WISCONSIN DELLS, Wis. – A challenge in the dairy industry is ensuring a market for the milk produced. Some producers are looking at farmstead marketing of their milk and other value-added products, while others see cooperatives as the best avenue for marketing their milk.
    A panel discussion about marketing milk with farmstead and cooperative marketing was held at the Grassworks Grazing Conference Feb. 1 in Wisconsin Dells, Wis.
    Panel members included Norm Monsen, a market development specialist with the Wisconsin Department of Agriculture, Trade and Consumer Protection; Andy Hatch, co-owner of Uplands Cheese Company; Dan Smith, the CEO and president of Cooperative Network; and Kevin Kiehnau, the national field staff manager for CROPP Organic Valley.
    A retired dairy farmer, Monsen works in the areas of dairy development, especially in the areas of farmstead creameries and on-farm processing.
    “We know that dairy is tough now, but in these kinds of times, this is when innovation happens,” Monsen said. “People start getting big ideas. We saw it in the early 2000s, a resurgence and rebranding and renaissance of Wisconsin dairy. People like you come up with big ideas of how to do something different or bring back something from the past.”
    Monsen said that while finding the profit in a business is important, expense must be determined first to determine the profits available to be made.
    “It starts at the farm, then goes to the plant, the distribution network, the retail stores and then finally to the consumer,” Monsen said. “These are all places you need to look for determining expense and potential profit.”
    Monsen referred to what he called an innovation curve when it comes to taking the risk of entering the world of on-farm processing.
    “It’s risky and fun to be in the lead; there are profits and more fun to be in the middle, but if you’re at the tail-end, you’re just watching the opportunity go away,” Monsen said. “I think we’re someplace in the middle of that curve right now.”
    Hatch operates Upland Cheese Company outside of Dodgeville, Wis., along with Scott Mericka. Upland Cheese Company was established in 2000 by the Gingrich and Patenaude families, during what both Monsen and Hatch referred to as the renaissance of Wisconsin cheese. Hatch and Mericka purchased the farm and creamery in 2014.
    They milk 200 grass-fed cows from March through December, and process it on-farm. About 120,000 pounds of cheese is made from May through October, while the cows are on pasture. Upland Cheese creates about $2 million in revenue annually, marketing their cheese online and in specialty stores nationwide. All aspects of the business are located on-farm, with the two owners working full time, along with three full-time and approximately eight seasonal employees.
    “What you’ll learn here is a seed,” Hatch said. “To grow that, you want to start with people like Norm, and ultimately, you’ll want to get to people like me. There’s a really solid sense of fraternity among small-scale cheesemakers in Wisconsin. If you’re contemplating trying to start your own cheese business, you should visit no less than five other plants. You should spend hours talking to people like me.”
    Hatch said what made Uplands Cheese stand out in its early years was the return to older practices, such as rotational grazing. The business was grown carefully and the owners kept tight control on the business and the product, keeping it all under one roof.
    Hatch said the ability to be optimistic about developing a farmstead market exist in the control the producer/processor have over product quality, branding and reputation, margins and the nimbleness to adapt to market changes. On the downside, farmstead processing requires a broad range of skills in addition to those required to run a farm, including things like making and aging cheese, marketing and sales, and management of hundreds of urban consumers. On-farm processing demands a large capital investment, and Hatch said those demands will continue to increase under modern food safety standards.
    Smith began his professional career as a dairy farmer, transitioning his family’s farm from confinement to grazing. After selling his herd, he entered state government before moving into the private sector, eventually becoming the CEO and president of Cooperative Network.
    “Everything that we do relies on profitability,” Smith said. “No one wants to do the work that agriculture requires without profitability, and we’re struggling for that now. We’re facing increased costs of production, new technologies, competition for resources and capital, and consumer preferences.”
    Smith said our country needs more people to enter agriculture, but you cannot force people into an industry that is not profitable.
    “We all value diversified, family-operated farms that are engaged in the community,” Smith said. “Wisconsin has done a really good job of keeping the cows, and a poor job of keeping the farmers. It’s a drain of the rural economy, society and culture of Wisconsin.”
    Smith said cooperatives rise from a common need, and follow seven principles: voluntary and open membership; democratic member control; member economic participation; independence; education, training and information; cooperation among cooperatives; and concern for community.
    “When we look at the dairy industry today, and how are we going to solve some of these issues, the members are going to have to step up and determine what type of agriculture, rural communities and economic policies they want,” Smith said. “We need to choose and create, not just accept whatever happens to us as agriculturalists.”
    Kiehnau retired from organic dairy farming before joining the field staff at Organic Valley. He said marketing with a cooperative is an advantage to producers because of the numbers involved and the say that cooperative members have in the marketing of their milk.
    “One of the biggest issues I see with direct marketing is that producers need to know the farm-side, the sales-side and the marketing-side,” Kiehnau said. “That’s really a tall order for someone to fill.”
    Kiehnau said the focus of the cooperative model is to take care of its members, which he said is something not seen in other business models in agricultural marketing.