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Cheesemakers give insight
into small-batch production

November 27, 2015

By Chelsey Dequaine

MADISON, Wis. — As the seasons change, so do some cheeses. Small-batch cheesemaking offers companies the ability to introduce limited-release seasonal cheeses and take advantage of demand during the holiday season.

Uplands Cheese, Dodgeville, Wisconsin, offers two seasonal cheeses: Pleasant Ridge Reserve and Rush Creek Reserve. Rush Creek Reserve is produced in the fall, as the cows’ diet shifts from fresh pasture to dry hay, and it’s typically sold between Thanksgiving and Christmas. Pleasant Ridge Reserve is produced in the spring, summer and fall while the company’s cows are grazing. Because the cheese is aged anywhere from 10-24 months, Uplands is able to sell it year-round.

“When the circumstances are right, seasonal cheesemaking is important because it aligns the character of the milk with a particular style of cheese,” says Andy Hatch, owner and head cheesemaker, Uplands Cheese. “Not all milks are created equal, and certain types of milk are more or less suited for different styles of cheese.”

Because Uplands Cheese uses milk from a single, seasonally-bred herd that produces grass-fed milk, Hatch says the company has more milk variation throughout the year than a confinement herd fed total mixed rations.

“We adjust our cheesemaking calendar to match the changing character of our milk,” he says. “Making the wrong cheese in the wrong season wouldn’t be disastrous, but it would tend towards mediocrity.”

In the Upper Midwest, Hatch says 2014 was an ideal year for pasturing dairy cows. Uplands Cheese avoided the heat and drought it typically sees in mid-summer.

“We made a lot of beautiful cheese straight through July and August, when every other year, including 2015, we’ve stopped making cheese for at least a few weeks during that hot, dry spell,” he says.

This fall, the company’s cows grazed through Halloween and produced what Hatch calls “pretty impressive milk.”

“Time will tell how the cheese tastes,” he says.

All of the cheeses offered by Jasper Hill Farm, Greensboro, Vermont, are small-batch cheeses. The company began small-batch cheesemaking in 2003 with a herd of five cows while building its herd of 45 cows. Soon after, the farm introduced its Winnimere, a raw winter cow’s milk cheese aged 60 days.

Zoe Brickley, sales and marketing director, Jasper Hill Farm, says 50 percent or more of sales from some of its retail customers come during the last 8-10 weeks of the year.

“If you have the same amount of milk everyday and then your demand doubles or triples, you don’t have enough milk for the holidays,” she says. “We are usually between that and having a little too much milk for cheese released in the new year. A seasonal cheese released in January is a good way to even that out. Plus, the style of our Winnimere is an excellent fit for the richness of our hay-fed winter milk.”

To help with the availability of small-batch cheeses, Brickley recommends varying age profiles. If one small-batch cheese is only aged for one or two months, she says to focus on a longer-aged cheese during the early months of the year.

While some companies are affected by lower milk prices compared to last year, Jasper Hill can turn its milk into a value added-product instead of selling it.

“If we need to, we have the option of sourcing extra milk,” she says. “But we think it’s important for cheese quality to be in control of the actual production of the milk, especially when we make raw milk cheeses. We champion a value-added model, so if we can take our raw material and add value to it on the farm, we can make our business more profitable.”

Pennyroyal Farm, Boonville, California, is a seasonal farmstead goat and sheep dairy farm. The company offers two aged raw milk cheeses, two surface mold ripened cheeses and a fresh cheese. Currently, Pennyroyal’s Laychee, a fresh, lactic cheese, has a citrus flavor profile because it is made with only goat’s milk in the fall and winter, while Velvet Sister, a Camembert-style cheese, currently ripening, is gooey and rich.

Erika Mckenzie-Chapter, head cheesemaker and dairy herd manager, Pennyroyal Farm, says the goats are approaching the end of their lactation. The company has been making cheese since March, and the final batches of cheeses for the season will be made during the last week of December. Production will begin again after births in the spring.

“Working with goat’s milk, we focus on the quality of the milk,” Mckenzie-Chapter says. “We make cheese everyday rather than holding onto milk to utilize the milk in the best ways possible. It’s about doing a minimum of hold time, agitation, pumping and trying to maintain the quality of the milk.”
At peak season, Pennyroyal Farm will produce 130 gallons per day, compared to its current production of 52 gallons of milk per day.

“Our milk in the springtime is higher in fat and protein,” Mckenzie-Chapter says. “We are doing higher butterfat content in all of our cheeses right now. We don’t standardize.”

One obstacle Pennyroyal has had to adjust to is the current California drought.

“Last year we didn’t have heavy grass until January and it shortened our grazing period, which affects the nature of the milk,” she says. “With the hay we’ve been able to grow on the farm, we’ve seen less protein.”

By doing small-batch cheesemaking, Mckenzie-Chapter says she’s learned more about cheese and how it’s affected by fat content. She uses morning milk and evening milk to make different cheeses because of the fat content: evening milk is used for the creamier Velvet Sister and Laychee cheeses, while morning milk is used to make raw cheeses. Pennyroyal is making cheese with high fat content now as opposed to summer because milk in the spring and late winter have the highest fat.

“Learning how long I can age cheeses based on their fat content also is unique with this,” she says. “Animal milk varies. Consistently our evening milk is higher in fat than the morning milk. By doing these small batches, I get more variability from batch to batch.”


Demand for New Zealand’s
pasture-based dairy grows

November 27, 2015

Editor’s note: Passport to Cheese is Cheese Market News’ feature series exploring the dairy industries of nations around the world. Each month this series takes an in-depth look at various nations/regions’ dairy industries with coverage of their milk and cheese production statistics and key issues affecting them. The nations’ interplay with the United States, including both imports and exports, also will be explored. This month we are pleased to introduce our latest nation — New Zealand.

By Rena Archwamety

MADISON, Wis. — New Zealand is a small country with a big dairy presence, both domestically and around the world. The island nation of just more than 4.6 million people is now home to 5.0 million milk cows and 11,970 dairy farmers, according to the latest dairy statistics released earlier this month by the industry-funded organization DairyNZ.

The lush country is well-known for its pasture-based dairies. The average New Zealand cow lives in a herd of 419 cows, and 74 percent of dairy herds are located in the North Island, with the greatest concentration in the Waikato region, according to DairyNZ. Milk production peaks in October, which is spring in New Zealand.

“It’s also when pasture is at its most plentiful and highest quality on farm, providing a perfect synergy which helps to make New Zealand’s pasture-based farming system so efficient,” says Greg Hamill, genetics business manager of New Zealand-based Livestock Improvement Corp. Ltd. (LIC). “That’s our core competitive advantage here in New Zealand — a cost-efficient pasture-based farming system, using great cows that are fed well.”

• Cheese industry

The pastures of New Zealand come through in its cheeses as well. The country boasts around 300 different types of cheeses made by 40 cheesemakers, according to Corrie den Haring, general manager at Green Valley Dairies in Auckland, New Zealand, and board member of the New Zealand Specialist Cheesemakers Association (NZSCA).

“One of the unique factors of New Zealand cheese is its clean freshness,” den Haring says. “This is partly derived from having grass-fed animals, which imparts a clean profile not often seen in other countries’ products.”

As a former British colony, New Zealand’s cheeses were strongly influenced by the British and traditionally it made Cheddar to export back to England. New Zealand’s specialty cheese industry began in the 1950s when some Blue-vein styles emerged. After World War II when a number of new immigrants arrived in the country, cheese styles began to diversify.

“After the introduction of Blue vein in the 1950s, other variations of ‘yellow hard cheese’ also started, with Colby and variations of the British-style cheeses,” den Haring says. “Then in the late 1970s, numerous Dutch cheesemakers began starting up and Gouda/Edam style cheeses took off mainly for the immigrant Dutch community. In the 1980s a number of more adventurous businesses started with French-style cheeses, Camembert and Brie. Also at that time the Blue-vein types also expanded away from the acid/Danish-style to more rounded softer French-style products.”

Lately New Zealand has seen a number of Italian cheesemakers introducing Mozzarella, Provolone and a range of semi-soft cheeses, den Haring says. Popular cheeses in the country still include Camembert, Blue and Gouda/Edam styles, while Italian and flavored cheeses are fashionable, den Haring adds.

Of the 40 cheesemakers in New Zealand, seven make non-cows’ milk products (goat, sheep or buffalo). Three are “large” specialized cheese companies that process more than 10,000 liters of milk a day, while most process 500-5,000 liters a day.

“We are a country of two industries,” den Haring says. “The large multinationals making milk powder, butter, Cheddar cheese, etc., and small independent cheesemakers selling domestically.”

Some medium-sized producers also export cheese, he says, but the vast majority of independent cheesemakers sell locally due to the high costs, compliance standards and distances involved in exporting.

• Fonterra

In 2001, New Zealand’s two largest dairy cooperatives merged to form Fonterra Cooperative Group Ltd., which now represents the majority of New Zealand’s milk and is the world’s largest dairy exporter. Key markets for Fonterra include New Zealand, Australia, Malaysia, Indonesia, Sri Lanka, China, Chile and Brazil.

New Zealand’s Dairy Industry Restructuring Act of 2001 (DIRA), which authorized the creation of Fonterra, also was designed to temper Fonterra’s market dominance in the country’s dairy industry.

DIRA regulations require Fonterra to supply independent dairy processors with up to 50 million liters of raw milk per independent processor, capped at a total of 795 million liters per season of the raw milk it collects. According to the New Zealand Commerce Commission, this provides a stepping stone for new processors and an ongoing source of supply for niche producers. DIRA also promotes the setting of a base milk price that provides an incentive for Fonterra to operate efficiently while providing for contestibility in the market for the purchase of raw milk from farmers.

This has made things both easier and harder for New Zealand’s independent cheesemakers, most of whom obtain their milk from local farmers or from Fonterra, den Haring says.

“Easier because Fonterra is obliged to sell milk at the farmgate price — they technically make no money from selling this milk — so price is reasonably predictable and competitive, however, you have no control over what farm or what milk you get,” he says.

The “rules” for getting this milk also are somewhat restrictive, he adds, as there is a minimum delivery of 3,000 liters plus transport charges from Fonterra that make buying smaller quantities non-viable.

“So for a small cheesemaker taking, say, 1,000 liters a day, this does not work,” he says. “There is little ability to buy milk from other dairy companies as there is no reason for them to sell.”

Some have been critical of Fonterra’s ability to create optimal returns for New Zealand’s farmers, but Fonterra maintains that it has been successful over the last 14 years and remains largely supported by the country’s dairy industry.

In a response to a recent critical New Zealand Herald article, Fonterra Chairman John Wilson noted the cooperative’s “unique strength coming from being a vertically-integrated supply chain with scale, connecting high-quality milk from pasture-raised cows to consumers around the world.”

He highlighted growth of Fonterra’s milk powder, consumer and foodservice revenue over the last decade, and noted that in the past two years, an unprecedented NZ$230 million has been invested in consumer and foodservice processing capacity in New Zealand to supply export products to Asian markets.

In May, Fonterra doubled its Mozzarella production at its site in Clandeboye, New Zealand, where it now makes enough to top more than 300 million pizzas a year in foodservice export markets in China, Asia and the Middle East. And earlier this month, Fonterra opened a new production line that doubles its sliced cheese capacity at its Eltham, New Zealand, plant.

“Once completed, we’ll be able to make around 2.3 billion slices of cheese each year out of Eltham, all of it sold into growth markets in Australasia, Asia and the Middle East,” says Mark Leslie, Fonterra director of New Zealand manufacturing.

Foodservice is a fast-growing market for Fonterra, with more than NZ$150 billion of dairy products purchased by this sector every year. Fonterra is the largest supplier of shredded Mozzarella and slice-on-slice processed cheese to global QSR (quick-service restaurant) brands in the Asia Pacific region.

During the China Business Summit held in Auckland earlier this month, Fonterra CEO Theo Spierings highlighted the growth of the company’s ingredients and foodservice businesses in China over the last five years.

“Our ingredient business grew from a NZ$1 billion to a NZ$4 billion business (through 2014),” Spierings says. “Foodservice we grew in China from a NZ$600 million business in that time period to a NZ$1.5 billion business, and we’re going very quickly to NZ$2 billion. To put that in context, that’s like the entire wine business in New Zealand.”

• Exports, global competition

New Zealand’s main dairy commodity is whole milk powder (WMP), and it sells much of this to the Chinese market. However, as China’s demand for WMP imports has plummeted this year, New Zealand has made up with more exports of cheese and other commodities, says Al Levitt, vice president of communications and market analysis, U.S. Dairy Export Council (USDEC). He adds that New Zealand’s recent increase in cheese exports has resulted in more competition with the United States, particularly in foodservice markets in Asia and the Middle East.

Fonterra notes in its annual financial results that it has adjusted its product mix away from WMP toward products such as cheese and casein, taking advantage of better pricing opportunities in Japan and the United States.

New Zealand is expected to produce 1.38 million metric tons of WMP in 2015, 6 percent below the 2014 total, according to the New Zealand Annual Dairy and Milk Supply Report 2015, released last month by USDA’s Foreign Agricultural Service. WMP exports by New Zealand are estimated to drop 4.4 percent to 1.36 million metric tons in both 2015 and 2016.

Meanwhile, USDA says New Zealand cheese production in 2015 is estimated to total 347,000 metric tons, up 7 percent from 2014, and total cheese exports for 2015 are forecast at 316,000 metric tons.

“This situation is likely to reverse in 2016 as the price relativity between WMP and cheese starts to favor WMP again,” the USDA report notes.

In 2016, New Zealand cheese production is forecast at 310,000 metric tons and exports will fall back to 2014 levels at 278,000 metric tons, the report says.


Cheese, butter stocks still
higher than one year ago

November 27, 2015

WASHINGTON — Total natural cheese in U.S. cold storage amounted to 1.149 billion pounds Oct. 31, 2015, down less than 1 percent from the 1.152 billion pounds in cold storage at the end of September 2015 but 15 percent higher than the 995.7 million pounds in cold storage at the end of October 2014, according to data released this week by USDA’s National Agricultural Statistics Service (NASS).

American cheese in cold storage totaled 695.6 million pounds Oct. 31, 2015, down less than 1 percent from the 698.8 million pounds in cold storage Sept. 30, 2015, but 12 percent higher than the 623.3 million pounds in cold storage Oct. 31, 2014.

Swiss cheese in cold storage totaled 21.4 million pounds Oct. 31, 2015, down 3 percent from 22.1 million pounds at the end of September 2015 and down 16 percent from 25.6 million pounds at the end of October 2014.

Other natural cheese in cold storage at the end of October 2015 totaled 431.5 million pounds, down less than 1 percent — 45,000 pounds — from the previous month but up 24 percent from the 346.7 million pounds in cold storage at the end of October 2014.

NASS reports total butter in cold storage Oct. 31, 2015, was 179.0 million pounds, down 5 percent from the 187.5 million pounds in cold storage a month earlier but 21 percent higher than the 148.0 million pounds in cold storage at the end of October 2014.


Senators urge flexibility
for bulk milk truck hauls

November 27, 2015

WASHINGTON — President Obama late last week signed another short-term extension until Dec. 4 for federal funding for surface transportation programs in order to give House and Senate conference committees more time to reach an agreement on a long-term highway and public transit bill.

This week a bipartisan group of nine U.S. senators — including Kelly Ayotte, D-N.H.; Tammy Baldwin, D-Wis.; Mike Crapo, R-Idaho; Al Franken, D-Minn.; Ron Johnson, R-Wis.; Angus King, I-Maine; Patrick Leahy, D-Vt.; Chris Murphy, D-Conn.; and Jim Risch, R-Idaho — sent a letter urging conference committee leaders handling the transportation bill to ensure the final bill allows bulk milk trucks to carry their cargo without being forced to offload portions of their load at state borders, which the lawmakers say increases food safety risks for consumers and costs for dairy farmers.

The language, offered by Reps. Elizabeth Esty, R-Conn., and Richard Hanna, R-N.Y., was included in the House-passed version of the bill but not in the bill passed by the Senate.

“Each day, more than 12,500 bulk milk trucks pick up milk at farms across the country,” the letter says. “The transportation of milk is an issue that affects businesses and consumers in every region and in every state.”

The senators urge conference leaders to support language included in the House-passed version of the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act that would classify milk as a non-divisible load. The provision would allow states to issue special permits to bulk milk trucks, giving them more flexibility to ensure that milk is delivered in a timely manner and in compliance with federal and state food safety and security standards, the lawmakers say.

“This measure recognizes the specific challenges in transporting milk and allows states to ensure that milk is delivered in a timely fashion while adhering to all transportation and food safety standards,” says Jim Mulhern, president and CEO of the National Milk Producers Federation.

Randy Paulson, division manager of Associated Milk Producers Inc., Jim Falls, Wisconsin, notes the cost of transporting bulk milk can be significant for dairy cooperatives and farmer-owners.

“Having a more rational and coordinated weight limit policy for milk trucks crossing state borders makes total sense, and we applaud the senators’ help on this matter,” he says.

The senators not that current law already permits states to issue special permits for non-divisible loads, such as trees, boats or any other products whose integrity would be compromised through division.

“Adding milk to the list of products that qualify as non-divisible loads would improve the safety and security of bulk milk. What’s more, this provision would improve the stability of trucks loaded with fluid milk. As the conference committee deliberates which provisions will be included in the final version of the DRIVE Act, we strongly urge you support the inclusion of this important milk classification.”


Metcalfe’s highlights Wisconsin-made products in its cheese departments
Wauwatosa remodel will double number of cheeses available

By Kate Sander

MADISON, Wis. — With the holiday shopping season upon us, Madison, Wisconsin-area consumers looking for just the right local cheese to share with friends and family have an abundance to choose from at Metcalfe’s Market.

Metcalfe’s is a fourth-generation, family-owned and operated neighborhood market with two stores in Madison — one in the Hilldale area and the other on Madison’s west side near West Towne Mall. The company also owns a store in Wauwatosa that is in the process of remodeling its cheese department and doubling the department’s size.

At any one time, Metcalfe’s marquee Hilldale cheese department will be carrying about 150 Wisconsin artisan cheeses, says Jeanne Carpenter, Metcalfe’s specialty cheese buyer. The store also carries a handful of cheeses from other states and 50-75 imports.

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Strong global milk supplies
pressure prices, CME cheese

November 20, 2015

By Alyssa Mitchell

MADISON, Wis. — Overall, Cheddar prices at the Chicago Mercantile Exchange (CME) have weakened this month as milk continues to flow to cheese vats and the holiday buying period begins to wind down.

Cheddar barrel prices dipped into the $1.40s over the past week, but bumped up 8.75 cents today to $1.5025 per pound. Cheddar blocks moved as high as $1.71 to start off last week, but since have weakened and settled at $1.57 per pound today.

USDA’s Dairy Market News says milk production is holding steady in the North Central region, while some increases in production are showing up in the South Central area. Weather has not impacted cow comfort.

“With the block and barrel cheese markets showing uncertainty, orders for milk loads are lower for the week into Class III plants,” Dairy Market News says. “Milk marketers indicate the recent change in demand from that sector was somewhat unexpected after the initial surge in orders at the beginning of the month.”

Throughout the Eastern United States, milk handlers are gearing up for Thanksgiving week, as bottling is expected to slow, causing increases in surplus milk supplies, Dairy Market News adds. In Florida, seasonal residency in the state is accelerating fluid milk sales.

Sara Dorland, managing partner with Ceres Dairy Risk Management LLC, Seattle, says recent challenges to global dairy markets include ample milk supplies and the absence of major importers China and Russia.

Ben Laine, commodity hedging manager with Agri-Mark Inc., Methuen, Massachusetts, says his outlook for global dairy markets in the near- to medium-term is bearish.

“Milk production is strong around the world, and it is more than demand can keep up with at the moment,” he says.

He notes that while demand for cheese has been strong in both foodservice and retail, the market is still amply supplied.

“Supply should be fairly steady, so a seasonal slowdown in demand could mean a drop in prices,” he says.

Dairy Market News says weakening cheese prices are increasingly hanging over cheese production scheduling decisions in the Midwest.

“The ever-present factor of spot milk is at the core of the calculations, especially with long holiday weekends ahead this month and next,” Dairy Market News says.

Mike North, president of Commodity Risk Management Group, Platteville, Wisconsin, says looking back at history — which is not always a perfect filter — cheese typically has found support this time of year in the $1.40 range, but he’s uncertain if that price is sustainable.

“That’s still quite a bit out of range with world markets to be competitive, and with our supplies and the U.S. dollar where it’s at, it’s going to be tough to hold U.S. prices at these levels,” he says. “It wouldn’t shock me to get down to the $1.30-$1.35 level.”

CME butter, meanwhile, continues to hold strong just under $3 at $2.885 per pound, where it has stood since Nov. 9.

Dairy Market News notes butter production in the Central region is steady, and some plant managers indicate they would like to have more cream, but light to moderate spot cream availability is curtailing production.

“A few retailers who were awaiting a much-anticipated pre-holiday decline in prices have relented and placed orders to cover retail butter needs through the balance of the fourth quarter,” Dairy Market News says.

“Butter production has been strong, but not near as strong as other products, and no one wants to be caught with high-priced butter, so they are only making enough to meet current needs,” North says.
He adds butter is the “must-have” item in recipes right now and will be more widely used this holiday season, and he expects that demand to continue.

Looking ahead, CME cheese futures on Thursday showed prices in the $1.60s through the end of this year and into 2016 before climbing into the $1.70s in late spring. Butter, meanwhile, is projected to stay at or near $2 per pound or in the $1.90s throughout 2016.

“I would suspect butter will carry a bit more premium than we saw in January 2015, but not necessarily today’s level of $2.80s, although I think it could stay just south of $2 for some time,” North says.

Dorland says she doesn’t think butter inventories have been built up compared to this time last year, and butter’s popularity at retail and foodservice will keep demand up.

Laine notes shifting perspectives on the beneficial qualities of butter and other milkfat products are opening the doors for fat and cream in many directions. Fat contents are increasing in yogurts, restaurant chains are switching from margarine to butter and whole milk sales are strengthening.

“All of these factors are pulling fat out of the total milk supply and tightening the availability of butter. I think we will drop from where we are now, but not to the same levels as past years,” he says. “We may see the same seasonal patterns as before, but we could see them play out at a higher level.”


U.S. milk production climbs
0.1 percent over October 2014

November 20, 2015

WASHINGTON — Milk production in the 23 major milk-producing states during October totaled 16.03 billion pounds, up 0.1 percent from October 2014, according to preliminary data released Thursday by USDA’s National Agricultural Statistics Service (NASS). (All figures are rounded. Please see CMN’s Milk Production chart.)

September revised production, at 15.60 billion pounds, was up 0.5 percent from September 2014. The September revision represents an increase of 12 million pounds or 0.1 percent from last month’s preliminary production estimate, NASS says.

The number of milk cows on farms in the 23 major states was 8.63 million head, 38,000 head more than October 2014 but 1,000 head less than September 2015, NASS reports. Meanwhile, production per cow in the 23 major states averaged 1,857 pounds for October, 7 pounds below October 2014.

Milk production in the entire United States during October is estimated at 17.08 billion pounds, up 0.1 percent from October 2014. Production per cow in the United States averaged 1,835 pounds in October, 5 pounds below October 2014. The number of milk cows on farms in the United States in October was 9.31 million head, 32,000 head more than October 2014 but 1,000 head less than September 2015.

California, the nation’s leading milk-producing state, experienced a 5.5-percent decline in milk production in October versus the previous year, dropping to 3.24 billion pounds in October 2015. Average milk production per California cow in October was 1,825 pounds, down 105 pounds from a year earlier. The state was home to 1.78 million cows in October, down 2,000 head from October 2014 and unchanged from September 2015.

Wisconsin followed with 2.45 billion pounds of milk produced in October, a 4.5-percent increase from a year earlier. Production per cow in Wisconsin in October averaged 1,910 pounds, a 70-pound increase from a year earlier. The state was home to 1.28 million cows in October, 8,000 head more than in October 2014 and unchanged from a year earlier.


Ownership of DairiConcepts
to shift 100 percent to DFA

November 20, 2015

KANSAS CITY, Mo. — Dairy Farmers of America Inc. (DFA) this week announced it would acquire 100 percent ownership of DairiConcepts, the cooperative’s joint venture with Fonterra Cooperative Group Ltd.

Fonterra and DFA have partnered in DairiConcepts as equal owners since 2000 when the joint venture was formed. DairiConcepts plays a key role in DFA’s strategy to further grow its ingredients division and extend its global marketing outreach but was viewed as a non-core component of Fonterra’s strategy, the co-op says. The decision was made by both DFA and Fonterra to consolidate ownership.

“Our relationship with Fonterra remains strong,” says Rick Smith, president and CEO, DFA. “DairiConcepts has historically generated strong returns for our farmer-owners, and we look forward to continuing to strengthen the business and expand markets for our members’ milk.”
Fonterra will remain a key customer of DairiConcepts, which will operate as a wholly-owned subsidiary of DFA once the sale is final Dec. 31, 2015.

DairiConcepts is a manufacturer of cheese, dairy ingredients and dairy flavor systems with eight facilities across the United States. It works with customers both in the United States and around the world as a value-added supplier, committed to creating appropriate lower-cost, quality dairy ingredient solutions.


New Wisconsin Whey Protein
plant to make Cheddar

November 20, 2015

By Alyssa Mitchell

DARLINGTON, Wis. — A new Cheddar barrel plant here is set to begin production in early December and will process up to 2 million pounds of milk per day to be made into Cheddar, says K Kachadurian, owner of Wisconsin Whey Protein (WWP), Darlington, Wisconsin, and Stainless Technologies, Menomonie, Wisconsin.

The new Cheddar plant was built to supply WWP with its own source of whey for its whey processing facility, also in Darlington. The firm also owns a whey processing plant producing instantized and regular whey protein isolate and whey protein concentrate-80 using only sunflower lecithin in Turtle Lake, Wisconsin.

Construction on the new cheese plant began in February and took only 10 months to complete. Kachadurian notes that his companies’ ability to do everything in-house — including design, engineering, fabrication, installation, programming and automation — kept the investment cost very low and made completion of the project move very quickly.

“Ten months is unheard of for a plant this size,” he says. The 2 million pounds of milk to be made into Cheddar daily will come from producers in Wisconsin and the surrounding areas.

The company has hired additional employees for the new Cheddar plant and plans to hire more.
“It’s a great thing for the state, the county and the town of Darlington,” Kachadurian says.


Online grocery platforms offer
fresh dairy sales opportunities

November 13, 2015

By Rena Archwamety

MADISON, Wis. — As consumers increasingly rely on mobile technology, grocers are finding new opportunities for marketing and sales through digital shopping platforms. And while online grocery shopping used to be seen as a small, niche market limited to mostly dry goods, offerings have now entered the mainstream and feature more fresh items such as dairy, deli and produce.

According to a report on online grocery models recently published by the International Dairy, Deli and Bakery Association (IDDBA), an estimated 3 to 4 percent of total grocery category sales shifted online in 2014. However, the report says this category is expected to increase at a 14-percent compound annual growth rate through 2016, in line with categories like consumer electronics and baby supplies.

This year, several large retailers have introduced or expanded their online grocery programs. Google Express recently added fresh produce, chilled and frozen food options to its grocery delivery services in San Francisco and West Los Angeles. In September, Walmart announced the expansion of its online grocery and free pickup service in eight new markets across the United States. And a couple of weeks ago, Meijer announced the expansion of its pilot Meijer Curbside program to eight additional stores in Michigan and Ohio.

“Our customers are always looking for ways to maximize their time, and we’re delighted to expand Meijer Curbside in Michigan and Ohio,” says Michael Ross, Meijer’s vice president of digital shopping and customer marketing. “We believe the combination of listening to our customers’ needs and providing a convenient digital shopping solution provides customers with time to do other things.”

• Fresh opportunities

Perishables, including cheese and dairy items, hold much potential with the growth of online grocery shopping.

“Fresh is seen as the last barrier to online grocery shopping, though if retailers optimize the delivery and pick-up of fresh groceries a greater share of total retail will move online,” IDDBA says in its report. “As fresh goes online, so does the rest of the grocery trip.”

IDDBA reports that perimeter/fresh categories still under-index as a percentage of total basket online compared to the average store basket. Among six leading online grocery services, including Amazon Fresh, Walmart Grocery and Peapod, dairy items comprise just 4 to 10 percent of the SKUs, according to RetailNet Group research in the IDDBA report. Among the reasons for this, IDDBA says, are higher sensitivity to product quality in these categories, loss of food theater in online grocery, and online customers tend to be less influenced by impulse merchandising.

However, some online grocery platforms are seeing higher growth in cheese and dairy sales. MyWebGrocer, which manages digital solutions for grocers and consumer packaged goods (CPG) brands, reports that for the year ending Aug. 31, 2015, online sales for the dairy category increased year-over-year by 14.3 percent, led by cheese, which had 16.2 percent growth. MyWebGrocer reports that the dairy category comprises 12 percent of its e-commerce sales.

Michelle Cote, vice president of data and insights for MyWebGrocer, says to build the trust of their customers, grocers need to hire and train the best personal shoppers that will prepare the online orders in the store.

“They should know how to choose the right items from the specialty departments and are trained to listen to customers’ individual preferences for things like fresh produce and deli meats and cheeses,” Cote says.

She adds that options like “Click & Collect” — where consumers order groceries online and pick them up at the store rather than schedule and pay for delivery — help grocers to keep down the costs of delivering fresh items and actually are preferred by consumers, who find curb-side pickup more flexible.

“By offering Click & Collect and hiring the right personal shoppers, we know customers already trust and rely on grocers across our platform because dairy items are included in their carts 93 percent of the time,” Cote says.

• Marketing potential

While customers may not be able to see the product first-hand like they would in-store, online grocery shopping offers some unique opportunities for product marketing.

“That’s where it gets fun — digital merchandising is just sweat equity. There’s no limitation on space or potential shrink. You can get as creative as you want to be, displaying products in different ways,” says Jeremy Neren, founder and CEO of GrocerKey, an online platform that works with Woodman’s Markets and Willy Street Co-op in Madison, Wisconsin, as well as Unified Grocers on the West Coast and grocery website provider Webstop.

“Instead of a cheese platter floating in space, shoppers could see a product image with a description of an artisan cheese and where it comes from,” Neren says. “Telling the story and featuring videos of the producer. Focusing on the quality of the image. Those things have a major impact on the likelihood that someone will buy the product.”

Partnerships between retailers and suppliers also can be tailored to the online shopper. In its report, IDDBA notes an example of a recent partnership between Peapod and Barilla to offer meal kits based on recipes online. All the ingredients for a pasta dinner, including salad, pasta, meat and cheese, were pre-measured and packaged for easy online ordering.

The ability to gather and customize information based on each shopper also is an advantage of online grocery platforms.

“Online grocery represents a type of marketing nirvana that CPGs and grocers never had access to,” Cote says. “Grocery e-commerce provides CPGs and grocers with the unique opportunity to learn things about each of their customers — like purchase behavior, intent, product preferences and demographic information — and in doing so, create a personalized and engaging shopping experience.”

Cote adds that marketing in this channel allows retailers and CPGs to fine tune product promotions and advertisements toward a particular shopper.

“Marketing efforts are targeted and more efficient as a result, which creates a relevant experience for customers and in turn breeds loyalty,” she says.

• Specialized products

In addition to providing convenience, online grocery platforms also allow mainstream grocers to offer specialized products that may not be available in brick-and-mortar stores, as well as an opportunity for specialized retailers to offer items to a wider customer base.

Neren says GrocerKey is working with United Natural Foods Inc. (UNFI) on a drop-ship program that will add 30,000 natural food products to a grocer’s existing online offerings on the GrocerKey platform.

“A store could extend those products to existing customers, and they would be shipped directly to the customer from one of (UNFI’s) fulfillment centers,” Neren says.

The rise of online grocery platforms also provides opportunities for specialty food stores and producers to reach a larger audience. One example of this is Artizone, an online grocery delivery service available in Chicago, Dallas and Denver, that features products from artisan producers and retailers — from specialty cheese and meat purveyors to hand-made soaps and cleaning products.

“We built a platform where each artisan, shop owner or farmer can open a platform under one roof,” Artizone co-founder and COO Lior Levy said in a webinar hosted this week by The Food Institute and BMO Harris. “With Artizone today, when customers go online, they can find products from different artisans and shops in their area and put them in a single cart. We provide picking, packing and packaging materials. Consumers have the experience of buying from an online supermarket, but everything is delivered from local farmers and artisans.”

Levy says 50 percent of Artizone’s revenue is generated by customers shopping on average at 19 different shops. More than half of their artisans have delivered in more than 50 zip codes, and key artisans can deliver more than 20 orders a day.

“This opens a conversation that those artisans and shops are becoming more and more unique in what they do,” Levy says. “They get the orders they need day to day to make a profit possible. It lets the artisans do what they do best.”

Neren, who also presented as part of this week’s webinar, notes that the online platform his company developed for Woodman’s has attracted shoppers that previously weren’t visiting the store on a regular basis, driving 80 percent incremental sales and 60 percent revenue growth with minimal advertising. Some of this growth has resulted from small businesses, such as day cares, placing large online orders, he says.

Bill Bishop, co-founder and chief architect of consulting service Brick Meets Click, said in his webinar presentation that some of the areas of greatest potential in online ordering include foodservice and catering.

“For an event, small or large, traditionally consumers make one trip to place the order and one trip to pick it up,” he says. “Online planning and ordering can eliminate that first trip. It’s often focused on deli and bakery ordering and is a chance to sell across all departments. It’s an opportunity to make it easier for customers to plan, place orders, know when it will be ready, and make sure it is accurate.”

Neren says there has been “enormous change” from when he first started an online grocery delivery service geared toward college students in 2006 and now, when online ordering is a basic consumer expectation.

“When I first started my previous business, it was considered a novelty to offer online ordering,” he says. “In 2006, very few grocery stores across the country offered online ordering at all, and very few had on-demand services. It has popped up in the last few years. And now with Amazon and Google getting into that space, all the big players want a piece of the pie. It influences things quite a bit.”


FDA seeks comments on
use of ‘natural’ in food labeling

November 13, 2015

WASHINGTON — Because of the changing landscape of food ingredients and production, and in direct response to consumers who have requested that FDA explore use of the term “natural,” the agency in Thursday’s Federal Register published a request for public comments and information on the use of this term in the labeling of human food products.

FDA says it is taking this action in part because it received three Citizen Petitions asking that the agency define the term “natural” for use in food labeling and one Citizen Petition asking that the agency prohibit the term “natural” on food labels.

Although FDA has not engaged in rulemaking to establish a formal definition for the term “natural,” the agency does have a longstanding policy concerning the use of “natural” in human food labeling. FDA has considered the term “natural” to mean that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in that food.

However, this policy was not intended to address food production methods, such as the use of pesticides, nor did it explicitly address food processing or manufacturing methods, such as thermal technologies, pasteurization or irradiation, FDA says. FDA also did not consider whether the term “natural” should describe any nutritional or other health benefit.

Specifically, FDA is asking for information and public comment on whether it is appropriate to define the term “natural,” and if so, how the agency should define “natural,” and how the agency should determine appropriate use of the term on food labels.

FDA is accepting public comments until Feb. 10, 2016. To submit comments, visit and type FDA-2014-N-1207 in the search box.

For more information, contact Loretta Carey with FDA’s Center for Food Safety and Applied Nutrition at 240-402-2371.


USDA lowers its forecasts for
milk production, 2016 prices

November 13, 2015

WASHINGTON — USDA currently is forecasting the number of U.S. dairy cows to decline more rapidly from a second-quarter peak than the department previously expected. That, combined with growth in milk per cow in 2015 remaining slower than expected, caused USDA to lower its milk production forecasts for both 2015 and 2016 in its latest “World Agricultural Supply and Demand Estimates” report released this week.

USDA now is projecting milk production in 2015 will total 208.7 billion pounds, down 200 million pounds from its forecast last month, while 2016 production is forecast at 212.9 billion pounds, down 100 million pounds from last month.

In the report, USDA also reduces its forecasts for imports on both a fat and skim-solids basis for both years as imports of milk protein concentrates and casein are expected to be lower.

The export forecast for 2015 is reduced on weaker butter, cheese and whey sales. Largely uncompetitive prices are likely to limit growth in export sales of butter and, to a lesser extent, cheese in 2016. USDA is reducing its 2016 export forecast on a fat basis to 9.4 billion pounds, down from 10.0 billion pounds in last month’s report. The 2016 export forecast on a skim-solids basis remains unchanged from last month’s report at 39.5 billion pounds.

Meanwhile, strong domestic demand for butter is expected to support relatively higher butter prices during the remainder of 2015, and the price forecast for butter is bumped to $2.005-$2.035 per pound from $1.920-$1.950 in last month’s report. However, supplies are expected to be large and the price forecast for 2016 is lowered by a half-cent from last month to $1.835-$1.955 per pound.

The cheese price forecasts also are lowered in this month’s report as supplies remain large. The 2015 cheese price is forecast to average $1.645-$1.655, down from $1.665-$1.675 last month. In 2016, the cheese price is forecast to average in the $1.595-$1.685 range, down from USDA’s forecast of $1.6000-$1.690 last month.

The nonfat dry milk (NDM) price forecast also is reduced for 2015-2016 as prices move closer to international levels. The 2015 NDM price now is forecast to average $0.900-$0.920, down from $0.910-$0.930 last month. In 2016, NDM is forecast to average $0.955-$1.025, down from $0.960-$1.030.

The dry whey forecast remains unchanged from the previous month at $0.375-$0.385 in 2015 and $0.280-$0.310 in 2016.

Reflecting the lower cheese price forecasts, the Class III price forecast is lowered for 2015 and 2016. The Class III price is forecast to average in the $15.75-$15.85 per hundredweight range in 2015, down 15 cents from last month’s report, while the 2016 forecast is down 5 cents to $14.70-$15.60.

The Class IV price forecast is raised for 2015 to $14.10-$14.30, up 25 cents from last month due to the strong forecast for butter which more than offsets the lower NDM price. In 2016, though, the Class IV price forecast is lowered by 10 cents to $13.85-$14.85.

The all-milk price for 2015 is projected to average $17.00-$17.10, up 10 cents from last month’s report, while the 2016 all-milk price forecast is lowered 10 cents to $15.95-$16.85.


Counsel for ADPI reviews
NDM/SMP key characteristics

November 13, 2015

CHICAGO — While nonfat dry milk (NDM) and skim milk powder (SMP) are similar substances and overlap in terms of their basic constituents and specifications, they are not necessarily identical, notes Keller and Heckman LLP, Washington counsel for the American Dairy Products Institute (ADPI), in a recent opinion on the interchangeability of NDM and SMP as an ingredient in finished foods.

ADPI requested the opinion from Keller and Heckman, specifically asking:

• Whether SMP is a permissible ingredient in foods covered by standards of identity established by FDA;

• Whether SMP is a permissible ingredient in non-standardized foods;

• How NDM and SMP should be listed in the ingredient statement provided on the label of finished foods; and

• Whether SMP may be identified as Grade A, and if so, whether it may be used an ingredient in Grade A milk products.

Keller and Heckman notes that NDM is covered by a federal standard of identity and is defined as “the product obtained by removal of water only from pasteurized milk. It contains not more than 5 percent by weight of moisture and not more than 1.5 percent by weight of milkfat unless otherwise indicated.”

Similarly, SMP is defined by Codex Alimentarius standard 207-1999 as the product obtained by the partial removal of water from milk or cream such that it contains no more than 5 percent moisture by weight and no more than 1.5 percent milkfat by weight.

Unlike FDA’s standard of identity for NDM, however, the Codex standard permits the addition of lactose, milk retentate and/or milk permeate for protein adjustment purposes and to otherwise meet the compositional requirements for SMP, the firm notes. In other words, the standard of identity for NDM meets the Codex standard for SMP, but SMP may not meet the mandatory standard of identity for NDM because of the addition of certain specified milk constituents that are not permitted under the standard.

Accordingly, the two are not interchangeable, Keller and Heckman says.

The firm says in its opinion that SMP is a permitted ingredient in nonstandardized foods but not in standard of identity foods where NDM is a permitted ingredient, to the extent that the SMP has been adjusted through the addition of milk retentate, milk permeate and/or lactose.

“It is our further opinion that, to the extent that SMP has been so adjusted, it must be listed as a separate ingredient in the ingredient statement provided on a finished food, apart from any NDM that may also be in the food,” Keller and Heckman says. “Finally, it is our opinion that SMP may be labeled Grade A if it complies with the applicable provisions of the Pasteurized Milk Ordinance and, accordingly, may be used as an ingredient in Grade A milk products.”


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Today's Cheese Spot Trading
November 25, 2015

Barrels: $1.5500 (+1 3/4)
Blocks: $1.5800 (+1)

Click here for more market activity
Cheese Production
U.S. Total Sept.
955.970 mil. lbs.

Milk Production
U.S. Total Oct.
17.080 bil. lbs.

Guest Columnist

Weaker forecast for commodity prices still in play

Arlan Suderman, INTL FCStone Financial Inc.

Also this week: “Fighting the right fight” by Jim Mulhern, National Milk Producers Federation

Click here for our columnist archives


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