Got (too much) Milk? As Wisconsin Dairy Gets Bigger, Progress Comes With a Price

When this week’s news hit that Grassland Dairy in north-central Wisconsin was ending milk contracts with between 65 to 75 Wisconsin dairy farmers, my first thought was: this is the beginning of the squeeze on medium-sized, Wisconsin-owned processing plants. Sure enough, news soon leaked out that nearby Nasonville Dairy in Marshfield, had also sent letters to about 20 area farmers on March 17, informing them their dairies would be dropped from pick-up because that cheese factory had recently lost a cheese contract and no longer needed their milk.

Keep in mind, these are not small factories. They are good-sized facilities employing hundreds of people. Grassland processes more than 3 million pounds of butter, cream cheese and milk powder a year, while Nasonville makes more 2 million pounds of Cheddar, Monterey Jack, Asiago, Brick, Muenster, Hispanic styles, Parmesan, Romano and Provolone at two different state-of-the-art facilities.

While Grassland’s predicament can be blamed on Canada (our neighbor to the north just implemented a new milk pricing structure, making it more cost efficient for Canadian processors to purchase milk from their own dairy farmers), the action taken by Nasonville, and I fear more Wisconsin-owned factories in the immediate future, is troubling.

To put it simply, big Wisconsin cheese factories that are not locally owned (more on this shortly) can and do purchase out-of-state milk cheaper by the semi-tanker than they can from the 10 small local dairy farms down the road. With a glut of milk in the upper Midwest, it’s a buyer’s market, and many big factories take advantage of cost differences by bringing in cheap milk from afar.

It wasn’t always like this. In the past 15 years, dozens of family-owned cheese factories that had decades of relationships with multi-generational local dairy farms and who forged long-term contracts with farmers who were essentially their neighbors, have either merged or been bought out by big companies. And most of those companies aren’t American. Today, of 127 cheese plants in Wisconsin, more than 15 of the biggest are owned by foreign companies.

For example: 

  • Saputo Inc., a Montreal-based Canadian dairy company that is the tenth largest dairy processor in the world, owns and runs some of the state’s biggest cheese plants, whey processing plants and dairy processing facilities in Green Bay, Fond du Lac, Waupun, Lena, Black Creek, Reedsburg and Almena. 
  • Agropur, a large agricultural cooperative headquartered in Quebec, owns four ingredient-processing and cheese plants in Luxemburg, Weyauwega, LaCrosse and Appleton. 
  • Arla Foods, an international cooperative based in Denmark, and the largest producer of dairy products in Scandinavia, owns a huge cheese plant in Kaukauna.
  • Emmi, a Swiss milk processor and dairy products company listed on the SWX Swiss Exchange, owns Roth Cheese in Monroe and Platteville. 
  • Last, but, oh my, certainly not least, is Lactalis, a multi-national dairy products corporation based in France. Lactalis is the largest dairy products group in the world. It owns two large cheese plants in Belmont and Merrill and cranks out more President Brie than one can imagine.

What does this mean for Wisconsin dairy farmers?

It means the local cheesemaker up the road they’ve been selling milk to for the past 20 years – and the same factory that their father probably sold to before that – is now owned by a stranger who values the company’s stock price over a handshake deal with a local farmer trying to earn enough money to send his kids to college.

It means that large dairy farmers who have spent the past decade spending money to get bigger rather than getting out are now worrying whether they will have a milk contract in 30 days.

It means small dairy farmers trying to break into the business are trying to find a buyer for their milk. Take for example, T.J. Grady, who will turn 21 in May. T.J’s a good-hearted kid who I’ve watched grow up into a hard-working man and build a small dairy near Oregon, Wisconsin with his father. T.J. has been slowly and steadily building his herd of 25 cows with a dream of farming full-time. In 2015 and 2016, T.J. took classes at UW-Madison, earning a dairy farm management certificate, a pasture based dairy certificate, and completed courses needed for a certificate from the Wisconsin School for Beginning Dairy and Livestock Farmers.

A few months ago, a neighbor who was milking 50 cows sold out due to a combination of health and financial reasons. “I was doing some research about getting an FSA loan and buying his herd, and renting their facilities. But I don’t think I would be able to find anyone to pick up extra milk, with the over supply in the market right now,” T.J. says.

T.J. took the news of nearly 75 farmers losing their milk contracts with Grassland especially hard, as most were small dairy farmers like him. “This is very disheartening to me, as someone who studied farm management and hopes to operate my own dairy someday. I can’t imagine how terrifying it would be to get a letter in the mail saying that your milk will no longer be picked up. I had a professor in school that said, ‘In Wisconsin, it used to be that if you milked 10 or 1,000 cows, there would be a market for your milk.’ Unfortunately with the ups and downs of today’s commodity market and the consolidation of dairy farms, coops, and milk processors, that doesn’t seem to be the case any longer.”

Sassy Cow Success

Sassy Cow Creamery, the little creamery that could, celebrates its five-year anniversary this month of producing on-farm bottled milk and old-fashioned ice cream for a growing consumer base demanding  not only to know where their food comes from, but also the first name of their farmer.

In this case, those first names are James and Robert, third generation dairy farmers who own two dairy farms, and in 2008, built a farmstead creamery in the middle. The Baerwolf brothers, along with their wives (both named Jenny), their growing number of children, and the amazing Sassy Cow sales/marketing guru Kara Kasten-Olson, a former farm girl herself, are a team that freely admits they had no idea what they were doing when they started.

Until Kasten-Olson and the Baerwolfs came knocking on the doors of Wisconsin grocery stores five years ago with gallons and half gallons of both organic and traditional milk, only the big boys like Dean and Golden Guernsey had a presence in the retail milk cooler. Kasten-Olson and the Baerwolfs worked beyond overtime the first couple of years to fight a milk mafia uninterested in a local farmer just to get their product placed alongside the conventional commodity jugs of milk.

Metcalfe’s Market at Hilldale Shopping Center was the first grocery store in Madison to carry Sassy Cow products. In an interview with today’s Wisconsin State Journal, Store Director Jim Meier says Sassy Cow organic milk is now tied with Organic Valley for the top-selling organic milk at Metcalfe’s, and Sassy’s traditional milk is second only behind Metcalfe’s private label.

“We see customers put other products down and pick this one up because it’s right down the road. People are willing to spend a bit extra to support the local economy,” Meier said.

Today, Sassy Cow milk is not only alongside the “big boys” of fluid milk in the dairy aisle, it often takes center stage. With their collectible “cow cards” – Darlene’s been on my fridge for years, after my daughter selected the gallon because she thought the cow’s personality description sounded like her mom – the Baerwolfs do an exceptional job of not only telling their farm story, but connecting the consumer to their farm.

Five years ago, when Sassy Cow Creamery celebrated its grand opening, it did so with lots of formal speeches from a variety of state and local officials, including Alice in Dairyland. The above photo was taken that day in front of a crowd of about 100 people. The same people in that photo are the same people running Sassy Cow Creamery today. You can meet them this Saturday at an Anniversary Open House from 11 a.m. to 4 p.m., complete with tours, games, product samples and wagon rides.

Sassy Cow Creamery is located at W4192 Bristol Rd., Columbus, Wis. From Hwy 151, take the Bristol Rd. (Hwy N) Exit. Head North on Hwy N and travel seven miles. Look for the big red barn on your left, and be sure to say hello to Robert, James, the Jennys, Kara and the crew. Congratulate them for a job well done.