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MAX PFEFFER: So welcome, everybody. I think we're getting started. Happy to see everybody here this afternoon. I just got a tip that it would be a good time to turn off cell phones. We won't get interrupted, and that'll be nice. And so appreciate that.
I want to welcome all of you here this afternoon. I want to do that on behalf of Dean Kathryn Boor and the College of Agriculture and Life Sciences, and also Cornell University. We're pleased to have all of you here this afternoon.
We've heard everywhere about the yogurt boom in New York State. And in fact, I was just reading something about it. It was referred to as historic. So that's what we're here to talk about, is the historic yogurt boom in New York State, and what it means for the state. We're here to talk about how we can maximize the benefits of this boom for New York and consumers in New York and elsewhere as well.
I have to tell you, CALS, College of Agriculture and Life Sciences is pleased to host this event. It's part of our unique responsibility as a land grant university to work to support agriculture and food production in the state so that we can provide food-- and you'll like this-- that I think is safe, nutritious, and I would add, for Wegmans, delicious, right? For our consumers. And so this is really important for us, and we take this responsibility very seriously.
And to help us do that, we have assembled today a very distinguished panel of experts to talk about this topic, the yogurt revolution. Can New York expand this boom to the dairy industry and beyond? The topic of our discussion today.
So with all that said, I'd like to run through some quick introductions of our panelists. Here on my left, I have Commissioner Darrel Aubertine, Commissioner of the Department of Agriculture and Markets for New York State. Prior to that role, he was in the New York State Senate, and chaired the Senate Agriculture Committee.
Also here, Professor Martin Wiedmann. He's a Professor of Food Science, Doctor of Veterinarian Medicine, and Director of the Milk Quality Improvement Program. And he's leading Cornell's outreach and dairy industry training curriculum development. We'll hear more about that in a little bit.
Rob Ralyea. Rob's right here. Senior Extension Associate in Food Science, Director of dairy extensions programs statewide, and an outreach member of the Milk Quality Improvement Program. Mike Van Amburgh, Professor of Animal Science and an expert on the capacity and development of New York State's dairy herd. We're going to want to hear more about that in a few minutes.
Josh Woodard. Josh, Professor of Applied Economics and Management at the CALS Dyson School of Applied Economics and Management. His research focuses on the economics of the state and regional dairy industry. Carmen Moraru, Professor of Food Science, whose research focuses on improving food safety and food quality with a focus on dairy products. She also teaches Dairy Foods Processing at Cornell University, and we want to talk a little bit about developing the expertise for our dairy industry in the state.
Tristan Zuber, Regional Dairy Processing Extension Associate based in Batavia. She's working to support yogurt makers in operating in Western New York. So we'll want to hear more from Tristan. Cathy Gaffney here on my left, Director of Specialty Cheeses, Delicatessen, and Kosher Deli for Wegmans food markets, hence my comment about the delicious food.
CATHY GAFFNEY: I like the water.
[LAUGHTER]
Bill Byrne is Chairman of the Board of Byrne Dairy Incorporated. Roger Parkhurst, Director of Operations at Alpina Foods USA. And Jim Murphy, President of Quality, Research & Development at Upstate Niagara Cooperative Incorporated. And last but not least, on my right--
[LAUGHTER]
Patrick Hooker. Patrick is Director of Agribusiness Development at Empire State Development Corporation, and he is also the former Commissioner of Agricultural & Markets for New York State. With introducing Patrick, I would like to invite him to give us a few opening remarks.
PATRICK HOOKER: Thank you very much, Max. Hello, everyone. I think I got this job right now from Max because I'm in a unique position of having been working exclusively with farmers for much of my career, and now in a position at Empire State Development of also working with the processing and the rest of the food industry. And so just one of a number of people in state government who is very involved in this.
Although certainly, the two leaders are Commissioner Aubertine at ag and markets who is working very closely with Kenneth Adams, who is my boss and is the president and CEO of Empire State development. And that's really something that the governor has been very focused on, is making sure agencies work together, and making sure that there is sort of a redundancy in skills among agencies.
And so it is a smaller, leaner government, but it is one that actually talks to each other and works with each other, which is kind of a nice change. And this will obviously be very easy to recognize, that this is New York and not Washington, DC.
This business of yogurt production in the state is fascinating to me. I graduated from this university in 1984. We thought about the dairy industry then as principally providing fluid milk to the industry here, to the consumers here in the Northeast. We were just at a point of expanding cheese production. And in particular, there was a tremendous demand for growth in Italian cheeses.
And we went a number of years where we really didn't do much more in terms of expansion in the state of New York. Thanks to the hard work of farmers and thanks to the investment that the state and the university made here and in cooperative extension, production per cow increased, but actual cow numbers have decreased. So we remain a very, very strong dairy state. But I think as Max alluded to, there's probably more to do there, particularly when I see my friends in the processing sector here growing their businesses and seeing the obvious benefit of being here.
And let me just stop for a minute and tell you that I think if you were to look around the world, you would not find a better place to milk cows and to turn that milk into consumer goods than you would here in this region of the United States. And it's principally New York, but certainly, our milkshed spills up into Vermont and down into Pennsylvania.
First of all, you're dealing with a naturally sustainable production area. This part of the world is a place where the soils are excellent, well suited to growing the forages, which is the basic ration for the dairy cow. And it is done through the natural fertility of the soil, the recycling of the nutrients that are there, and it is also done with natural snowmelt and rainwater. And we are not contorting mother nature in any way, shape, or form to produce the basic building blocks for milk production here in the Northeast.
It is also a temperature that is very sustainable for the cow. She likes it cool, and she's about to get what she really likes here for the next few months. And so we have-- it's a very excellent location for overall cow comfort.
I think you add to that just the location that this part of the country is in relation to the consumers. 60 million consumers up and down the eastern part of the United States, all well within a day's drive of this production area. And you're talking about an ethnic and cultural diversity that you don't see anywhere else in the world either. And it is all of that sort of consumer demand that has driven the ingenuity in this dairy industry here. So we have not only a huge amount of consumers in close proximity to a huge amount of milk production, but you have that diversity that calls for that product demand.
There are a couple of other things that are important, and they're important to say here, and they're important to say now. We have this system here, this university system. We have this land grant university. We have this college, the College of Veterinary Medicine as well, the knowledge, the support that comes from the state to these colleges in the form of financial support for various programs, some very specific like PRO-DAIRY, some much bigger and less seen to many people, like the Diagnostic Laboratory up at the College of Veterinary Medicine. But they provide an underpinning for animal health, animal welfare, environmental stewardship, and then business management on these farms.
And when you look at all the traditional dairy states in the country and dairy areas around the world, and the ones that have been doing it the longest, the state of New York and this region, the state of New York in particular is far ahead in benchmarking itself against places around the rest of the world. So we already start from a position that's very, very strong.
We also-- having been involved in a number of plant expansions since I've been at Empire State Development, it's pretty clear that it is the consumers, and it's pretty clear that it is the amount of consumers, and the diversity of the consumers and the milk supply that has drawn in a number of these companies to be here and consider expanding.
But it is also all the facets, and including-- and I should say quickly, of course, that was on the dairy production side-- but we have a world class dairy product research capability, and you're going to see more about that later today up the street in this new Stocking Hall and the tremendous scientists that we can bring to bear in support of these businesses. And that's something that many other regions do not have and cannot have.
And finally, in this other externality that faces this business, we have a governor who has these agencies that the commissioner and I are a part of. And a directive, a summit. He had all of these people in the room. And he essentially said to all of us, what are we doing right and what can we do better? And so we're in the process, all of us, of answering that question.
And we might have it a little more answered if we didn't have a hurricane, and if we didn't have a nor'easter last night. It has obviously consumed a great deal of time, frankly, for all of us. But there's a lot of discussion going on among agencies. There are regular meetings to follow up on what people said at that summit.
And there is a very determined focus on the part of the governor to see this industry through. And that means more yogurt, more dairy products produced in this state, more cows, more milk, more people employed, more open space kept open because it's profitable, and it's more profitable to keep it in farming than it is to turn it into subdivisions.
So there are challenges along the way. We have to look at milk supply. We have to look at regulations as they relate to our businesses compared to other states. What are essential that we need to keep for health and safety? What have we overstretched on? And that's true at the processor level. It's true at the producer level. Product development. Is there more that we can do to be helpful there? Waste disposal on farms, waste disposal at plants, energy, general research needs.
And then something that I think is growing now within the industry, and that is a coordination of the whole industry from producer to processor to government to academics. How do we all stay in this room? How do we all work together? How do we all understand everyone's needs and how we can all be helpful to move the industry forward? And so there's a commitment on the governor's part to see that through as well.
If we're successful in all of this, it's going to benefit many, many people in many walks of lives. It's going to benefit many people outside-- within agriculture outside of dairy. Just think of all the fruit that's in yogurt, and so on. I'm thinking about the fruit in the yogurt that I had this morning. Although looking at all these yogurt manufacturers here, the kind of yogurt I had this morning will go unnamed.
[LAUGHTER]
But you can all rest assured, I mix it up a lot. So there are other things that are frustrating to the industry I'm sure to processors as there is to producers, and those deal with federal issues. And they are things like, where do we go with the farm bill What positions will USDA and the Congress take? Where do we end up on our labor supply and immigration reform, and so on? And those are frustrating to us too, because we're here in New York, and we're not in Congress trying to solve those things.
So I'm really looking forward to today, and really looking forward to following up with all of you days, weeks, months, and years in advance. Thanks a lot for having me here.
[APPLAUSE]
MAX PFEFFER: Thanks, Pat. I think you've done a great job of kind of framing the discussion today. I wanted to just step back for a minute. I realized I didn't even introduce myself. I was so eager--
[LAUGHTER]
--to be with all of you. So for those of you that don't know, I'm Max Pfeffer. I'm a professor in Development Sociology here, and also the Senior Associate Dean of the College of Agriculture and Life Sciences. So again, happy to have you all here.
What I think we're going to do now, so you all know, we're going to try to pick up on some of the themes that Pat Hooker has already laid out. And what I'm planning to do is direct some questions to various of you, and ask you to address those. And as we go along, we don't have to be too stiff and formal. If there's something you want to jump in on and make a comment, just let me know, and we can have a little bit of a discussion.
We'll have the panel kind of have a discussion for a while, and then at some point, we're going to open it up to the floor, and so all of you will have a chance to ask questions. So with that said, I'd like to kick this off, get a little bit of a business perspective on things. And what I'd like to do is ask some of our business representatives here, how do you see this whole yogurt boom? What's driving this? What's behind it nationally and in New York State?
Bill Byrne, you may have read about Byrne Dairy last week, right? It was in our local newspaper. Going to invest in a new processing plant here in Cortlandville, right? Bill, how do you see this big boom, this yogurt boom? What's going on here?
BILL BYRNE: Well, I think there's a couple of different things going on. Obviously, the huge development is-- and it's too bad Chobani isn't-- I'll have to speak for Chobani today.
[LAUGHTER]
They're not here, and that's too bad, because I mean, it is really one of the most amazing success stories in the history of the food business. And Greek yogurt has taken over not just the nation, but the world, OK? And it really is just an amazing development to go from a startup to a billion dollars in sales in five years, which is what Chobani has done.
So the big development is Greek yogurt. And what's really behind that? I think that we are seeing an increased appreciation of the value and the importance of protein in the diet. We are seeing an increased appreciation for the quality of dairy protein as that protein source. And I think especially in yogurt, people are seeing a product that has higher protein and lower carbs, and that tastes really good. And I think those factors put together, and I think maybe Alpina probably should talk more about this than I, OK? Or you have other people.
MAX PFEFFER: Yeah.
BILL BYRNE: I'll leave some things for them. But the point is that the market, the projections of the market, we're at about $6 billion in the nation right now. The projection is it'll go to $9 in five years. We see a good thing. We're a little bit late to the party, but we want to get involved.
MAX PFEFFER: Yeah. No, that's very interesting. I want to come to Alpina in just a second. But Jim, Jim Murphy, for your perspective from Upstate Niagara, you know, this boom and what's going on here, what's your perspective on it all?
JIM MURPHY: Well, I think Bill hit on several of the subjects [INAUDIBLE]. And a comment made at the very beginning, products have to be delicious, and they have to be nutritious. And I think yogurt captures both of those attributes, and the consumers are aware of that.
And then as you see some of the different trends in consumers in the US or health issues in the US with obesity, with hypertension, people are trying very hard to change their eating habits. And if we can provide a product that gives them the nutrition that they need, all the nutritional attributes such as higher protein, lower carbs, without sacrificing flavor and satisfaction, that's really where we need to be.
You know, I step back. Upstate Niagara's a cooperative. We're owned by dairy farmers. And it starts with the milk. And I think when we start talking about why this area is really leading the boom, it starts with that high-quality milk supply.
We are blessed with the weather patterns, the climate, the geography to allow for this milk production. And I think we're also blessed with resources such as Cornell to help the processors develop the technology. So really, I would sum it up by saying, the natural facts of a nutritious, delicious product combined with innovation on, how do we bring these products to market?
MAX PFEFFER: Thanks Jim. And Roger Parkhurst, I want to turn to you for a minute and ask you kind of the same question, a little bit the perspective from Alpina's point of view about kind of this boom, and where this market-- what's driving this market. But I also would like you to comment in particular, why New York? Why is New York so favorable to this yogurt production from your perspective? Because one of the big stories, of course, is Alpina coming into New York and investing significantly, so we're interested in your perspective.
ROGER PARKHURST: Thank you. Thank you, Max. The story pretty much about Alpina is its history dealing with dairy going back to Europe and Switzerland. And they brought that basic artisan cheese to South America, which made them a strong dairy company in South America. So they know dairy and yogurt. It's one of their principal products in South America. It's one of their leading products.
The [INAUDIBLE] label is more drinkable because of the environment. The lack of refrigeration, the quality of the milk is inferior somewhat to the quality of standards we have here in the US. So it was an opportunity for them to expand their market, to come to the US about five years ago. And yogurt was on their radar screen.
The Northeast was part of that vision because of the population. As you talk to the opportunity to get into the markets, the volume it represents, the quality of the degree in the Northeast, or up and down the East Coast, but primarily the Northeast, which has higher quality than the Southeast, especially yields.
So that made it very attractive. We were comparing New York to Pennsylvania. Lancaster was where we were looking at versus Western New York, but bundled with the quality of the milk, the opportunity economically that the state of New York supported to make it a viable option, and the proximity to the markets. Within a day, as Pat was saying, within a day, you're at 60 million people. That makes it very attractive, especially with the energy issues we're having with the cost of fuel to make it very attractive.
So on top of strong commitment from the state of New York economically, a strong history of dairy support as a state, and Western New York and Upstate, we're working with Upstate directly. So it's part of our philosophy to partner with local folks as well.
So it was a natural fit. So all a combination-- it wasn't just one element of it, but a combination of everything Pat talked to. It was like-- I'm not going to say a perfect storm after what we've just had, but perfect conjuncture came together. And we took advantage of that to establish ourselves here in the US, and use this as our jumping off point to the rest of the United States. I think our timing would have been nicer if we were a couple of years earlier, but we're still making it-- going to make it work. I think it's a great place.
And being a native New Yorker, I love the opportunity to be able to support New York too, so it worked out well for me. So I'm familiar with New York. I'm familiar with its capabilities. I'm familiar with the standards, the quality standards that the state requires of the farms, and the inspection service that's out there. The quality of the farmers, the quality of the environment to support good quality milk.
I've worked with Cornell since 1980 with Dean Wolf and [INAUDIBLE] to help understand what Cornell can also bring to support our business. So I was able to promote that internally within the company, and the company's philosophy was to get into Western New York because of all the services it has to offer.
So it's been quite a trip, and I've been enjoying it. And this helps us too to network. And again, to extend that support not just to Western New York, but to all New York State.
And as the philosophy of the company, it's not just about the company. It's about the location and the area it supports. It's a community activity, economically as well as for both us and the community. So that's one of our baseline philosophies.
So I love it, and I'm enjoying it. I'm enjoying working with everybody here, and getting involved with the area, and supporting New York State's effort in leading-- being number one in yogurt. And that means we're part of that number one, so I'd like to be part of that too. Everybody wants to be one. Nobody wants to be number two.
[LAUGHTER]
You never know where number two is. You always remember number one. So I'm here to support that as well, and offer up any support I can provide, both in management of yogurt direct processing, supporting in the community, and helping how to handle all the side venues.
Not to mention just the dairy side of it. New York State has a lot more to offer than just dairy too. That tends to be forgotten. We are working strongly with the local farmers. Honey is one of the things we're trying to find a partner with in Western New York.
We're looking for those opportunities as well to keep as much into New York as we can. Not just on the material side too, but also on the construction side and the education side. So it's not just our isolated little pocket. We're trying to spread it across the whole state. So thumbs up for New York on that one.
MAX PFEFFER: Yeah. Thank you. I mean, I think that this gives us an idea of kind of the scope of what we're talking about, right? We're not just talking about a single product, but really, economic development upstate. So Commissioner, do you want to say a few words on kind of how you see this yogurt boom in terms of New York and what kind of opportunities it's creating for all of us?
DARREL AUBERTINE: Sure. Thanks, Max. Before I do, I certainly want to recognize Dean Boor, you and everyone here at CALS for helping to put this together and building on the foundation that we've already started in Ag and Markets and at this state with the Yogurt Summit, and then we've had follow-up meetings around the state. And this is certainly a giant step forward, bringing a lot of the major players together.
But I don't think there's-- it certainly isn't lost on the decision makers, I think, here in New York State, the governor, the legislators, us in state agencies, the fact that, as you were just pointing out, dairy is certainly one of the major drivers in agriculture. And agriculture in and of itself is one of the major economic drivers in rural New York State. We're not going to see the kind of resurgence that we all want to see without recognizing agriculture's got a major role to play.
So having said that, the dairy industry reaches across-- it cuts across a lot of different types of agriculture out there. And the framework that dairy supports is the framework that supports other types of agriculture, whether it's trucking or crops or fuel or equipment dealers. And the list goes on and on. That's all supported by dairy. And as Pat pointed out, those are all jobs in those separate sectors.
There is a role and certainly a connection between what we're trying to do here in enhancing the dairy industry, the yogurt sector in particular, as it relates to retail, as it relates to processing, as it relates to production. And that's what we're trying to get at is, how can we take all those different facets and really, for the first time, have an open, candid discussion without everybody going to their own separate corner? And I think we've started down that road, and sure.
Are there always going to be proprietary issues? Of course. It's the nature of competition. It's the nature of business. But that doesn't mean that there aren't commonalities and things that will benefit all of us. A rising tide, if you will.
So I just think that the recognition of the role that dairy plays, that in and of itself was a bit of an epiphany, it seemed to me. Having had a front row seat in the legislature here in New York State, having been associated with several different administrations, this administration has recognized for sure in a very tangible way that working with all the players in the dairy industry and focusing on research and development, which certainly Cornell is a leader here, not just in New York State, but in the world, for that matter.
Working with Cornell, working with processors, working with producers, working with the retail end, and all of us pulling in the same direction, that's really the path that we've started on here today. And actually back last summer. So to capitalize on that, that's a good thing.
MAX PFEFFER: Great. Thank you, Commissioner. I want to turn now and get into a few more specifics, and I want to turn to Josh Woodard. Josh, can you tell us a little bit about, what are some of the kind of market challenges that we might face in addressing this expanding dairy industry in New York State?
JOSH WOODARD: Sure. Thanks, Max. And thanks for having me as well. I appreciate it. So there are several issues, I think. So first I'll kind of talk about some of the challenges and some of the opportunities.
Let me preface all this with saying that this really is a historic opportunity for the dairy industry. Demand is projected to continue growing in New York, and that's good for the state. And I'm also going to come at this from more of a producer perspective.
But I think from a high level, some of the big issues are-- and this is in no particular order-- one is-- and someone touched on it earlier, is immigration and immigrant labor enforcement. So the New York dairy industry and the dairy industry in the nation, for that matter, relies pretty heavily on immigrant labor, and this creates a real source of risk to producers that need a stable labor supply, frankly.
Some people have floated some ideas about things we can do at the state level to sort of bring this to a head. But at the end of the day, it's more of a federal issue. But that definitely is a legitimate concern. We've all heard the stories about ICE coming in and rounding up labor, and not having enough labor. So this is a thing that really needs-- you know, I think it's on produces' minds as a challenge.
The second is the farm bill, or lack thereof, rather. With the election out of the way, hopefully we'll see some development on this. But as most of you know, under the last farm bill, which has expired now, there was a milk income loss contract program, which compensated producers in certain situations. But as of September 31, this program has been ended. The farm bill authorization has ended.
So there's a couple things that could happen. Congress can either do nothing, which I'll just tell you, that's probably not going to happen for various reasons, because that would include things like reverting back to 1949 foreign policy and some other things. The more likely scenario, if history is any guide, is that we'll probably get-- we may get an extension, which is what they've done before, to extend the last farm bill. The third would be that they pass a farm bill by January 1, which may or may not happen with the fiscal cliff and some other things that's kind of maybe not on the front of the radar.
But in the current version in the farm bill, the Senate's version, there's a margin protection program. And I just wanted to comment on this, because this kind of has some implications for New York.
So there's a margin protection program that will cover producers, paid producers if the milk and feed costs get too close together, basically. The margin gets too small. But producers that participate in it, they also have to agree to the supply management. And again, this is just a proposal. This has not gone through. Obviously, this is not going to be very popular in New York where we're trying to promote policies to grow milk supply.
Other challenges, the drought. This is something that will pass. But in general, we're sort of in a new era of commodity volatility. So managing risk, managing margin risk is going to only become more and more important at the producer level.
We've seen that historically, though, you know, dairy is an industry that's characterized by high asset fixity, high fixed cost, which just means that once you enter into a decision, it's not easy to reverse it, right? And the margins now are very volatile. But historically, we haven't seen producers very actively manage their input and output price risk. So I think from a university and state perspective, anything that we can do to sort of encourage producers to manage risk, either through educational programs or otherwise, is something that's beneficial.
And I don't want to take up the whole floor, but anyone can feel free to jump in. But I think those are some of the big things. You know, immigration reform, the farm bill, and managing risk at the producer level. Those are some big issues, I think.
MAX PFEFFER: That's great. Those are really big issues. And thanks for putting those up. I want to stick with the production perspective for a minute and turn to Mike Van Amburgh and ask you a little bit about this. Now we've heard a lot about the high level of demand for milk in producing Greek yogurt. Can we get that supply? And if so, what can we do to get it?
MIKE VAN AMBURGH: Yeah, thanks. This is a great forum. Can we get to supply? Well, the one thing I know about the New York dairy industry, they love a challenge. And I think the other thing about the dairy producers in New York is that they are probably the most competitive and some of the best businessmen I know of anywhere in the world in terms of the dairy industry. They know how to make margin. They know where there-- they know where the dollars and cents are, and that cannot be said for a lot of the dairy producers outside of the Northeast, especially in New York.
So given all that, can they make more milk? Yeah, they can. It's going to come from a combination of a little larger herd size, hopefully. But it's also going to come from more milk per cow. And right now in New York, I would say New York probably leads the country in terms of milk production per cow increases over the last few years. And that's to the credit of the dairy producer.
You know, last year was kind of hard because of the weather. And between that and the corn price, that's going to take a little bit of a toll this year, probably to the detriment of a few of you sitting around the table, because that's going to make the margin a little bit tighter.
But at the same time, they know that the way to improve profitability to farm is to have more milk per cow. And if the business environment is good, we'll see more cows. We're about 610,000 cows in the state of New York. If I put all the demand on the table at 70 pounds per cow average, which that's OK for all the cows, that's about 200,000 more cows, right?
Well, we're not going to get 200,000 more cows in the state of New York. But we could possibly get another 100,000 cows, possibly. And that other difference in the milk supply is going to come from more production per cow. And I think that's how it's going to happen. And we always have the opportunity to bring a little bit of milk in from some other sources, and that happens when we're really in need.
But I think the other thing that's happening here, and I'm sure this is going to come up someplace in the rest of the panel, are fluid milk uptake is decreasing. You know, we're down about 7% in fluid milk, over the last couple of years. Class IV process is down about 3%. So if you look at where fluid milk is at and some of the powder products versus where the yogurt's at, basically, it's not quite keeping step with it, but it's moving in the direction where there's enough of an offset right now that it's not hurting us too bad.
So in the end, can we do it? I think we can. But we're going to have to be a little bit more innovative. Some of the things that Josh talked about, we need to have a stable labor force, and we need to have some lenders out there that are willing to work with dairies to help provide the equity necessary to allow them to do some reinvestment and development. I think that's a big key.
MAX PFEFFER: That makes optimistic. We know what we need to do, so we've got to go out and do it, right?
MIKE VAN AMBURGH: Got to go do it.
MAX PFEFFER: Yeah, got to go do it.
MIKE VAN AMBURGH: But it's going to be a farm decision. That's the hard part about this, is it is a farm decision, right? So we can't force them to do it. But we're going to have to create the environment that encourages them to say, hey. Let's move those cows.
MAX PFEFFER: And be supportive. Yeah. And a lot of our programming is intended to do that.
MIKE VAN AMBURGH: PRO-DAIRY, the Western New York program, [INAUDIBLE]. That's all geared to help the environment plus the business planning.
JOSH WOODARD: Just to follow that up, to follow up with what Mike said, there is a lot of room for improvement, I think. If you look at dairy summaries like what we publish here at Cornell and so forth, you see that there's a big degree of heterogeneity in terms of efficiency on the farm. So having more programs to help producers become more efficient, you know, there's a lot of room for improvement, I think. That's what the data show.
MAX PFEFFER: Great. So that's encouraging and optimistic as well. So I want to turn away from yogurt for a moment, because now we're talking about big investments in the dairy industry in Upstate New York, and that's very promising. I want to ask, especially some of our representatives from business, but of course, other experts as well, what are some of the opportunities beyond yogurt for products coming out of our dairy processing industry? Jim, you have some thoughts on that?
JIM MURPHY: Well, I think, as I mentioned earlier, innovation is-- not only can it help drive the yogurt side of the business, but it's driving other sides of the business as well. We've got two cultured plants, two fluid plants, and what I'll best call a specialty products plant, Alacta milk products. Alacta's looking at novel, dairy-based beverages, whether they're high-protein beverages, sports beverages, nutrition beverages, coffee drinks that contain milk. So there's a lot of opportunities.
There's been research done here at Cornell that we've capitalized on that looks that milk fractionation. What else can you do with milk? Milk has gone into non-fat dry milk and now milk protein concentrates, but there's a host of other nutrients. And the goal would be zero waste. How do we take all these natural nutrients that are in milk and utilize in the best way possible?
So there's absolutely room for innovation, and it should be an exciting area. You know, as an R&D guy, I want this to be exciting, and I think really, over the last 20 years, we may be at the most exciting time of all, because there's so much opportunity with new technologies coming out, and the focus on nutrition. What better substrate to start with than milk?
MAX PFEFFER: I know another man that gets really excited about that kind of innovation, and that's Rob Ralyea. And so Rob, can you tell us a little bit about what Cornell's doing kind of in the new product development direction? And kind of how our Food Processing Development Lab may play into that.
ROB RALYEA: Thanks, Max. And part of my title there, that big, long thing that I am, I'm also the pilot plant manager of where we'll be taking the folks here to taste different styles of yogurt with different problems even. It's all safe. Don't get nervous.
But we do a lot of extension work with dairy plants. When I say extension work, as part of the land grant university piece, we work with a lot of the dairy plants to solve problems. We work with the plants to help with their education needs, and help develop their workforce to some extent. So that's a critical piece that we do. We also do research projects with a lot of them.
And as far as the FPDL, which is the Food Processing and Development Laboratory, it's basically a small-style kitchen-- well, bigger than a kitchen, but smaller than a plant, that a processor could come into and do a small run, per se, maybe a hundred-gallon run of a product in a licensed plant where they could use it for consumer testing.
Whereas in most plants-- Bill, correct me if I'm wrong, or Roger, or Jim-- you know, it's going to be an 8,000, 10,000, 20,000-gallon run. And if it doesn't turn out good, 20,000 gallons of nothing or junk is junk.
AUDIENCE: [INAUDIBLE]
[LAUGH]
ROB RALYEA: So that opportunity exists here at Cornell. We're hoping to expand that in the near future. I can't really elaborate on that yet, because those decisions have not been made, but we're looking to increase the capability there as well. So companies have that opportunity, and we have expertise, obviously, in our faculty, to try to help them put that best foot forward when we're talking about product development.
MAX PFEFFER: So one of the things that I've been really excited about is some of the work we've been doing in supporting artisanal cheese production, and it's an exciting kind of thing.
ROB RALYEA: I can elaborate on that. We're also-- actually, I might let Cathy go first from Wegmans, and she can spill her beans, I think.
MAX PFEFFER: [INAUDIBLE]. I mean, we'd be really interested in Cathy Gaffney from Wegmans. We would be interested to hear what your experience has been working with Cornell, and kind of what some of the opportunities are in the area of artisanal cheeses. I mean, I think there's a lot of buzz out there about this that's pretty exciting.
CATHY GAFFNEY: Great. Well, thank you very much. First, I'm thrilled to be here. I grew up in Western New York on a fairly large dairy farm, graduate of CALS, '89.
And my role at Wegmans now, essentially as the cheese buyer, I've seen some opportunities that I think we can really tie together what we're doing with dairy in New York, what Cornell has to offer, to really take a look at not only innovation, but also looking at what other countries have been doing for years and years, and that's making great cheese. And we already make great cheese, but it is more of that commodity cheese. And certainly, we want to continue to focus on that as well. I work with our deli departments.
But we also want to start looking at artisan. And people get nervous when you say artisan, because it's that, just handmade. Is it small production? Does it make sense? Should we invest monies there?
And it's not just about being a small production. It's about making great cheese, maybe in a more traditional way, following that European model. They've been eating yogurt in Europe for years, and finally, we just started doing that here in America. So I'm hoping the same trend will follow with great cheeses.
And essentially, as the cheese buyer at Wegmans, one of the frustrations I've had over the years is not really being able to find great cheeses within New York that will fit into our model of about 300 different varieties of cheese. We do carry several New York cheeses, but we want to carry more.
So the goal is basically to figure out-- you know, we meet with different folks. They bring their great products to us. And one of the challenges I have is, maybe it's not the right size. Maybe it's not in the right form. Maybe it needs to be aged just a little bit longer.
And up until now, I never had a place to say, gee, go work with X, Y, and Z so that you can come back to me with a better product. These are the things that we would like to see in the cheese. And working with Rob and obviously going to Cornell, I figured, there has to be a way to kind of link all of these things together.
So really, the goal-- and Cornell can offer everything from assistance in understanding business models and being more productive and driving costs out of their systems, but also making a better product, and all of the R&D that Rob's talking about. So in essence, what we want to be able to do is work with a few cheesemakers initially and be able to say to them, if you take your product, these are some of the things we'd like to see changed, and then partner with Cornell to make some of those changes, we're hoping that those products will be on our shelf in the future.
MAX PFEFFER: Wow, that's really great. Rob, do you want to follow up on that?
ROB RALYEA: And we're actually starting-- we've kicked that project off, actually, with Wegmans. So we're actually working with five-- we've identified five artisans that we're actually going to work with. We're going to build a model for the other artisans in the state. Currently, there are over 90 licensed artisan cheesemakers in New York State.
So there's a big need out there. And once we take that model and build it, the idea is that under the new Food Safety Modernization Act, this would help them deal with all those types of things as far as regulatory goes that they would have to deal with when the federal inspectors come knocking on their doors, which they're going to start doing now. So there's regulatory pieces to this as well to try to help our artisans have that foot up that probably other states are not doing.
MAX PFEFFER: Great. Thanks. I want to just change the subject for a moment. And you know, we're hearing about a lot of action here in the dairy processing industry, and so there's a lot going on. One of the things I would like to know a little bit more about is, what are some of the advantages of clustering some of these activities? So we have more and more investment that's clustered together in a particular place. Martin Wiedmann, I want to turn to you on that question. Are there advantages to dairy processing clustering?
MARTIN WIEDMANN: Yeah, thanks, Max. I really see some unique opportunities. I want to synthesize something and throw out an idea here that what we see is Greek yogurt, but then Cathy talks about European-style cheeses. I think what we're really seeing as part of the innovation here is to look at the international products we have in dairy and producing them locally. And we know why we need to do that, because it's very hard to ship dairy products for extended distances. It costs money, some of the dairy products are highly perishable.
So there is a need with increasing international populations, particularly in the Northeast, but throughout the US to produce these products here. That's why we're excited about have a company like Alpina here, which helps us understand the markets in South and Latin America, because we have the consumers here in that market.
So that's the opportunity. How do we tap that opportunity? If we have dairy processors working together with producers, with universities to build the expertise, the innovation pipeline and then tap in what we can do in terms of training and workforce development-- because we do have people in Upstate New York who are very, very qualified to work in these industries, are very interested to work in these industries, that have the background, coming from dairy farms, having worked in a dairy environment.
What Cornell can and will contribute is to work on that workforce development, not just at what we traditionally do in terms of training bachelor's degree-type students, but also offering certificate programs, which is one thing you started. And not just for yogurt production, but certificate programs in yogurt and other fermented products.
Many of you have seen kefir. Didn't used to see that in the dairy aisle. It's another international fermented product, which I think hasn't gotten quite the publicity as Greek yogurt. But it shows there are new international-type products where we learn from the other parts of the world to produce them here for consumers here in the US and in the Northeast in particular. Same thing with cheese [INAUDIBLE] from Wegmans, we're developing a cheese certificate program, but also in fluid milk production.
I think there continue to be opportunities in food and milk production in terms of some of the new products that [INAUDIBLE] make. If you have that as a cluster concept, highly qualified employees, which I think is one thing we haven't touched on as much, that will make New York even more of a unique place to produce high-quality dairy products for the Northeast.
So I think there's an advantage. I think if you look at some of the car industry in North Carolina or South Carolina, see how other industries have done that, I think there's an opportunity for New York to build on that, learn from that, and further develop an economy here, but also make good, safe, and high-quality products for consumers in the Northeast.
MAX PFEFFER: And so you really speak to, you know, Cornell's an educational organization, so we're interested in providing people with education and development of the workforce, really. And we're really talking about economic development and job growth here in this sector.
So Tristan Zuber, I want to turn to you. You've been working, especially in Western New York, on some of this workforce issues related to the dairy processing industry. Could you tell me a little bit about-- or tell all of us a little bit about, what do you think are some of the particular challenges in workforce development for the dairy processing industry? And maybe if you can tell us a little bit about some of the Cornell initiatives that are under way.
TRISTAN ZUBER: Absolutely. And I just want to thank you for inviting me here today. Growing up on a dairy farm in Western New York, and then just seeing the yogurt industry expand like it has over the past few years has been a tremendous experience for me to see.
But with regards to workforce, New York dairy manufacturing jobs have increased 3% over the past six years, whereas other manufacturing sectors in New York have fallen tremendously over the past few years. So with more processors coming into the area and current processors expanding production, there's going to be a strong need to develop a well-trained workforce to staff these plants.
So training. Training would be provided to attract new talent to the food processing sector. And as well, maybe help those workers who have been displaced from other manufacturing jobs.
So Cornell and myself and others around this table have been working in collaboration with different agencies throughout Western New York, as well as industry representatives, to help develop a strategic plan on how to train people to staff these plants that are coming into the area. Some of these initiatives include further developing certificate programs, developing continuing education programs, and even looking at degree programs that we can implement throughout the Western New York region to help train people to staff these plants.
MAX PFEFFER: Great. So we're out in the state. This is part of the beauty of Cornell and the Cornell Cooperative Extension system. But we're also working on campus. And Carmen, I wanted to ask you a little bit, following up on some of the things that Martin was saying, what about the educational efforts that we have under way to train experts that can work in the dairy industry?
CARMEN MORARU: Well, thank you, Max. First, Cornell is an education institution, and we have a very long and strong tradition in dairy. And we do offer a range of courses to our undergraduate and graduate students in the area of dairy, starting with the production side, and then [INAUDIBLE]. And my colleague can talk more about that maybe.
But over in Food Science, we train our students from the freshman level to the senior level, and then going into the undergraduate level in different issues related to dairy chemistry, dairy processing. And we are very happy to see some of our graduates becoming the new leaders in this field, both in New York State and in the country. And we actually have a product of our own programs right here. Tristan has been trained through our programs, and she is now emerging as a leader. And like her, there are many others.
But what I want to stress is I find this a very unique situation, a very advantageous situation in which we are here, that we can combine the classroom teaching where we give students theoretical knowledge in the area of dairy and dairy processing-- that's my area of specialty-- with some hands-on training in our world-class [INAUDIBLE] plant facilities. And we will see now the facilities as we move into the afternoon, it's really fabulous to be able to have our students actually do hands-on training on those pieces of equipment that we have around.
And also another thing that's very beneficial for us is to be in a dairy state, to have dairy plants very close by. We work closely with the dairy industry. We bring guest speakers from the industry to interact with our students. We take our students to dairy plants. And the dairy industry has been very, very helpful and gracious about this, and they allow our students to go in plants and see what really happens there. So that's invaluable, because you can not just do classroom teaching in a very effective way. But this is really, I find, a win-win situation.
And while most of our dairy teaching is focusing on our undergraduate students, we do continue that at the graduate level. And then we involve some of the graduate students in dairy-related research. That is another actually training opportunity and experience for them.
MAX PFEFFER: One of the things that I think-- and you may acknowledge this, some of the employers. What we hear back is the students that have this lab experience and have some of this research experience are really valuable when they get out in the workplace. Rob?
ROB RALYEA: Max, if I can jump in real quick to jump on Carmen's point there. We also have partners out there in the industry that have taken on interns over the past several years in the dairy industry over the summers for students. And typically, we look for students that are motivated.
And then when they get into those plants, they see what's out there, it creates an opportunity for them, one, down the road. Two, it gives them something to put on their resume when they get ready to leave Cornell. And three, more often than not, it gives the dairy something, usually a project that they've focused on that they can never get done that they focus a student on. It gets done for them. So it's kind of a win-win situation.
And we placed-- we're going into our third year. We placed five the first year, we placed 11 last year, and we're looking to place more this year. So our industry obviously supports Cornell as well.
On that note, I have to leave the forum and go up and prepare ropey yogurt for our good friends here, most other things. It won't hurt you, trust me. But it'll show you what ropey yogurt is. Something we don't want to ever make, right?
ROGER PARKHURST: Not intentionally.
[LAUGHTER]
ROB RALYEA: So I'll see you up at the plant.
MAX PFEFFER: Thanks for [INAUDIBLE] and giving us all a role.
JIM MURPHY: Max?
MAX PFEFFER: Yeah, Jim?
JIM MURPHY: Can we just go back to an original question that went to the whole cluster concept and goes towards the education. From an employer's standpoint, we've got five plants, over 1,000 employees in the state of New York, direct employees. And then obviously, the indirects that go from there from 365 farms.
But the cluster concept is uniquely valuable to us. We've got a world-class milk supply here. We've got world-class yogurt manufacturers and dairy manufacturers here, and we need to continue to supply world-class employees, and that starts with the education.
And we have a unique opportunity where we have a premier university recognized in dairy, and we also have a community college system where we can have a variety of educational opportunities, whether it's certificate programs, whether it's-- again, Tristan had mentioned, we're an industry that's growing. We offer a lot of job opportunities. We have other industries in New York that are not growing.
Typically, when there's an employee that's displaced from another industry, there's retraining dollars available. I'll tell you, as our industry changes, a mechanic used to be a wrench turner. You fixed a piece of equipment with a wrench.
Now you fix it with a laptop. There's programmers. There's automation. If there's somebody from a high tech industry, a programmer or a maintenance person that's displaced, a six-month retraining program to turn them into a-- give them knowledge in food and beverage, we'd snap them up in a minute. So I think there's opportunity to leverage the growth in food, beverage led by dairy into employment opportunities.
MAX PFEFFER: Yeah. [INAUDIBLE]. Yeah Go ahead.
PATRICK HOOKER: I would build on that, and agree with everything you said. The other thing I see in the economic development world is when you're in a county or you're in a region of the state, and you have some businesses growing, and we have some businesses contracting. And out your way, we think about maybe a Kodak going one way and dairy-- thank you, thank you-- going the other way out there.
And you start to see the economic development professionals realize that, And you start to see their boards of directors realize it. You start to see the system recognize it. And then you have engineering firms and you have equipment firms that are willing to sort of shift their thinking, and really kind of tool up for this.
And I think the things you just said also causes them to say, yes. And let's go to the community college, and let's think what kind of students we want to have come out of there.
And you know, and the governor's Regional Economic Development Councils presents a really great opportunity to profile the business of dairy farming and dairy manufacturing where if it was all driven-- not that it was all driven, but it was substantially driven out of big places like New York City in the past, and so that's not the case anymore. And you see these regions starting to say, hey, let's put resources, time, effort into this area. Tools, funding streams. So it's pretty exciting what can spin off of it once this has gotten going.
MAX PFEFFER: Yeah. I think this discussion about workforce development and the new workforce development is really important and exciting. And that's what Upstate needs, as much as anything else.
DARREL AUBERTINE: Absolutely. But I just think that the more you can relate the expansion of the dairy industry to jobs, the greater the focus your bring to the whole issue. And that synergy just continues to grow.
MAX PFEFFER: Well, this is a good place, I think, for us to pause for a moment. I think what we'd like to do now, rather that me directing questions to all of you, we'd like to open the floor and take questions from the floor. So who would like to ask a question? Microphone.
PILAR PARRA: [INAUDIBLE] you will hear me.
MAX PFEFFER: They record it. They need to record it.
AUDIENCE: Record my sweet voice. OK.
[LAUGHTER]
So I'm Pilar Parra. I [INAUDIBLE] and work in nutrition. And I think I should add one more point of important to the goals of this [INAUDIBLE]. [INAUDIBLE] is the aging of the population. And the aging of the population [INAUDIBLE] for women [INAUDIBLE] for men also. So this is another [INAUDIBLE] already [INAUDIBLE]. And so this is [INAUDIBLE].
MAX PFEFFER: Thank you, Dr. Parra. [INAUDIBLE]. Here's [INAUDIBLE].
AUDIENCE: Are there challenges to keeping the quality of milk high as demand goes up? Are there challenges to that?
MAX PFEFFER: Who wants to take that?
MIKE VAN AMBURGH: Either one of us.
AUDIENCE: [INAUDIBLE] jump in afterwards.
MIKE VAN AMBURGH: Yeah, no. So the answer to that is no. There's no challenge whatsoever. Actually, the higher the milk production per cow, generally the healthier the milk and the healthier the cow. So milk production per cow is actually the best indicator that that cow is healthy and other low stress conditions. So the more we can do, the better the cow is.
MARTIN WEIDMANN: The other thing is on farms, if you grow milk production, grow the number of cows, you will make more investment. That investment often means better quality, because you have newer equipment, better equipment, et cetera. And so that also will help with a lot of that. So I don't think-- the quality challenge is really not there. As we heard, New York has a high level of quality milk. We have some great organizations around the state, including at Cornell, that monitor the quality very closely, and I don't see any challenge in that area.
ROGER PARKHURST: And from the manufacturing side, we insist on it. So we're pushing to make sure that we only get the top quality. And that's pushing back some of the farmers rewarded for that high quality by a dividend. So there's an economic advantage to the farmer to produce good quality, and it's good for the plant, because it gives us better yield, especially in the yogurts and the cheeses where your protein is so critical. Maybe the perfect protein milk might be something to focus on.
MIKE VAN AMBURGH: We're working on that.
ROGER PARKHURST: Yeah. So I don't doubt it. I don't doubt it. But yeah, the quality's absolutely critical, and we reinforce that economically to the farmer as a dividend to them if they can deliver. It translates to better use of the milk for us.
MAX PFEFFER: Tristan, [INAUDIBLE].
TRISTAN ZUBER: And along with that, we've seen quality improvements over the past 20 years, either through the Milk Quality Improvement Program or the Quality Milk Promotion Services. So we've seen how growing pounds of milk in New York, there is higher quality milk than there was 20 years ago, thanks to technology and thanks to advancements in research also.
MIKE VAN AMBURGH: Yeah, and dollars and cents. These guys, they're reimbursed, they're given premiums for high-quality milk, because these guys want higher quality milk. And like I said, we have very competitive dairy producers. So if they can increase the quality of their milk and pick up another $0.25 a hundredweight, they're going to do everything they can to capture that value.
MAX PFEFFER: So we're going to go to a question from our internet viewers. Ellen [INAUDIBLE].
ELLEN: Hi, yes. We have a question from Jonathan [? Piro ?] who is wondering, what sort of barriers to entry, if any, are there for the yogurt business, and who is interested in coming into New York? Or barriers of entry for people who are interested in coming into New York.
UNKNOWN SPEAKER: You want to take that? Josh?
[LAUGHTER]
PATRICK HOOKER: Well, I would be very interested in some other people's perspectives here. But I think one thing-- and it's sort of like the same thing is also true with the barrier to a significant farming operation. It's probably capital. I mean, you have to start from somewhere. And so if you come into the state, and you want to do any business, it is a lot about, what equity do you have? What are your sources and uses? What is your business plan? And so I think to come in and be a Byrne Dairy and be an Alpina, be a Chobani, that's tough, because that's a lot of money to do that.
Having said that, we've heard about the opportunities at small scale. I see small operations all over the state. And there are resources that are available for that. You take the Southern Tier Regional Economic Development Council, they put together a $3 million fund. It's a revolving fund, but it's there for people who say, I want to add value into an existing business, or something like that.
And you know, I don't think it's any different. And Mike, I'm not sure what the trends are these days. But I know my college roommate here did not come from a dairy farm. He came from farming. But when he left here, he went out as an employee-- in this case, to a farm. Could be that he goes to a plant. And then you-- or she. Obviously, my college roommate was a he.
[LAUGHTER]
He got in the business. He showed his value. He showed that he made that farm more profitable than before he got there. And lo and behold, he's a 50% partner today, and part of the reason that the industry is moving forward. And so there are lots of ways in this, and I'm sure that's also true in these other businesses.
With regard to the state of New York, these are-- to the extent we invest in any business from the state standpoint, we do so very carefully. We're the last money in. These are your tax dollars, and so there needs to be a very solid plan. There needs to be a very clear path forward to profitability, and there has to be a risk to the state. Well, what if we don't get in this? What if this business either leaves or never comes here? Then what is our opportunity cost too? So that's how we weight. That's some of the things we weight.
MAX PFEFFER: Josh, you want to comment on this?
JOSH WOODARD: Yeah, sure. Just wanted to comment really quickly. Some of you have probably read in the news that, for example, Chobani recently said they opened a plant in Idaho because they were worried about being able to source enough milk in New York. So just to kind of comment on that, so land availability at the producer level is sort of a concern, but we haven't seen elevated land prices like we have in the Midwest. We haven't seen them that high. And so there still is room for expansion.
When I look at Chobani-- and they're not here, so they can't really say anything. But I mean, that's maybe as much to do with-- to have yogurt on the West Coast as anything else, and to bring that as almost a tactic to the negotiation table.
But you know, and there's also a lot of good reasons to come here, like you've said, from the market perspective that we did. In general, this is a very business-friendly environment from the state's perspective right now. You know, this is a good opportunity.
And second, we're really close to a population center. I don't think we've emphasized that enough. So being really close to a big part of the population in the Northeast is also a big benefit.
Yeah, another one of the New York advantages.
ELLEN: I'd just like to say that Chobani was going to be here, but they had some last minute travel.
UNKNOWN SPEAKER: [INAUDIBLE] to Idaho.
MAX PFEFFER: Does anybody else want to comment on barriers to entry before we--
BILL BYRNE: I would like to ask the commissioner a question, really.
DARREL AUBERTINE: Sure.
BILL BYRNE: I think that one of the issues-- and I'm not sure if this is quite a-- it's a barrier, it certainly is. There are those of us, both on the producer and the processor side who feel that we need to-- there are some legislative things we need to do. Do you have some advice for us today? You know, I know that there's going to be an effort on ag and markets to coordinate this, and I'd just like to hear your thoughts. There really are-- I like to think of myself as the poster child for tax investment credits.
[LAUGH]
Because I know what it did for us at [INAUDIBLE] dairy. And I'm sure that Alpina would say the same thing, and I know that-- it's really the incentive programs that New York has in place are extremely valuable to the processing industry. And we think we need some targeted things for producers. And we think there needs to be some legislative effort on that, and what advice you have for us.
Well, I guess, having had the advantage of kind of being on both sides of the equation when it comes to putting a budget together in Article VII language, which is language in a budget that implements a budget, from the legislative side and now from the administrative side, the one thing I would say is, obviously, you need to be vocal, and you need to be persistent to get any legislation to be recognized and carried the distance. In other words, it has to be dealt with in both houses, the assembly, and the Senate. And then obviously, on the governor's desk.
But from an agency standpoint, being able to support legislation that expands availability to things like tax credits and other incentives to processors, and things we can do for producers both. And we started down that road at the Yogurt Summit, as you're well aware, with trying to identify some of the needs that producers have, one of which was the CAFO issue, and allowing those dairies to get past that threshold.
And I think most of the people here are pretty familiar with dairy enough to know that a 200-cow dairy, as someone who's spent his life in the dairy industry, a 200-cow dairy is one of those thresholds that you need to get past. And having the ability to go to 300, as far as capitalizing and cash flowing, it's a much easier business to do at 300 than it is at 200. It's even easier to do at 100 than it is at 200.
But having said all that, I think getting back to your point is what we can do legislatively, we have a lot of-- as we craft the budget, as we've been working on it over the past couple of months, as you can well imagine, and going into December and January, we are working on legislation that hopefully will be beneficial, not only to processors, but to producers as well.
And one of the commitments we've made as an agency is to try to streamline the process when it comes to inspections and licensing in helping, as the one caller was alluding to, how do you get into business here in New York State? Sometimes just stepping up the process of licensing and inspections is a giant step forward to help somebody into the business.
And that's really the role I like to think that we're playing at ag and markets, is promoting it in turn, regardless of where you are in the circle, whether you're a producer, a processor, a retailer, or a consumer. Some of the things that we're proposing to do will impact you.
MAX PFEFFER: Great. Let's take another question from the floor.
AUDIENCE: Hi. I had actually a Greek yogurt market question. Can you explain the popularity, the explosion of popularity in Greek yogurt? And more to the point, before there's so much investment in it, how can you be sure it's not just another food fad? Not that I'm implying that it is, because I think it's just delicious.
MAX PFEFFER: Good question. Who wants to start?
CATHY GAFFNEY: Me?
[LAUGHTER]
UNKNOWN SPEAKER: Good call.
UNKNOWN SPEAKER: We were allowed to take it.
CATHY GAFFNEY: I think just as people become more well traveled, and they start to realize the nutritional benefits of yogurts, and certainly the yogurts that we've been able to bring to market with great producers and manufacturers, we're seeing just an explosion of business with the yogurts. All different varieties, all different kinds.
And I think people here are just doing what many Europeans have been doing for many years. They're incorporating it into their diet every day. It's not just something that you have because you're on a diet. They're making better products that taste better with, as we said, all the nutritional benefits that come with it. So that's really-- what I see is really a-- no pun intended-- culture change for Americans--
[LAUGHTER]
--to move to eating differently. And for something that tastes great and offers such great nutritional benefits, people are just reacting very well to yogurts of all types.
MAX PFEFFER: Sort of back to nutritious and delicious. [INAUDIBLE]. Tristan, you wanted to say something.
TRISTAN ZUBER: Yes. In going along with that, the consumption in the United States, Americans only consume one sixth the amount of Europeans. So there's a tremendous amount of growth that can happen here in America, boosting consumption on a daily basis for all Americans.
CATHY GAFFNEY: And only half the amount of cheese, so I know there's--
UNKNOWN SPEAKER: That's a good fact, yeah.
MAX PFEFFER: Martin, did you want to add something?
MARTIN WIEDMANN: Josh can maybe help me. I think there's another one, if you look at Chobani as an example, I mean, the way Chobani works with Twitter or social media, et cetera, that's something the dairy industry traditionally has not done.
I think there is some new energy going along with an outstanding product. And I think that combination really was important to specifically push Chobani, which then really pulled along, to a certain extent, part of the yogurt industry. I think there's more to it, which I think we can all learn in all parts of the dairy industry to help grow the industry.
ROGER PARKHURST: Greek had been there for a while. I mean, it has been on the market. It hadn't been doing anything. And there was some market pressure within the dairy industry with [INAUDIBLE] coming to the US that Chobani was trying to take advantage of.
By establishing a plant here and with the state of New York economic help [INAUDIBLE] plant in South Edmeston by Kraft, an opportunity presented itself, and he had a dream and conviction to make it happen and be first to market. So he followed up his dream and made it happen, and I applaud-- as we all would have loved to have been able to do that.
But it was through the help of economics with the state of New York, and it was the right time for the consumers. We just ended the Atkins diet phase, so we'd already heard about the value of protein. So that was starting to die literally with Atkins himself.
[LAUGHTER]
But what it did do is it raised--
UNKNOWN SPEAKER: That's the one quote that's going to make it from today.
ROGER PARKHURST: --raised the consciousness in the value of protein, protein in a diet, and also with that, [INAUDIBLE] cottage cheese was very popular for a while. A good source of protein. Higher source of protein than yogurt, but what would you rather have? And what do the kids want to have? It tastes better in a yogurt format than it does in a cottage cheese. Cottage cheese looks funny.
JIM MURPHY: For now, right.
[LAUGHTER]
ROGER PARKHURST: From the perspective of the kid, OK? They see the little curds. Or they can have something sweet, fruity, and still gives almost the same protein content as the cottage cheese. Mothers want the protein for the kids. If they can get it through yogurt, they already feel that yogurt's a good value from an alternative to candy bar. I'll use candy bar rather than another source. But what would you rather have? Yogurt. Yogurt as a dairy source. Now you've got a protein value, and it's low fat content.
So I think that was a whole combination of just hitting right. And it's been sustained five years for-- I think transcends the fad at this point. And when you see everybody else getting into the market, now you're going to see economic pressures with everybody on the shelf, the price is going to come down just from market pressure. So it's going to make it even more explosive in the market for consumption.
And if anything, it's affecting the traditional style of yogurts. They're getting pushed a little bit to the side, and you're seeing the Greek kind of fulfilling that former process [INAUDIBLE] traditional yogurt. I mean, look at Yoplait and where Dannon is right now thanks to the Greek process.
MAX PFEFFER: Cathy, did you want to add one more thing?
CATHY GAFFNEY: Just a couple of things. One is I think we have to be careful too, because now everyone wants to use the term Greek yogurt on everything. So I think we really should come out with, what is Greek yogurt, and what does that mean, and what are possibly some standards to help protect the industry a little bit too, and the manufacturers a little bit on that side. But you know, I think there's some things we need to look at there.
But just even yogurt, I mean, above and beyond yogurt and just dairy products in general are a great protein boost for kids. Your partner that up with fruit, it's a great snack between school and those after school activities, whether they're sports or anything else. And you say candy bar, but there's lots of other bars out there that have an ingredient deck that's pretty hefty.
So you look at an ingredient deck on dairy products, and it's any one of them, nature's most nearly perfect food. So I think it's just a great way for us to talk about the dairy industry overall. Now partner up fruits as well, as those are great combinations for kids, and much healthier options.
ROGER PARKHURST: I think it has done a lot to help the dairy industry. It's raised the consciousness of dairy in the US because of the marketability of it, which is going to be some offshoots.
MAX PFEFFER: I think that's what we're experiencing here in a big way. Let's take another push from the floor.
AUDIENCE: Hi. My question was for Darrel Aubertine, following up on Bill Byrne's question. You mentioned certain legislation in streamlining some of the [INAUDIBLE] that need to be done. I was wondering if you could give me any particular specifics about what legislation is going through, or how that's being streamlined? I was just wondering if you could get a little bit more specific.
DARREL AUBERTINE: The way the process works at this point, we would have departmental bills. And at that point, we would have as many as 25 or 30 departmental bills that we would be looking to move. We will winnow those down to probably five or six priority bills that ultimately we would seek to get through the legislature. The other process would be to have legislation put in the budget in Article VII language that would be helpful to economic development, for example, or streamlining a process, driving more funding into getting almost any kind of legislation out as it relates to licensing or regulation.
So I mean, there's a myriad of ways to do it. We aren't to the point yet in the process where I'd really be comfortable about saying, we are going to take this piece of legislation and move it. But suffice it to say that in the coming weeks, we'll be getting to that point in the process as to what specific legislation and language we'd be acting on in this legislative session.
PATRICK HOOKER: Yeah. Commissioner's being pretty modest here, and I will say, it's right to be cautious in terms of he doesn't want to get ahead of anything. But I've seen-- you know, our agency puts bills together. His agency puts a lot of bills together. And then we share them to see, what do you think about this or that? And I've had the opportunity to see some of his thinking.
And I will say what I predict you will see is a very strong nexus between what this industry needs, what came out of the summit, what kind of good thinking is going on, and actually, what he's going to do. So I'll leave it at that also.
[LAUGHTER]
I think that's the connection for you, is that people are listening, and you're going to see that turn into legislation.
MAX PFEFFER: So we have time for a couple more questions from the floor. Or do We have one from the internet?
ELLEN: Yes. I have a good one from the internet talking about-- asking, how can the industry build on the success of Greek yogurt in development of new products? And what are the important areas of product information? What kinds of yogurt products and products will we see coming at us in the future?
MAX PFEFFER: Jim started talking about that a little earlier. You want to come back on that for us, Jim?
JIM MURPHY: I think there's two components that go into it. One is innovation. Innovation, innovation. And there's so many opportunities. But the other is to listen to the consumer, whether it's-- and look at the trends, whether it's obesity, whether it's hypertension. We get back to, is Greek yogurt a trend or a fad?
And there's a lot of dynamics that are coming into play, whether it's changing population diversity-- Europeans historically ate more dairy proteins. And some of that is due to they didn't have large land masses were you could raise beef cattle, so you had dairy. And every little village had a dairy, and this is where you got your protein. And that was just normal. We're in the US. It was meat and potatoes.
So as we see more ethnic diversity, that changes what people want to eat. But if we go all the way back to dairy being an unbelievably rich source of nutrients, it is a nutrient-dense product. And we've done a lot with turning milk into other things. Now we're really looking at technologies that are starting to separate out the various components of milk, and what can we do with those?
You know, I do envision the day-- people talk about corn now, right? Corn's in every product, whether it's in there as starch or whether it's in multiple forms. You could almost find corn in every product that's out there.
And I think that we're going to get to the day that you're going to say the same thing with dairy, that there is some component in that product that had been sourced originally from dairy, because there are-- the nutrients are incredible, the minerals are incredible, the combination is unbelievable. That's where it continues to go. So I don't think we've tapped the possibilities at all, and I think there'll be many more next Greek yogurts.
MAX PFEFFER: Bill, Roger, you want to comment on product development? Then we'll come to Martin and Carmen.
BILL BYRNE: Well--
[LAUGH]
Some of it's been kind of a no-brainer. You know, Greek frozen yogurt. That was easy.
[LAUGHTER]
And everybody's done it, with of mixed results, actually, because it's not really the same kind of kick that you get from Greek yogurt as opposed to regular yogurt. But I think there are a lot-- we're seeing a trend, obviously, toward milk being used as a carrier for such things as DHA for those kinds of products. Value-added products for specific nutritional needs. Both for kids and for older people especially, we're seeing that.
But I think I'd just like to say, as we're sitting here talking about all this, I think that as Governor Cuomo said at the Yogurt Summit, and I think I'd like to just emphasize that point, he said, there's a window of opportunity here. That's what we have, OK? And it looks like the processors are out a little bit ahead of the dairy farmers, OK? And that the limiting factor is going to be dairy farmers.
The dairy farmers have got to win. It's that simple. We've got to make this-- we've got to do everything we can to produce the milk, to continue to grow this industry, not just in one segment, but right back at the rural level, at the farm. And that's really what we need to do, and I think we need to focus on that.
And I'd like to just point out a couple of kind of difficult situations. Our pay price in New York is lower than Wisconsin's. Now how can that be, when you really think about it, given the structure of the federal market orders and everything else?
What's going on is Wisconsin's 15% short, and there's a lot more competition for our milk. You know, I hate to admit that, sitting here as one of the players in the marketplace, OK? But the point is that the dairy farmers in Wisconsin are getting more money per hundredweight for their milk. And at the same time, their feed prices are maybe $1 per hundredweight less.
So we've got some real structural things we have to work on. And I know that our company's committed, and I know that everybody around this table-- I think we've been so lucky to have Cornell. I think our educational piece is very strong. I think that our retail-- you know, if you look at-- I think the retailers are doing a fabulous job in terms of both educating consumers and marketing to consumers. We've got to be-- we've got to shore up the rural end of this business.
MAX PFEFFER: Yeah, that's a really good point. Carmen, you wanted to jump in [INAUDIBLE].
CARMEN MORARU: Yes, although I'll take the discussion a little bit back, following up on what Jim just said, that I certainly can see things developing in the future. We're thinking we'll go a little bit out of the box. And we look at different type of utilization of dairy ingredients. And there is quite a bit of research on developing now at Cornell in that direction.
How can we use innovation to really use these dairy ingredients, to really use milk proteins and make products that people don't necessarily think of right now as typical dairy products? So I don't know if that's going to be the next Greek yogurt. But certainly, I can see the dairy taking place of some other traditional ingredients like Jim has mentioned before. And then I'll let the conversation go back to--
MARTIN WIEDMANN: I think we have two future paths for the dairy industry. One is really [INAUDIBLE] the component, you know, add dairy as a health-- beneficial ingredient to many foods.
The other one, I think, is going back to where [INAUDIBLE] Greek yogurt. Replace foods, which were traditionally thought of not being so healthy, with a dairy food which is recognizably dairy, does have a label which doesn't have a lot of stuff on it, and people are going to try to replace it. It's going to go both ways. The percentages of each in terms of the market for dairy, that's going to be hard to predict.
But I think-- and then in terms of the types of products, I do think if you look around the world, drinkable yogurt never made it in the US. That's sort of one of-- that was a fad, and it's never really made it. Why, I don't understand at all. But around the world, that's a very common product. I think there were some other sort of products in that interface, which at some point, if someone does it right and hits the market right in the US, I think there's some opportunity there.
But if you look around, I think that other part of the market's really developed. It's not new product innovation. It's like, look at what's already out there, and make it better, make it consumer-friendly. Package it well, market it well. I think that's the two things where, in my mind, that dairy industry's going to go.
MAX PFEFFER: So with that said, we're going to transition now to our tour of our dairy facility. And so I want to [INAUDIBLE] thank you to all of you who came here. And I want to give a special thanks to our panel. [INAUDIBLE] incredible [INAUDIBLE] great learning experience. Thank you so much.
[APPLAUSE]
Consider this: In a state where overall manufacturing jobs shrunk 9 percent from 2005-11, with total wages dropping 21 percent, one sector has bucked that trend - New York's dairy industry. Over that same time, even as the state and national economies struggled, New York's dairy manufacturing job base increased by 3 percent, with a 14 percent jump in total wages paid to local workers and an estimated 5.72 local jobs multiplier benefit.
One of the driving forces behind that success story is the boom in New York's milk-intensive yogurt industry, where production has more than doubled since 2005 - with new plants being expanded or constructed and investment pouring in from around the world.
On November 8, 2012, State, industry and academic leaders gather for an open forum on New York's yogurt boom, and how to maximize its benefit to the dairy industry, local communities and consumers. The forum was followed by a yogurt production and quality demonstration, and a walkthrough the $105 million Stocking Hall Dairy Plant, training and teaching facility.
