Dairy Farmers Have Been Slaves for So Long, It's Difficult to Adapt to Life as Free Business Owners; Tips for Surviving a Raid; Michael Schmidt's "Milk Trial By Jury"
Thursday, July 15, 2010 at 10:58AM 
How much should raw dairies charge for their milk?
That question has been the subject of intensive debate on the Raw Dairy listserve over the last week after a dairy farmer new to the list introduced herself by saying she's selling raw milk for $16 a gallon, and has no apologies about it.
I bring it up partly because it's a question that relates directly to the issue of whether and how to establish an association of raw dairy producers. More on that in a bit.
First, the debate over pricing. Here's one fairy typical comment: "For someone to charge $16 for one gallon is unethical in my mind. I am sure that the costs are much less. Hate paying my $8.00 a half gallon from Organic Pastures. Unfortunately, I only buy it for 'medicinal' reasons..."
And another: "It saddens me to see people entering these niche markets that are so important in moving the evolution of our species forward--organics, raw milk, etc.--and using corporate standards, the get-all-you-can-get mentality, to set their prices. I understand it, and if I were a dairy farmer I'd probably feel the same way. But unfortunately, many people like me will not be able to take advantage of this highly desirable product because you've priced it so high...You didn't price it based on what it cost you to produce it."
These two consumers obviously think producers of raw milk are somehow different than other businesses--that they should be pricing their milk according to what people are used to paying, or want to pay, or some very limited notion of what farmers' expenses are. There's also a suggestion that raw dairies are somehow different from other businesses in that milk prices have always been low and, besides, the farmers should want to be helping people by providing a healthful product.
I've spent much time with people who have started businesses, and are trying to figure out how to make them succeed. I always ask this question: What do you want to be when you grow up?
The answers invariably fall into one of two categories. Either you want to create what is sometimes referred to as a "lifestyle" business-- a business that allows you to pursue activities you enjoy, support your family, put away some money for the future...or you want to create a growth-oriented business, where you are continually looking for new products to produce, new markets to serve, with the idea of creating an enterprise you might sell off or hire others to run for you or hand off to your children.
One farmer who commented illustrates the lifestyle approach: "I feel that I do very well at $8.00 a gallon and I am only milking three cows. That is all I want to milk...I am not organic but then I don't want to be. I am natural and I am soy and corn free and all grass fed which I think is more important. I make a profit on my milk and pay my son to work for me. I take my bonus from being able to do the things I want to do with my horses which comes from my milk income. The farm also provides us with all of our meat and dairy needs and keeps us out of the grocery store. What is that worth? I think it is priceless."
I'd say an enterprise like Organic Pastures Dairy Co. in California illustrates the growth-oriented dairy. It is continually developing new products, figuring out ways to enlarge its herd, grow its market.
Either approach is fine from a business point of view. It can save a lot of confusion to know which approach you want to pursue by guiding pricing, marketing, promotion, and other activities.
As for consumers, they will adjust, and make their decisions based on their own perceptions of quality and self interest, as this person pointed out on the listserve: "As a raw milk consumer in South Florida, I can buy my milk from a farmer that charges $7/gallon for 80% grass-fed milk and I can buy from another that charges $13/gallon for 100% grass-fed milk. Each has its benefits. Sometimes I have the extra cash to buy the 100% pastured product that I prefer; sometimes I only have enough to buy the part grain/part grass product. I'm glad I have a CHOICE."
My larger point here is that dairies in the raw milk arena have an opportunity that conventional dairies don't have and never will have: They are free to set their own prices, and because of that have the opportunity to enjoy life as regular businesses. Of course, they have a political problem in that the government wants them to go away.
What do businesses do that have political problems? They form associations, hire lobbyists and lawyers, and figure out how to turn enemies into friends, or at least reduce the impact of the enemies. If there is concern about product safety, they develop standards their lobbyists and lawyers can use to make their case. The standards may well cover a number of areas--in the case of raw dairies, they may well extend to areas like soil, animal diet, and bacteria counts. Winning the political battle, though, isn't about who has the best product or the right science. It's about winning friends and influencing people and convincing them you are dealing with whatever problems they might perceive. Complaining to local politicians when there's a raid, or practicing civil disobedience are appropriate weapons as well. It's about rights, but it's also about the right to do business.
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Speaking of political problems, I've just written an article for Grist about the growing number of raids on food producers. It provides suggestions about what to do if your farm, food club, or home is raided by regulators and police.
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I knew that Canadian dairy farmer Michael Schmidt puts on a "Symphony in the Barn" each summer for his herdshare members and neighbors, but I never knew he actually writes music. It turns out he's written an opera, "Milk Trial By Jury" that will be performed later this month at his farm. He explains all in this video. Can't wait to read the reviews.
Reader Comments (31)
I really enjoyed your article in GRIST. Great insights and advice. I also suggest multiple video cameras....we more and more at OPDC rely upon smart phones like I Phones for our camera documentation efforts to back up fixed securitycameras. These are personal possessions and are not likely to become the object of a search warrant. We have trained OPDC employees to just start filming and do not stop....when six I-Phones get turned on and recording all quietly and descretely it is a devastatingly effective tool against guns and loud mean FDA and FBI voices. This footage will be the Rodney King evidence to put a nation on fire. Our mother lion CA raw milk consumers will invade FDA offices and FBI offices alike...very bad press indeed for agencies already on the brink of being outcast by the people. Remember that the FDA and FBI are moms and dads as well....appealing to their hearts is powerful.
As far as raw milk pricing is concerned...you are correct. OPDC is a growth company and is actually working hard to reduce price points to our consumers by adding buyers club direct sales channels and stores that use raw milk as a loss leader to attract more consumers. Raw Milk is a huge buyer magnet product.
We price our products at different levels for different distribution channels. Farmers Markets and buyers clubs and on farm store and retail markets are all different. Some stores sometimes get really carried away and take extreme advantage of raw milk and add as much as $4 to $5 dollars per half gallon to the mark up. This really hurts everyone.
I think you said it all when you said that "Raw Milk is Medicinal"....thats right....it is time to rethink food and medicine. Dr. Sue Stone MD in Fresno recommends and prescribes raw milk as a Medical Superfood. Dr. Donald Fields in Fresno does the same thing....lots of CA doctors are doing this.
When your asthma, excema, allergies, colds and ear infections, crohns, lactose intolerance and IBS goes away....priceless. Health is literally priceless. Now compare that with pasteurized dead dirty CAFO white stuff....in many people it is the very cause of this same laundry list of illnesses and worse.
Now....what is the value of health....???
Priceless....
That does not mean that raw milk dairymen have a liscence or right to gouge....on the contrary, the dairymen must make extreme investment to assure safety ( testing, feeding, cleaning, managing and paying for people and fuel and trucks and insurance and the cost of new computers when the FDA and FBI take them away, video cameras ...you get the idea it is not cheap )...and manage the delicious nature of his raw milk. This is expensive. But the dairymen....must be most sensitive to his customers. He lives or dies by them. He must give them true value.
For a fresh look at another angle and a different take on the differences between Pasteurized Milk and Raw Milk please see:
http://www.organicpastures.com/pdfs/15thingspasteurizationkills.pdf
All the best,
Mark
Michael certainly knows how to add some culture and perspective to the raw milk movement. His veal dinner also looked very fun and interesting. Wish I could have been there.
All 36 million citizens of CA have equal access to safe delicious state inspected raw milk except.... for the 128,000 citizens of Humboldt County. Humboldt county is located on the far north western edge of California and is green pristine old dairy country.
In Humboldt, the dairy industry years ago moved the Board of Supervisors to pass local ordinance 512.4 that prohibits raw milk sale. This was a move against the old market forces of Alta Dena in the 1990's.
There is a citizen based Humboldt Raw Milk Revolt going on right now and every one is invited to attend the rally and raw milk presentation on July 22nd and August 23rd In Arcata CA. It is one gorgeous place and worth the trip if you live in Northern CA.
Join the Humboldt Raw Milk Revolt and bring equal fair access to California state inspected retail approved raw milk to all of its citizens.
http://www.youtube.com/watch?v=KR7l5C0bpc8
All the best,
Mark McAfee
Here in California, a lot of things cost more than in other parts of the US. That's just a fact of life. I have friends in Oregon and Washington that pay about half that price for their raw milk. There costs of living are lower than mine (homes and land cost a *lot* less in their areas), so I would expect the cost of their locally produced food to cost less than what it costs in my area.
We pay $16 a gallon for our raw milk. I do not feel that I am being gouged by my farmer. Not in the least. Yes, $16 a gallon is expensive. Quality products usually cost more and we juggle our budget to accommodate a fair price for quality food. We recoup that money in improved health and lower health care costs.
It was disheartening to read that some folks think farmers do not have the right to be prudent in their business operations by including the cost of anticipated legal costs in their pricing. Being self-insured for these costs doesn't make it any less of a business cost.
It was both humourous and tragic to read that supermarkets support many people but farmers only support themselves. Really? It makes you wonder if the ranter on the raw dairy thread has ever really seen a farm in operation. Since she is sitting in judgement of farmers versus supermarkets, it's too bad we can't "sentence" her to a month of community service labour on a dairy farm (or any other small farm) to bring her up to speed.
1) Consider using an online service such as Dropbox (http://www.dropbox.com) to automatically back up important files to the "cloud." That way, you can use the service to retrieve your information from any computer, anywhere. It is very secure, but do keep in mind that, as with any online service, they will probably cooperate with authorities if confronted with proper documentation. Dropbox is fully automatic, so you don't have to waste time performing manual backups.
2) Also consider using encryption software such as TrueCrypt (http://www.truecrypt.org) to encrypt the data on your computer. This will prevent thieves who sieze your computer from accessing the data on your hard drive. They may demand that you provide them with the encryption keys to unlock the data, but TrueCrypt has a plan for that too - it can hide your primary operating system while displaying a decoy secondary operating system. This tool puts the ball back in your court, at least temporarily.
There's not a lot you can do about the loss of hardware, but you can protect your data. That is often much more valuable.
Jeremy Johnson
P.S. I'm willing to provide assistance to anyone that asks.
Can it be made cheaper on a grand scale like Organic Pastures? Yes. But what kind of world do you want to live in? One where are your food is produced by a handful of large farms or one with a diverse array of small farms? Sure there is room for both, but consumers need to understand that in the long run you get what you pay for and everyone will be better off if most of our milk comes from the latter and not the former.
And I don't care what you pay for milk, its still cheaper than buying asthma/chrones/IBS/allergy/etc. drugs and then dealing with whatever side effects come from that.
Some of the elevated costs come from the politically dangerous nature of the bussiness. Even though the actual risk of an outbreak is small, the risk of raids and government harrassment are much greater. Add to this the hostility from milk processors and even the insurance industry, and you have a formula for a more expensive product.
That being said, quality vs. quantity can be an important reason why raw milk can get more expensive. There are plenty of Wisconsin dairy farmers who drink their own raw milk, but I honestly don't think it is quite up to par in terms of quality for wider distribution as raw milk, even if it is organic and rotaionally grazed. The milk may have seasonal off-flavors when the Milk Urea Nitrogen gets too high (this usually happens in early spring and mid summer here), and it may have too many psycrotrophs (cold-loving spoilage bacteria) to have any shelf life beyond 4 or 5 days. The farmers are getting it as fresh as possible, for themselves and their family of course, so this doesn't matter to them, and the dairy plants are usually pastuerizing it so it doesn't matter to the processors either.
In any case, I think we do need to make a concerted effort to educate consumers about why raw milk is more expensive, and also why it is worth paying the extra money for it.
One of the costs of "knowing your farmer" means that you will dealing with small or even micro farms that have zero economies of scale.
But such farms can offer other values. Some humane philosophies, for instance. Maybe your farmer never sells a calf for meat - that's a critical point for some people - knowing that the bulls are destined to be oxen rather than veal. Or knowing that castrations are done with a local anesthetic.
How much land per animal does a farmer have? Is it the land a dust bowl or a lush pasture or even better - is it silvopasture? Is a portion of the land devoted to conservation? For some consumers, that matters.
Maybe it's important to a customer that calves are not taken away, that milking is once a day, that the dairy is seasonal....
all of these perks are $PENDY for the farmer.
There are so many variables regarding how much a gallon of milk costs to produce, no two dairies can be compared.
You want that gallon. I want a dollar or I want 1000 dollars, doesn't matter outside of you and me.
We rail against government interfering with a private contract between two individuals when they make raw milk illegal. The same principle is true regarding pricing. The transaction is a private contract between two individuals and is nobody elses business except the producer's and the customer's.
Bob BUBBABOZO Hayles
Two quotes come to mind...
Everyone knows the cost of everything, but the value of nothing...
Cost is only a consideration in the absence of value....
Just another tid bit.
If the "conventional"(skimmed/cooked) price of milk was at par in its percentage of market value in 2003 as it was in 1945 the amount paid to the farmer would be $42.30 per hundred weight base price.
In laymans terms that is $3.64 per gallon, before being paid for higher protien & fat, so add about 25 cents on average....almost $4.00.
Current mail box price before component premium is $14.80 hwt or $1.25 per gallon.
This price is against a national average cost per hundred weight production cost of $15.85
Average herd size in the us is 300 cows, and bulk buying of everything is attained.
The average cost of production of raw milk herd (average size is about 12 cows) is about $38.00 per hundred weight, and can be as high as $42.00 per hundred weight or more.
This is before the container, transportation hours spent promoting the cause/product.
Bulk buying can not be utilized, and you pay through the nose for everything.
So if we take this simple off the top of my head cost comparison we can look at a cost per gallon (equivilent charge for the share arrangements) of 2.7 times the $4.00 should be price which equals $10.80.
Figure in that the total market dollar paid in 1945 was 47%(currently 16% of total money made on milk & milk products) of the store price, take $10.80 + another 53 % = $20.65 per gallon given we are the whole distribution chain, but we would have to include jug price at 45 cents delivery $1.00 and the cost per gallon would/should be
at $19.20 base.
Add a bit for higher cream & protein content, no pastuerization & GMO, additional testing, ability to raise the health care deductable and we would comfortably be in the $23.00 range.
This is not a scientific or economic excercise.....just comparisions given we have never really been told the true cost of our food.
Tim Wightman
If we want raw milk to be available as widely as possible, we need to make sure we have a sustainable model for providing raw milk to people which makes sure the farmer is being paid a fair price and the consumer can afford the milk without breaking the bank.
It is worth it to me, no added chemicals nor adulterated milk. Breaking down the cost--would that be per gal? per year?
'The CAFO Reader: The Tragedy of Industrial Animal Factories'
I haven't read this yet, it does appear that the masses are slowly becoming educated about their food and how it is raised/processed, etc. Education is the key.
I don't quite follow your math. But it is the kind of analysis which I don't usually see and isn't usually done, so I want to understand it.
Where did you get 2.7x?
Market dollar mean the value gained via marketing (i.e. the grocery store's markup)?
How did you go from 47% to 53% and how did you come up with 20.65?
You subtracted 1.45 because customers pick it up and bottle it themselves?
It is hard for a farmer to determine what costs they even have into marketing milk, much less how much they ought to be charging.
Ok in 1945 farmers got 47% of the in store cost of milk..
Today its around 16% of the store cost of all dairy & dairy by- products.
So if we were to go off of base price of milk 14.80 and figure it should be 47% and not 16% we get our should be price.
Given the raw milk producer is producer marketer distributer we add in the other 53% of store cost and we get the $20.65 minus our cost of jug and delivery and we have a base price of $19.20 a gallon not $4.00.
Traditional way to figure your cost per gallon is, cost times three.
This may or not be the way to figure your cost it just what is used in resturants bakerys ect.
With some consideration of labor which is very high when small number of animals with very low production as usually the case in raw milk production are putting pressure on labor costs.
Which is why you want to be the at the highest possible effeciency as a small producer.
Labor usually does not show up on hwt cost..and is an important factor.
$40.00 per hundred weight cost(ALL costs factored/shared or representative) x 3 = $120.00 hwt divided by 11.6(gallons in a hwt) = $10.34 per gallon plus jug plus delivery.
Milk only, no cream, yogurt, cheese labor ect..just the milk.
We can go over this in a more defined matter as a group if every one wishes but not really something to be done on this site.
Tim
Another aside -- some people "get it" and then others never will. I was having a drink with my softball team after our game on Sunday, and we were discussing food -- I am a non-doctor on a team of radiologists.... anyway, we were discussing how many eggs we eat and how great the farm raised ones are, and what a wretched life the factory hens lead, and how they go crazy, scratching their feather off, etc. One of the young docs simply replied, "I don't care how those chickens live"... pure and simple -- he knows and does not care.... there will be a subset of our population that feels that way about hens, food, AND raw milk. We have to just acknowledge that we cannot educate and convert everyone.
Long live our farmers! Hats off to all of you who work so hard to feed us! THANK YOU!
miguel, thank you for that link to Wendell Berry's lovely poem.
I trust the farm that produces my milk. I've been buying their milk for many years. If something unusual ever happened and the farm contacted me to warn that a pathogen had been found in their milk (hasn't ever happened in the 80 years they've been in business), I'd ask to know more about what they thought had happened *and* I'd still buy their milk. If necessary, I would boil it (and probably culture it) as needed until they let me know things had been cleared up. Boiled milk from that clean, pasture fed dairy farm would still be better than commodity pasteurised milk. I trust that my local farmer would address whatever fluke caused the issue and we'd be back to drinking raw eventually. SInce I only buy one type of milk, when I want to make a cooked dish that requires milk (like a Bechamel sauce or a pudding), I use a bit of my raw milk for cooking. I can work around the issue.
I see no need for the various regulatory agencies to shut down the dairy for an abnormal instance - just issue a "boil milk" advisory if pathogens were truly found in the milk and then work with the dairy to correct the problem that allowed the pathogens into the milk in the first place. Having said that, if there were a continued, consistant problem, I would want to see that addressed, but I would want that to be addressed by a group supportive of raw milk.
When an extra heavy rain or flooding causes the water/sewage treatment plant to overflow into the water lines, they don't cut off the muncipal water supply, they issue a "boil water" advisory and leave it up to the individual to either boil their water or buy an alternate bottled water. This could be simple if the monopolies could be kept out of it.
In the meantime, I'll keep the contact info of my representatives and my state ag board at the ready and be prepared to be part of whatever civil disobediance action is needed to keep my farmer safe and solvent.
At base, her farmer/consumer relationship presumes no evil intent on either side, and more, presumes each wants to actively do what is best for the other. The result?
“I've been buying their milk for many years.”---Stable business.
“If something unusual ever happened and the farm contacted me to warn that a pathogen had been found in their milk (hasn't ever happened in the 80 years they've been in business), I'd ask to know more about what they thought had happened....”---Extension of trust rather than loss of it.
“I'd still buy their milk.”---Acknowledgment that the relationship is more important than an episode of error (or perhaps uncontrollable circumstance).
“If necessary, I would boil [the milk] (and probably culture it) as needed until they let me know things had been cleared up.”---Working together toward solutions without pushy, self-centered calls for vengeance or punishment.
“I trust that my local farmer would address whatever fluke caused the issue and we'd be back to drinking raw eventually.”---Both sides accepting the bare reality that in this imperfect world, things go wrong, and we must react to those events lovingly.
And finally,
“In the meantime, I'll keep the contact info of my representatives and my state ag board at the ready and be prepared to be part of whatever civil disobedience action is needed to keep my farmer safe and solvent.”---Recognition that love is a verb, demonstrated by self-sacrifice, and that that, in the end, trumps all.
Isn't what Suzanne and her farmer have worth working toward? Likewise, is it not a tragedy and a sin to actively work against them?
The movement toward local food and its sequent face-to-face relationships between producers and consumers has never presumed perfect protection from illness, or even from fouled relationships. It does, however, recognize (and puts feet onto) the reality that human relationships are what life is all about, and that good ones bring peace, happiness, and contentment. The two great commandments-- love God; love your brother--are linked because one cannot happen without the other.
The systems we have invented to substitute for human relationships, whether designed to protect or not, are effectively destroying our humanity. Whatever good they produce is completely, dramatically, overwhelmed by their cost.
Keep the faith, Suzanne! (And thanks much for the comment.)
Has anyone here taken legal advice from them or have had them represent you? I have.
They keep promoting these herdshare/cowshare/farmshare programs, but every one that has come under fire is still under fire or tied up in court. There hasn't been any 'win' upholding our right to contract under a herdshare.
We farmers are in worse shape now than we were before because of the legal advice the FTCLDF is giving. Look at the cease-and-desist orders, look at the warrants and confiscations. In Wisconsin, Ohio and New York it's all the same. Meadowsweet has been tied up in court for 3 years. How long will Vernon Hershberger have to deal with the harassment? If this is a valid business model, where are the victories?
We would have been better off selling milk under the table, keeping our mouths shut about it, and working for legislative change in an intelligent and methodical way. But that doesn't keep us pushing the donate button, now does it?
FTCLDF should stand for
FALL THROUGH the CRACKS Legal Defense Fund.