Just as we were nationally competitive for this project, we plan to be in the running for other selections of this type,” Redding added, thanking all industry and government entities who work on these coordinated efforts to welcome businesses and support agriculture.

When asked specifically about the whether or not Pennsylvania’s state-mandated Class I fluid milk over-order premium (OOP) played any role in the outcome, Redding stated: “The OOP was not a factor.”

The fairlife line includes Class I fluid milk products as well as dairy beverages that fall outside of the Class I criteria into manufacturing milk classes. The company offers a range of products including fairlife ultrafiltered milk, Core Power protein shakes, and fairlife Nutrition Plan  meal replacement shakes.

The fairlife products are made through an ultrafiltration process that removes lactose and condenses other solids to raise the protein content while lowering the natural sugar (lactose) content. For flavored beverages, this means more sugar and other sweeteners can be added because the natural sugar content is lower.

According to the New York Governor’s press announcement, this ultrafiltration process “gives milk a longer shelf life.” 

All fairlife products carry the UHT mark for ultra high temperature pasteurization, which also increases shelf-life. Some of the flavored fairlife products, such as YUP and CorePower are already offered as shelf-stable beverages in supermarkets and online, so it is unclear whether aseptic packaging will extend to all fairlife milk and beverage products in the future.

Other leaders from the collaborating New York State agencies and organizations highlighted the project expands their goal of positioning New York as a hub for attracting technology and innovation in food and beverage manufacturing.

In fact, the Governor’s press announcement stated that, “The research for fairlife’s branded milk process (ultrafiltration) originated at Cornell University over a decade ago.”

However, the story told by fairlife co-founders Mike and Sue McCloskey, as recently as the 2020 Pennsylvania Dairy Summit, and in earlier meetings, presentations, and published interviews, is that they discovered the reverse osmosis and membrane filtration process when dealing with a well issue on their former dairy in New Mexico.

After seeing what this filtration did for separating minerals in the water to make it more palatable to the cows, they started tinkering with filtration for milk, the story goes.

Select Milk Producers (SMP), also founded by the McCloskeys, then began using reverse osmosis and ultrafiltration as early as 1995 to reduce the water when moving loads of milk to cheese plants. At the same time, they began their high protein, low sugar milk proposition by partnering first with H-E-B supermarkets across the Southwest under the Mootopia brand in 1996 – a precursor to what is fairlife today.

Sue McCloskey explained to Pennsylvania producers at the 2020 Summit that they saw other protein drinks in the market they could compete with by concentrating the protein in the milk. 

She said this means that the raw milk going into the ultrafiltration process must be very low in somatic cell counts because the process separates some solids, like lactose, while concentrating other solids.

Products in the fairlife line are currently made at the original SMP ultrafiltration plants in Dexter, New Mexico and Coopersville, Michigan. Newer plants opened in Goodyear, Arizona in 2021 and Petersborough, Ontatio, Canada in late 2020. The latter sources all of its milk from Canadian farms for the Canadian consumer market.

Ultrafiltration is employed by other dairy companies, such as Cayuga Milk Ingredients (CMI) using proprietary European technology to produce unique liquid and dry milk and dairy ingredients for sale in the U.S. and internationally. 

Also located in the Finger Lakes Region of New York in the town of Auburn, CMI announced its own expansion last year to break ground this spring on a second facility that will have aseptic packaging capabilities for manufacturing a range of shelf-stable fluid milk, filtered milk, and dairy-based beverage products.

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NY launches state bills to put whole milk option back in schools, joins PA in tackling federal prohibition

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‘Let’s get this done’ — All urged to contact New York Governor and state legislators to ‘put whole milk back in schools’

By Sherry Bunting, Farmshine, May 6, 2022

SHARON SPRINGS, N.Y. — It was a rainy, dreary Monday (May 2), but dairy nutrition advocacy was bright and sunny in the feed room at Ridgedale Farm. The Conard family hosted a press conference supporting New York State legislation to bring whole and 2% milk back to schools.

Patterned after the Pennsylvania bill that has already passed the state House and is expected to be voted on in the Senate this month, the New York bill would support schools in their desire to offer more milk options, including whole and 2% milk produced on New York farms. The bill includes provisions for the Commissioner of Education to notify school superintendents about the flexibility as well as for the State Attorney General to file civil suits on behalf of schools if the federal government withholds other-than-milk funding.

While some media outlets continue to point to the superiority of federal regulations, there is a groundswell of state lawmakers saying “enough is enough” when it comes to the children and the farmers being victims of regs based on false narratives that push young people away from the very nutrition they need, and the very nutrients the Dietary Guidelines committee admitted their government-sanctioned dietary patterns are not providing.

The movement to have state legislatures get involved is not – as some would say – ‘political theater.’ No, this is the reality of where ‘we the people’ get a voice in the very sustenance of farms, food, and future generations. 

In Pennsylvania, it began with U.S. Congressman G.T. Thompson (Dist. 15) with H.R. 1861 as well as State Rep. John Lawrence (Dist. 13) with HB 2397. In New York State, it began with Congressman Antonio Delgado (Dist. 19) a prime cosponsor of H.R. 1861 and Assemblyman Chris Tague (Dist. 102) introducing A9990 with 25 cosponsors. Within a week of Tague’s bill, State Senator George Borrello (Dist. 57) sponsored S8999 with cosponsor Peter Oberacker (Dist. 51).

The New York legislation has been referred to each chamber’s Education Committee. Tague and Borrello are Ranking Members of each chamber’s Agriculture Committee.

Tague and Borrello were joined Monday by other supporting lawmakers, government officials, nutrition and education experts, dairy farmers, FFA members, school superintendents, town mayors, school principals, discussing why it is so important and urging a public groundswell to contact all NYS lawmakers and the Governor’s office in support.

“We are going to get whole milk back in schools. We’re dispelling the myths propagated by many over the years,” said Tague.

“I ask every one of you to spread the word — to your friends, to your family, to your neighbors, even your enemies. Ask them to join us. Call, email and text every single member of the New York State legislature. Tell them: ‘Put whole milk back in our schools!” he exclaimed.

“Then call Governor Hochul and tell Kathy we want whole milk back in our schools,” Tague explained that the bill must go through committee, then to the floor, then get voted on, and then it would go to the Governor.

“Government and misinformed people need to stop biting the hand that feeds them,” he added. “We cannot live without good nutritious foods. No farms, no food. How does a young person today make a go at it? Farmers are not only ‘price takers,’ they take everything else that comes at them. There’s never anybody that stands up for them. That ends today. We’re here to stand up for you.”

Senator Borrello reflected on the problem, which he said is “based on false narratives. A long time ago, they convinced us that taking skimmed milk and pouring it on high sugar, no fat, breakfast cereal was somehow a good breakfast choice for kids, and they’ve taken whole milk out of our schools. The result has been more waste, it ends up in the garbage. And what have we told our kids to do? It’s okay to have energy drinks and other things that just aren’t good for your health. We’ve also seen a dramatic rise in obesity rates.”

The data for these dietary patterns just is not there, said Borrello.

“Now we know that having fat in the diet is not only good for kids, it helps with their growth, and the kids that do drink whole milk actually end up with less obesity. The science had changed, but unfortunately, our government has not,” he said. “We should give the children the choice. But most importantly, we should recognize this is a good choice. That’s why this is an important bill. Most people don’t understand, that even whole milk is 97% fat free.”

Borrello observed these current dietary rules have further impact, that they are “the beginning of the push to take us away from products like milk, that want to push us toward things like almond beverage, which is not milk, and other things. That’s the real agenda here. Let’s understand that whole milk is nutritious. It feeds your brain. It feeds your body. It is probably one of the best, most nutritious drinks that you can have. But instead of serving that, they want to push these artificially created products onto our children and tell them that’s okay,” he said.

“We need to give them this (whole milk) choice because it is the right thing to do and because it is also good for agriculture, the most important and largest industry in New York State. People forget that. We are here today from all points of the state standing united to say this is the right time to bring back whole milk into our schools,” Borrello stressed.

Nutrition expert agreed

Toby Amidor, registered dietitian, nutrition expert, food safety consultant, instructor, speaker and author in New York City, drove out from Brooklyn to give her thoughts on the bill and whole milk misconceptions.

She confirmed the 2020-25 Dietary Guidelines for Americans “pinpoint three under-consumed nutrients that are found in milk, that people of all ages, including school age children, adolescent children, even toddlers, they don’t get enough of,” said Amidor.

“Those nutrients are calcium, vitamin D and potassium. Milk is a vehicle that you can get all of this nourishment into children in order to grow and thrive like we want them to. It’s an important thing to give them a choice. Choose (the milk) you want,” she explained.

Amidor was joined by various school system superintendents noting the key concern of student access to nutrition.

“School is where many children get their nourishment. So that’s where you want to give them these choices,” said Amidor. “It’s okay to have the fat in milk… it’s a nourishing drink, the fat increases the palatability of that nourishment – more power to it!”

School officials were blunt

“We have a large food service system and are highly focused on farm-to-school initiatives. Milk is one of those,” said Anita Murphy, Capitol Region Board of Cooperative Educational Services (BOCES) superintendent, representing 24 districts and 80,000 schoolchildren across four NYS counties.

“On a personal level, I don’t drink skim milk. If that’s the only thing there, I pass,” said Murphy. “I think that’s what happens with our children. If you walk into our cafeterias, what you will see is kids passing on milk. A lot of these kids eat two meals a day at school, and that’s it. That’s what they get, so if we don’t give them those things that they need and that they want that are good for them, we are making a mistake. We are willing to lend any support you need to get this done.”

Representing 22 school districts and more than 30,000 students, Dr. Gladys Kruse, Questar III BOCES district superintendent concurred. She thanked the lawmakers for their efforts.

“We need more children to drink milk to get the nutrition they need. We know some of our students get two of their meals a day at our schools. When we hear students throwing away their lunch or their milk, or we hear of farmers having to dump the milk they cannot sell, it is time to reevaluate and reconsider the options and the policies. This legislation is a welcome step in expanding the availability and consumption of milk locally and across the state,” said Dr. Kruse.

Thanking Tague for his leadership, Kruse stated the bill would “provide the flexibility to have more milk options available to our students. This includes whole milk and 2% milk produced here and across the state. From our first beverage as a child to a staple in our daily school lunches, milk is fuel of our young people’s growth and development.”

From the Berne-Knox-Westerlo Central School District, superintendent Dr. Tim Mundell talked about partnership and collaboration, calling the day’s event a great example of that.

“The passage of this bill would help us bring local whole milk to our students, viable nutrition and real value,” said Mundell noting the need for flexibility. “Students get two meals a day from us. Many of our students live in very isolated and rural areas and access to nutritional foods, like whole milk… for their health and well-being, it’s scarce, and it’s scary.”

“When we put kids at the center of all of our decisions and all of our advocacy, great things happen, and the decisions are easy. This (should be) a very easy decision,” he said.

Mundell also observed the losses in enrollments and economic opportunity throughout rural regions of the state. He said FFA leadership learning is so important, and when students are able to see agriculture economically thriving, it gets their minds thinking about life and options after high school.

“Passage of this bill will enhance the capacity of all rural areas in New York State to re-engage in economic development. We are on board for collaboration in making this economic activity happen,” he said.

From the dairy farmer perspective, Ray Dykeman of Dykeman and Sons, Fultonville admitted that farmers prefer being in the field or with the cows and doing the work producing nutritious food, but, he stressed that this advocacy is vital for the future.

“This bill is extremely important for the kids in school (and) for the dairy farmers in the area,” said Dykeman with appreciation to the Conard family and their “beautiful cows” as hosts.

He challenged people to compare whole milk’s label to most other beverage options, “if you can even pronounce half of the ingredients that were made in a laboratory. We were using milk products as many as 10,000 years ago. Why not trust the cow, probably one of the most perfect animals in the world?”

Dykeman also thanked the lawmakers for taking on this issue to bring whole milk back to schools at a time when dairy farms are challenged. “This legislation will support our hard working dairy farm family businesses and get more milk into New York schools. This is very encouraging. Agriculture is our number one industry, and milk is our number one commodity.”

Among the panel of speakers, the New York Farm Bureau and the Northeast Dairy Producers Association (NEDPA), based in Geneseo, were represented. Behind the scenes and joined by 30 other farmers in the Ridgedale feed room were grassroots whole milk promoters Duane Spaulding and Ann Diefendorf. They brought the 97 Milk messages and signage used prominently throughout the event.

In fact, Tague thanked the grassroots efforts of farmers, of 97 Milk, and even mentioned Milk Baleboard originator Nelson Troutman in his opening remarks.

For Farm Bureau, Todd Heyn noted their “long advocacy for the return of whole milk to schools, giving districts the ability to provide this healthy and nutritious dairy product to school kids.”

Heyn reported the bill would “provide additional markets for whole milk, a Class I dairy product that earns dairy farmers a higher price.” 

Heyn said this would support New York dairy farmers and raise awareness to find a workable solution at the national level, explaining that Farm Bureau is formally asking USDA to “follow the science around nutrition and revise the school nutrition guidelines for dairy products in the school lunch programs.”

The energy was really high by the time NEDPA executive director Tonya Van Slyke got to the podium. She talked about dairy farmers are part of a global economy but take pride in what they do locally… especially in schools.

While Tague and Borrello held the sign taken from images at 97milk.com touting all the benefits of whole milk, Van Slyke — a mother and dairy farmer — recalled walking intop the school cafeteria and being asked by the director: “’Dairy farmer, how did you let this happen? Why are they taking the healthy fat away from my babies?’ Nutrition helps them have good brain power.”

As she turned to Tague and thanked him and his colleagues, Van Slyke said: “Let’s get this done,” and the room erupted in echoes and applause.

Tague, a former dairy farmer himself, noted he had actually milked a famous cow in the very barn where the event was held Monday. He worked years ago for Wayne Conard and his father Willis. He made a direct appeal to the farmers, encouraging farmers everywhere to get into the game.

“We have a lot of work to do. This press conference today is just the beginning… the squeaky wheel gets the grease. Sometimes as farmers, we are too proud and too busy to let our voices be heard,” he said. “But folks, it ends today. We’ve got to get up and scream it. We’ve got to make them hear us that enough is enough. 

“Let’s leave here today with one thing in mind: Whole Milk back in our schools!”

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NY dairy farmer fights eminent domain as county moves to take best fields for cheese plant relocation, expansion

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“If the state — under the auspices of the Industrial Development Agency — can decide how these properties can be used, I think as farmers, we need to realize we can lose our land through eminent domain takings,” says Charlie Bares. He is fighting to save fertile farmland that is key to feeding cows and managing manure nutrients at Mallards Dairy. Photo provided

By Sherry Bunting, Farmshine, May 21, 2021

ANGELICA, N.Y. — It feels like a no-win situation for Charlie Bares ever since Great Lakes Cheese set its sights on fertile Genesee River Valley land that is integral to growing forage and hauling manure for the 3000-cow Mallards Dairy.

The Allegany County (New York) Industrial Development Agency (ACIDA) has moved forward with eminent domain proceedings to condemn 321 acres of Bares’ land, identified in county documents as Marshland LLC, so the county can use the land to build a 480,000 square foot cheese manufacturing facility for Great Lakes Cheese.

The county has a deal with the Hiram, Ohio-based cheese company to give $220 million in tax savings and incentives to build the $500 million plant on Bares’ land. 

The new plant would double the company’s current production at its Empire Cheese plant in nearby Cuba, New York.

According to documents in the public record, Great Lakes Cheese intends to close the Cuba plant after production would begin at the plant it seeks to build on Bares’ land. 

ACIDA and the cheese company began working on this project in October 2019 and have set a timetable for groundbreaking later this year and operations to begin in January 2025.

The public record also indicates that 200 jobs at the Cuba plant, and additional jobs with the expansion, as well as milk markets, are “in jeopardy” if Great Lakes can’t build on this particular land.

Cows have been milked in this operation since 1860, according to Bares, who joined Joe Strzelec as a partner in the 1990s. As the ownership and business changed over the years — with Bares becoming the principle partner and expanding the operation — the Genesee River Valley land the county wants to take has become a key to the dairy business 20 miles away.

“IDA has begun the eminent domain process, and we are fighting it,” said Bares in a Farmshine phone interview. “We are arguing that this is not an overwhelming public benefit, but that it is an overwhelming private benefit.”

A few weeks ago, attorneys representing Bares and Marshacres LLC filed a petition challenging the county’s actions. The legal case is currently in the New York State Appellate Court.

Bares was approached a year ago about selling more than half of the 400 acres for the cheese plant.

“We didn’t want to sell, and we gave a price that reflected that. This land is the biggest and best field for us, and it is an integral part of our business. Selling it would weaken our dairy business,” he explained.

In addition, Bares is concerned about the environmental impact of losing land like this to concrete. While his operations are just outside of the Chesapeake Bay watershed, he is a supporter of the clean water blueprint for the Bay, and has invested over the years in technologies and best management practices profiled in 2015 in a Chesapeake Bay Foundation blog. Tree plantings and riparian buffers for water quality in the Genesee River Basin were also highlighted, among other things, in 2018. 

The ‘market value’ of this land is irrelevant under these conditions. What is relevant is the value of the land to Mallards Dairy and its owners.

In fact, in a letter reported by the Olean Times-Herald, Bares’ attorney John Cappellini observes:  “You are taking property from one company and giving it to another? You have decided that one commercial use, the farm, is somehow less important than a cheese factory.”

Explaining in the letter that the threats from Great Lakes Cheese to close all area facilities and leave the area have motivated officials against his client, Cappellini stated further that, “They are extorting from the taxpayers of Allegany County, and the County Legislature is complicit. They threaten to leave ‘unless you give us what we want.’”

The ACIDA notes that 80 sites were evaluated as Great Lakes Cheese had specific criteria to build a plant that would double its production after the Cuba plant is closed.

Of those 80 sites, the county says this is the only property that meets the company’s criteria.

Reports indicate the land meets three criteria: flat land, proximity to the river and being just off a major highway, I-86. The greenfield approach is the company and county’s least expensive build option with access to cheaper highway transportation.

Bares believes the company has not negotiated in good faith.

Answering questions about milk supply, Bares notes there has been no ‘provincial talk’ guaranteeing this project must use any percentage of its milk from New York State farms. No such stipulations are noted in the public record, except the ACIDA record includes a mention and link to Dairy Farmers of America (DFA).

Over the years, this region of New York has received milk from Michigan, Ohio and northern Indiana as it sits in a part of the state that falls just outside of Federal Milk Marketing Order maps — sitting as a bridge between the Northeast FMMO 1 and the Mideast FMMO 33.

The public record does show conditions that the over 200 employees at the existing Cuba plant would be offered jobs at the new plant.

Meanwhile, Mallards Dairy employs 35 to 40 people and feeds and milks 2500 cows with a total herd of 2900 mature animals. The land the county wants to take is key to that business.

This Allegany County Industrial Development Agency drawing shows the Great Lakes Cheese project, including 480,000 square foot cheese plant, 50,000 square foot wastewater treatment plant, access roads and infrastructure planned for land now belonging to a New York dairy farmer. According to county meeting transcripts, “Building out the Crossroads area that is planned for I-86, Route 19 and CR-20 is the number one immediate priority.” Screenshot under projects at acida.org

At the March ACIDA meeting, officials noted publicly that they hope to break ground in the third quarter of 2021 and be fully operational by Jan. 1, 2025. If the ACIDA is successful in the eminent domain process it has begun, the county would own Bares’ land and lease it to Great Lakes Cheese.

At one point, early on, Bares notes that not only did the selling price he offered reflect the importance of the land to the dairy business, but also the idea of securing a milk market was mentioned to the company. He says Great Lakes Cheese declined, noting simply that they purchase their milk from cooperatives. 

A prime supplier of Great Lakes Cheese is DFA, as the public record reflects. Bares markets his milk through a small independent cooperative.

Having been unable to reach an agreement that would reflect the impact to his dairy business, Bares hired a lawyer.

“This area is very hilly with narrow valleys. There’s not a lot of farmland. This Genesee River Valley land is very good, very fertile, non-erosive land,” said Bares of the land around the main dairy operation outside of Cuba, and the land the county wants to take 20 miles away. “We want to hang on to this land because it’s hard to replace. Every farmer has land that is their best land, that they aren’t going to let go unless they are done farming.”

He says going through this process over the past year has only strengthened his resolve to keep the land and fight the eminent domain process. He notes that his wife Elizabeth has helped him tremendously.

New York’s history of interpretation for ‘public use’ in eminent domain cases is a broader notion than for most states. Bares knows it will be an uphill battle to fight the county’s taking, but he is hoping that his battle will ultimately help others in the future facing a taking of their land.

“Our dairy jobs — and the cows — depend on this collection of land resources we have grown,” says Bares. “This whole thing is wrong for the profitability of our dairy to chip away at the best land. It’s wrong for the environment because this is a beautiful riparian river valley and land like this is disappearing fast. It’s wrong from the social aspect the way the government is using eminent domain to help one private enterprise while harming another.”

He says his attorney is confident and always believes he can win every case until he loses, so Bares is trying to stay positive.

Their petition was filed recently in New York State Appellate Court. The Allegany County IDA has reportedly petitioned the court to expedite proceedings. Bares had expected both sides to be writing briefs through the summer with oral arguments in October, but that could be expedited to August or September.

This land near Angelica, New York is farmed by Charlie Bares to primarily grow alfalfa and receive manure as a key part of nutrient management and forage production for the 3000-cow Mallards Dairy owned by Bares and his partner. The county wants to condemn it through eminent domain for a cheese plant.

“I think everyone should take a dim view of this. Every farmer — everyone — has a property that is head and heels above their other land, their best fields,” Bares suggests. “If the state — under the auspices of the Industrial Development Agency — can decide how these properties can be used, I think as farmers, we need to realize we can lose our land through eminent domain takings. My case is just an example.”

This case is an example because the ‘taking’ is not for a public use. It is for a private business use that the county is using economics to declare as a public use.

Bares has had some support from the community. Some rallies with some turnout, especially in April. There has been support online, and he has received a few phone calls. 

But largely, outside of the southern tier New York and northern tier Pennsylvania region, the story is not known.

A petition by Marshacres and citizens of Allegany County has been started, which has nearly 5500 signatures to-date at https://www.change.org/p/acida-stop-eminent-domain-seizure-of-working-farmland

“No one’s lining up (manure spreaders) at the county courthouse and threatening to open the valves, if that’s what you mean,” he answered.

After a long and quiet pause, he communicates just how difficult this situation has become for everyone.

“The farmers around me, my peers, they want this cheese plant and a stronger market. I believe that’s a big carrot, so it’s not easy. It seems there is little chance that I can come out ahead, either way. Either we chop off part of our business or the cheese plant will not expand here so everyone will view us as economic martyrs,” he explains.

“I feel like I cannot win.”

Even though each of two outcomes at the moment represent a different kind of difficult for Bares, he believes fighting the county’s eminent domain proceedings could help someone else — as untouched land like this that is important to agriculture and the environment is disappearing. 

“Once it’s paved over in concrete, ” he says, “it’s not coming back.”

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Seismic shifts in milk supply chain ahead: New Walmart plant triggers Dean’s cut of over 100 dairy farms in 8 states

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By Sherry Bunting, from Farmshine, March 9, 2018

LEBANON, Pa. — He saw the mailman drive up and linger in the driveway, wondering if they were expecting a package. Moments later, his wife was standing there, holding a letter she had signed for.

The certified letter informed this Lancaster County dairy farm family that after 13 years of sending their milk to the Swiss Premium plant in Lebanon – along with decades of the farm’s milk in generations before them — the agreement with Dean Dairy Direct would end May 31, 2018.

The same story played out Friday among neighboring farms on the same hauling route to the same plant. And it was the same scene in driveways for approximately 120 dairy farms in eight states, including 42 in eastern and western Pennsylvania — around half of the Dean Dairy Direct shippers to three plants in the state.

Reace Smith, director of corporate communications for the Dallas, Texas-based Dean Foods, confirmed in a phone call Monday that against the backdrop of expanding raw milk production, and companies “asserting and expanding their presence in a market where consumers are drinking less milk (namely the Fort Wayne, Indiana Walmart plant where bottling begins this month) over 100 dairy farms in eight states received 90-day termination notices” from Dean Dairy Direct on Friday and Saturday, March 2 and 3 stating that their agreements will end May 31, 2018.

Smith confirmed that the over 100 affected dairy farms are in the states of Indiana, Ohio, Pennsylvania, New York, Kentucky, Tennessee, North Carolina and South Carolina.

“This affects all size herds and is not a large or small farm thing,” said Smith. While she was unable to supply specific information about the farms that were terminated, she said the widespread volume adjustments at multiple plants across four Federal Orders was necessary due to the new Class I plant (Walmart) coming online this month and the loss of a contract through a competitive bidding process (Food Lion).

Both market losses for Dean indicating structural change to the dairy industry as more retailers move into milk bottling in more centralized distribution models.

Sources in the various states confirm the affected farms range in size from less than 100 cows to over 1000 cows.

“This was an incredibly difficult decision. We tried very hard to avoid it and regret this decision had to be made,” said Smith. She indicated that Dean Dairy Direct field representatives are serving as resources to these producers and can provide a list of contacts for potential milk buyers. They are also offering counseling.

DeanFoodsMap.jpgWhile the company will not provide a list of affected plants or a state by state break down in the number of farms or volume of milk affected, they have indicated that the state that may be hardest hit on a volume basis is Indiana.

In fact, the volume of displaced milk in Indiana, alone, has been estimated at over 20 million pounds per month, representing the under 100 to over 1000 cow size range but most of them milking 300 to 1000.

The affected Indiana farms shipped milk to the Dean plant in Louisville, Kentucky, which also terminated 22 Kentucky dairy producers, ranging from 50 cows to 250, according to Maury Cox, executive director of the Kentucky Dairy Development Council.

In Tennessee, Julie Walker of Agri-Voice near Knoxville has confirmed nine (now 10 confirmed) affected producers ranging 60 cows to 300, and numbers in the Carolinas are unknown at this time.

From the standpoint of the farms affected, Pennsylvania is hardest hit, and while the number of New York farms is unknown at this time, some may have shipped to Dean plants in Pennsylvania.

According to Jayne Sebright, executive director of the Center for Dairy Excellence, 42 Pennsylvania dairy farms shipping to three Dean plants in eastern and western Pennsylvania received notices Friday – representing half of the Dean Dairy Direct shippers in the state. This includes 26 producers in eastern Pennsylvania, including Lebanon and Lancaster Counties, as well as 16 in western Pennsylvania, where the Dean plants in Sharpsville and Erie also ended agreements with Ohio farms. The number of Ohio farms affected is unknown at this time.

“The (Agriculture) Department and the Center have been reaching out to other markets to see what capacity is available, but at this point we do not know of any with available capacity,” said Sebright. “We are working to support the affected farms as best we can. We are very concerned both about the future of the farms and the well-being of the farm families.”

Sebright noted that the Center is making additional resources available and recommending use of their Dairy Decision Consultants Program to evaluate options — both within and outside of the dairy industry. “This is a difficult situation to be in and we are concerned.”

Dean-Cows.jpgIn fact, the farm this reporter visited in Lancaster County Tuesday was already working to call every available market and neighbors who also lost their contracts were looking at everything they could think of. Four or five trucks go through the county picking up milk every day so they wonder if each one can find a market or if they are better off pulling their milk together to find a single-haul market.

The producer was thankful, at least, for being part of a dairy producer discussion group and thankful for folks like Dr. Charlie Gardner with the Center who leads the group.

Not only were the Pennsylvania dairy farms shocked to receive the letters, veterinarians, nutritionists, feed company and equipment maintenance folks are facing this loss with their farm customers as the news spread this week throughout farm communities and the greater dairy community.

In Indiana, where estimates are that over 20 million pounds of milk per month has been displaced, producers had already been on edge as the Walmart plant took shape in their state and they contemplated its milk sourcing.

“We are working with producers and contacting cooperatives and potential markets to try to work together to get through this thing,” said Doug Leman, executive director of the Indiana Dairy Producers. He has been in contact with affected producers, the Indiana Department of Agriculture, and the plants and cooperatives that provide markets for milk in the region.

“I’ve had calls not just from the affected producers, but from many other Indiana dairy producers sharing their concern and asking if there is anything they can do,” said Leman. “I’m encouraged by that, and I am encouraging our producers to keep their chins up through this difficult time in their lives, families and businesses in the hopes that we can work through this together.”

Leman said he does not want to blame Walmart because, wherever the first Walmart plant would have been located, this was coming. Indeed, Walmart has entered a trend among retailers to move toward bottling their own private label store brands (Great Value and Sam’s Club Member’s Mark) rather than contracting with Dean Foods.

“Walmart was coming to Ohio, Michigan or Indiana, and I still believe it is better to have the plant in Indiana because it offers opportunities,” said Leman.

While fluid milk consumption is on the decline for 15 years — although stabilizing with more consumption of whole milk last year — retailers notice that nearly every shopping basket going through their stores includes milk. They seek their own store brand loyalty as loyalty to their store and some of the retail price wars happening in states without loss-leader protection are evidence of this. As is the ability to pull premiums away from states that have loss-leader protection or a minimum retail price as in Pennsylvania, to “fund” price wars in other surrounding states without any loss-leader protection.

The dichotomy points to a need, perhaps, for a federal loss-leader threshold versus random state programs that can fuel the picking of winners and losers in today’s times of seismic structural change to the dairy industry from retail all the way through the supply-chain.

In short, the region would likely have been affected by Walmart’s decision to vertically integrate its Great Value and Member’s Mark milk brand for its stores in the region — no matter which state the plant had been located.

In fact, sources indicate potential sites to the south are being eyed for a second Walmart plant in the future, revealing a corridor strategy to this vertical integration of single-source, full-traceability, each-truck-one-farm model.

The Dean Dairy Direct letters of termination to dairy producers in the region were dated February 26, 2018, which was the same day as Dean’s 2017 earnings call where the company projected its strategy in brand and private label supply and to “right size” its milk volume and consolidate its supply chain to achieve a “flatter, leaner and more agile” company into 2019.

According to Smith, there are no official announcements of any plant closures at this time and none of the plants involved have released all of their shippers. Still, there remains concern that some of the plants that have released a larger portion of their farms are vulnerable.

“We still have a commitment to local milk,” said Smith about the volume adjustments. “There are many factors that impacted this decision. We are seeing surplus raw milk when the public is consuming less fluid milk, and we see companies asserting and expanding their presence in a market where consumers are drinking three gallons less annually, per capita, since 2010 while the U.S. dairy industry is producing 350 million gallons more milk annually than the year before.”

In addition to the overall imbalance Smith said that, “The introduction of new plants when there is an industrywide surplus forced us into the position of further adjusting our milk supply according to demand.”

As vertical integration of milk at the retail level leads to consolidation by the nation’s largest milk bottler – Dean Foods – the company has diversified into soft dairy product brands that are just starting out of the gate and were discussed in the Dean earnings call as well.

Specifically, the letter received by Indiana and Kentucky dairy producers shipping to the Louisville plant stated “two indisputable dynamics led to this difficult decision. First and foremost, a retailer’s new Class I fluid processing plant is coming online in the region, significantly decreasing our production as milk volume is moved away from our facility to this new plant.

“The second reason is bigger than all of us. The steady increase of raw milk production combined with the decrease of Class I fluid dairy consumption…” the letter stated.

Letters received by producers in the southern market as well as eastern Pennsylvania did not specifically reference the new Class I fluid processing plant built by a retailer (Walmart) as had the letter to Kentucky and Indiana producers serving the Louisville plant and western Pennsylvania and Ohio producers serving the Sharpsville plant.

Those letters received by farms further to the east and the south indicated the plants had “lost a portion of customer fluid milk volume to a competitor through a customer-bid process.” Sources indicate this may include both the Food Lion private label store brand and the Walmart Great Value private label in these areas as well.

The letters received by producers said further that Dean was “unable to lock-in enough new customer volume to offset this loss.” This is a function of the overall decline in fluid milk consumption and the new milk via large multi-owner, multi-site farms in surplus regions of the Mideast and Midwest.

One thing is also clear in speaking with producers, veterinarians, organizations and others in the industry, the farms that are facing this difficulty are largely well-managed and producing high quality milk. Many of them are young families representing the next generation. Many are progressive, with updated facilities and technologies as well as utilizing the resources available to them for continued improvement in all that they do to supply their communities with milk.

In these states affected, whole transportation routes were terminated, presenting both challenges and opportunities for a collective effort in dealing with these market losses.

Walmart will not reveal the farms they have secured to supply the plant, but it is widely known that some of the milk will come from the north, some from within Indiana, and that a processor in Wisconsin is handling contracts and in a position to balance the Walmart plant’s fluid needs that may or may not have involvement by cooperatives.

As in Indiana and other states, Cox said of Kentucky: “We, are contacting other potential markets for our producers and would like to meet with Dean Foods to see what more we can do for these producers and to have a better understanding about the future of the Louisville plant” (where both the affected Kentucky and Indiana producers shipped their milk.)

Some state dairy organizations, state departments of agriculture and other industry leaders indicate they want to let the dust settle and allow options to emerge as they adopt a patient mindset to look at potential options for their respective state’s producers.

In the meantime, all are reaching out to producers and urging producers to reach out to them, and to each other. In fact, right now, more than ever, the dairy community needs to be reaching out and talking about its future to higher levels of relationships beyond what has occurred in the past.

“We want to survive,” said the dairyman this reporter visited 15 minutes from my home in Lancaster County, Pennsylvania, just four days after receiving the letter.

Like others this reporter has spoken to, they have done everything the industry suggests to make their farm competitive. While a small farm whose milk shipped for generations to the Lebanon Swiss plant serving local stores and consumers, this young farm family had invested in the latest technology, produces milk with very high components and very low somatic cell counts.

But here they are, facing what 120 of all sizes face throughout eight states as vertical integration from Walmart and other retailers sends a ripple effect and seismic shifts throughout the supply chain.

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