Upstate Dairy Farms Are Facing an Uncertain Future | Economy | Hudson Valley | Chronogram Magazine

Jay Sharkey, owner of The Farm at the End of the Lane in Greene County, was among more than 100 small dairy farmers in the Northeast to receive notice this summer that his creamery, Maple Hill, would no longer pick up his milk next year. That will leave Sharkey with nowhere to send the 1,000 pounds, or about 116 gallons, of milk his farm yields per day.

Sharkey searched for other places to send his milk—“I contacted Horizon and they’re not taking any milk; I contacted Organic Valley, they’re not taking any milk”—but had no luck. Horizon Organic, which is owned by the multinational conglomerate Danone, announced at the end of August that 89 farms across the Northeast will be losing their contracts in August 2022.

Sharkey says Maple Hill let go of 30 farms, but official details remain scarce. The Kinderhook-based creamery did not respond to requests for comment. But Sharkey says there are three reasons Maple Hill is dropping farms: not enough milk, poor quality milk, or the farm is too far away from other Maple Hill-contracted farms. That third reason was the one Sharkey was given in his letter.

“I didn’t think it would come to this point,” Sharkey says. “The stop before us was about 26, 27 miles away and the stop after was about 26, 27 miles away. In the grand scheme of things, especially in organic milk, that’s really not that far.” 

Horizon has a similar strategy, Sharkey says.

“They can go to Idaho, Ohio, Texas, and get as much milk from one or two farms as they could from all farms they dropped in the Northeast. That’s kind of where the dairy business is going.”

The Dairy Industry at a Glance

Milk is New York’s No. 1 agricultural product, according to the 2017 USDA Agriculture Census. The $2.7 billion dairy industry employs 26,000 people in the state. 

But in recent years, the industry has been in steep decline. New York lost 240 licensed dairy farms in 2020, the fourth-largest drop in the country, according to the USDA National Agricultural Statistics Service. No state reported an increase in dairy farms in 2020, and the year-over-year decline nationwide was the second-largest drop since 2003, when the US Department of Agriculture began collecting the data. The overall number of dairy farms has fallen more than 55 percent since 2003. 

Despite the loss of farms, New York ranks still fourth in the nation for milk production, and overall production actually increased by 21 percent in 2020—meaning more milk is coming from fewer farms.

Upstate Dairy Farms Are Facing an Uncertain Future
Courtesy of Jay Sharkey
A landscape image with a herd of cows in the foreground and mountains in the background.

While Maple Hill has dropped farms, its business seems to be expanding, Sharkey says. Maple Hill had about 200 farms as of 2018, according to its website, a number that has declined by at least a couple dozen since.

“How are they possibly coming up with and selling products in every state in the US?” Sharkey says. “If you’re dropping farms, where are you going to get milk from?”

The answer, according to Sharkey, seems to be in consolidation, leading Maple Hill buying from ever-larger or more densely concentrated farms. “It just seems that Maple Hill wants bigger farms with 200-250 cows, or they want farms making milk with 75-80 cows, but clustered in the same area,” he says. The creamery increased its minimum pick up to 1,000 pounds every two days in 2019, prompting Sharkey to spend about $90,000 to build an addition on his barn to milk more cows.

Then, this summer, Maple Hill dropped Sharkey, along with farmers in Cobleskill and Oriskany Falls, he says. But it has picked up other farms in the area. “They send me the letter they’re going to drop me, but right after, they picked up a farm in Stamford…It’s frustrating.”

Sharkey’s contract with Maple Hill will end January 1, but his contract with Dairy Farmers of America, the company Maple Hill uses to administer payments to farmers and coordinate USDA inspections, doesn’t expire until April. However, Sharkey worries that DFA also won’t take his milk, because they don’t need it. 

The DFA contract would bring in about $16 per hundredweight—or 100 pounds—of milk, Sharkey says, which is half of what he makes through Maple Hill. He doesn’t know what exactly it costs him to produce a hundredweight, but said he’s heard estimates of $22 to $23 per hundredweight—meaning he would actually be losing money with the DFA contract. 

The predicament is forcing Sharkey to look into bottling his own milk. “It’s the only avenue left,” he says. 

Two Paths for the Dairy Farmer

As if dairy farming weren’t difficult enough, farmers who are brave enough to take on their own processing have even more to deal with, including more red tape. 

There are two different approaches to bottling your own milk: teaming up with a creamery or getting the equipment to process your own milk.

The first approach requires the enterprising dairy farmer to find a co-packer—“somebody who has a creamery, who is willing to bottle, make butter, ice cream, or whatever you want to do with your milk,” Sharkey says. “You have to find a way to get milk to that creamery, then figure out a way to get that milk home. You need a large refrigeration unit to store everything in.”

Next, the farmer has to figure out where to sell their milk, which is less straightforward than it may sound.

“You have to find outlets for the milk locally,” Sharkey says. “You have to come up with a label for milk, butter, or whatever product. And then after you get the label, you send it to New York State, where they approve it, which takes up to two months; or it gets kicked back to you, and you wait another month.” 

Upstate Dairy Farms Are Facing an Uncertain Future
Courtesy of Jay Sharkey
A portrait of a dairy farmer hugging a cow.

Alternatively, a dairy farmer could go it alone and buy their own equipment. But according to Sharkey, that requires an investment of over $100,000.

Assemblyman Chris Tague, whose 102nd district includes all of Greene and Schoharie counties and rural parts of adjoining counties, is a former dairy farmer himself who once aspired to bottle his own milk. 

Having that sense of pride is critical to farming, he says. “Nobody in agriculture cares about being a millionaire, I can tell you that, because that doesn’t happen. There’s a sense of accomplishment when you produce a good product.” 

Sharkey agrees. “I don’t need to be rich—I just need to pay bills so the farm can sustain itself.” 

Legislative Action

In an effort to support farmers and their livelihoods, this year Tague introduced the New York Food Insecurity, Farm Resiliency and Rural Poverty Act—a bill that would make it easier for farmers to process their own meat and dairy products and expand the Nourish New York Program, which was created during the pandemic to streamline the product chain from farmers to regional food banks.  

“Primarily what it did is it allows somebody to get a grant, and to get into the processing game on their own,” Tague says. 

The bill would allocate $35.7 million to the state Department of Agriculture and Markets to facilitate several programs. It would task the Empire State Development Corporation with providing grants to farmers looking to set up their own processing facility. And it would establish a new commission—the Meat, Fiber and Dairy Processing Study Commission—to issue recommendations on where processing plants are needed in the state to the governor and the state Legislature. 

Other grant programs for farmers in the bill include $1 million for beginning farmers and $6 million for infrastructure and equipment for veteran and disabled farmers. The bill also proposes to increase the tax credit for farmers from 25 percent to 50 percent. 

In Tague’s view, the loss of livelihood for small farmers has near-existential implications. “We need to think about future of this country,” he says. “Who’s going to take over these farms? How are we going to feed America in the future? No farms, no food. I think people need to realize that.” 

Senators Chuck Schumer and Kirsten Gillibrand are also advocating for dairy farmers, and joined a dozen other Congress members asking the USDA to finalize its Origin of Livestock rule. The rule, which was issued in 2015, allows farmers to transition their cows from conventional farming methods to organic over a 12-month period.

But despite being intended as a one-time exemption, some farmers take advantage of a loophole by, for example, shifting calves to a conventional farm that uses cheaper, non-organic rearing methods, and then reintegrating them back into the certified-organic herd one year before they’re ready to be milked. This allows farmers to continually transition their livestock and grow their organic herds more quickly at a lower price. 

“The USDA’s ongoing delay in finalizing this rule, which continues to enjoy widespread support within the sector, has contributed to the oversupply of organic milk in the market, placed the integrity of the organic label at risk, and kept farmers in our states at a severe financial disadvantage,” the lawmakers wrote in their letter to the USDA.

New York, which had the highest number of organic dairy farms in the nation in 2017, has a lot at stake, New York Farm Bureau President David Fisher wrote in a letter to the USDA:

The proposed rule would close existing gaps in the current regulations to ensure that organic dairy animals must be raised organically from the last third of gestation or be raised organically for one year if transitioning a conventional herd to organic, which is allowed only once. In addition, once a distinct herd is transitioned to organic, all animals must be raised organically from the last third of gestation. Cycling of dairy animals in and out of organic production is currently prohibited and needs to continue to be prohibited to ensure that dairy cattle meet the organic requirements. This rulemaking is critical to bring consistent enforcement and a level playing field to all organic dairy producers.

But the wheels of government may turn too slowly for small farmers like Sharkey, who are being forced to completely reimagine their business model or sell. 

“Maybe down the line I will say getting dropped by Maple Hill was the best thing that ever happened to me,” Sharkey says. “Maybe.”

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