A Tale of Two Dairies - Part Two

Sweet Grass Dairy in Ohio, all photos courtesy of Jacob Coleman

A Tale of Two Dairies - Part Two

Published Jul 12, 2018 

This is part two in my series exploring the stories of various farmers around the country of all kinds, shapes, and sizes. You can catch part one here,

As the sun set on the rolling hills of north central Pennsylvania, Jacob and Elizabeth Coleman found themselves in a similar spot - their small farm house, after a long day of farm work, with limited time and resources to figure out a way forward for their growing family. Jacob was 26. Elizabeth, nine months his senior. One child asleep, another on the way.

It was an especially tough time for farmers - high crop prices and low milk prices were putting a big pinch into the little money the young couple made working on Elizabeth’s family’s dairy farm. They didn’t have much savings, to boot. In the four or so years since graduation, Jacob had a track record of odd jobs under his belt. They knew they couldn’t stay. They knew they didn’t want to stay. But they couldn’t figure out how they would go.

There were many motivations at play beyond fiscal prospects. The approach to farming Jacob had witnessed at Carterly Farms and read about in the works of Joel Salatin is what they wanted for their farm and family. They wanted to control their farm’s future. That wasn’t going to happen in Pennsylvania.

2011 turned into 2012. Winter gave way to Spring, and Spring to Summer.

They searched and looked for their own farm, hoping to find some kind of option or arrangement that would work financially. Given their finances, it was pretty slim pickings. But in Summer of 2012 while perusing Craigslist (which, interestingly, is how we found our farm as well), they came across a listing just outside of Columbus, Ohio.

This farm had been many things over the years. Its bones were 150 acres of rolling pastures on the far north western edge of the Appalachian foothills that stretch towards central Ohio. Amish and Mennonite communities make up a fair share of the landscape in those parts o Ohio, along with good soil and a generally kindly climate.

After many years of conventional agriculture, the owners converted it to a pasture based operation during the New Zealand grazing movement of the 90s. A tragic accident in 2001 killed the father. The kids had no interest in continuing the operation. Josie Swartzentruber, the matriarch, had no interest in selling. So she decided to rent out the farm.

Renting out a farm is a bit like Russian Roulette, only it often seems like half the chambers are loaded. The renters ran Mrs. Swartzentruber’s farm into the ground. Animals were not properly pastured. Infrastructure was not properly maintained. Eventually, failure overtook the renters. The only thing they hadn’t managed to destroy during their stay was the farm’s organic certification.

Where most others saw problems, Jacob and Elizabeth saw providence. Where others saw hard work, they saw a hard prayed for opportunity. Where poison hemlock and thistle dominated, possibility and treasure awaited. In the fall of 2012, they signed a five year lease agreement with the owner. On March 20th of 2013, the Coleman’s started their farm.

First Dairy Herd Hits the Ground Running

Jacob and Elizabeth’s skills and experience combined with the farm’s organic certification opened up a golden opportunity for the young farmers - organic milk. In 2010 through 2013, the organic dairy market was exploding. Organic dairy prices were two or more times those of conventional milk. Demand was high and supply was very tight. Horizon was actively looking for new farmers to help them meet this growing market.

While the Coleman’s had an already certified organic farm and the skills to run run an organic dairy, they lacked a rather crucial component. Cows. That would take money, money they did not have. So, they would need a loan.

Unsurprisingly, the loan agency didn’t want to lend them money until they had a contract for their dairy products. Horizon didn’t want to give them a contract until they had the loan and farm in order. It was the proverbial chicken and egg problem, one farmers have been solving for generations.

Somehow, Jacob and Elizabeth managed to get all the various parties on the same page. A lease, a loan, a bunch of new cows, and an organic dairy contract all in place so they could start their farm. The same day that they moved into the farmhouse their first heifers calved. By mid April, Horizon started every other day pickups, three times per week.

The Coleman’s first dairy herd was half what was already present on the farm and half what they purchased from a closed herd in Pennsylvania. They started with forty springing heifers - new mother’s who had never been milked. As they were unpacking boxes they were also catching calves… lots and lots of calves. Long before they were settled into their new home and farm, Horizon was making milk pickups. To say it was a busy start to a new farming operation is a bit of an understatement.

While busy, it was bountiful for their family. The monthly milk check for their fluid, organic milk allowed the young family to quickly establish and expand their enterprises. For the first time, the young couple saw real money coming in from their hard work farming.

Even with an immediately successful dairy, Jacob couldn’t escape Carter and Joel Salatin’s influence, or his love of entrepreneurship. So he also started to raise pastured broilers in chicken tractors, both to help renovate the degraded pastures and provide another source of income. They thought if they couldn’t find buyers, at least their family would eat well. Diversifying his enterprise would soon become a valuable form of insurance to the young family’s farming future.

Don’t Ask, Don’t Tell in the Dairy Industry

Just a few weeks after they moved into their new home, a stranger pulled up after having noticed the cows grazing across the pastures. “Do you offer cowshares?” Jacob and Elizabeth talked, and decided that offering direct to consumer dairy along with chicken made good sense.

At the time, Ohio was one of a number of states where raw milk was legal. But this didn’t happen without a fight. While raw milk has been happening across almost all fifty states for many years (and before the PMO ordinances of the mid century, was fairly common. During a meeting of the KY legislature a few years back, a representative asked those in the chamber who grew up drinking raw milk. The show of hands was almost universal).

By the time the Coleman’s stepped onto the scene, cowshares had a bit under a decade of precedent under their belt. Also, Horizon and many other dairy aggregates had no stipulations banning their farmers from such direct to consumer sales. Even if some did prohibit or frown upon such sales, many operated under a “Don’t ask, don’t tell” type approach to this divisive issue within the dairy community.

That first herdshare member brought many others. Jacob and Elizabeth also began posting flyers in local health food stores and in online direct to consumer farm sales sites. Web sites such as Local Harvest and Real Milk.com had exploded in popularity over the past decade, providing a way for consumers who wanted to directly connect with local farmers to do so quickly and conveniently.

In eighteen months, they went from one to one hundred cowshare members. The dairy operation allowed them to diversify into pastured beef, giving a way to turn unneeded males and females into sought after grass-fed and finished beef products. The pastured poultry production produced plenty of profits - 1st year 50 chickens, 2nd year 500, 3rd 2500, 4th 5000. Year five marked just under ten thousand pastured chickens produced by their operation.

Sweet Grass is now far more than just your typical dairy farm,

providing a wide variety of proteins that people want.

In just five years their direct to market sales produced over half of their annual farm revenues and income. It was a fairytale type story come true for the Coleman family. Yet, even the smallest of kids know, all good stories involve struggle, sacrifice, and at times, scary stuff. All that came to Sweet Grass Dairy in 2017.

The Organic Dairy Boom and Bust

One thing you learn as a farmer, no matter how dry it gets, eventually it rains. When it rains, it usually pours. While organic dairy was a hot commodity in the early to mid 2010s, conventional dairy was struggling. Struggling may be an understatement. As some put it, conventional dairy found itself on life support, where it still sits today.

That struggle eventually spread to organic dairy in mid 2016. Supply caught up with demand. Partly because of the problems in conventional commodity dairy, many farms had moved to certified organic production. The promises that the milk processors and cooperatives made were also a major part of the movement. Suddenly, this once niche market was flooded with fluid dairy.

Unfortunately for the farmers, changing consumer preferences took a hard turn against them. Tight supply and runaway demand swapped positions. Substitute, so called milk products - soy, almond, rice, and many more - saw a sudden and sharp increase in demand. Consumption of fluid milk - which has declined by almost 50% since the 1970s - continued to fall.

In response, organic milk prices began to plummet. The industry, which was already undergoing rapid and highly debated changes and consolidation, began to take it out on the farmers. Many farmers waiting to get picked up by organic milk aggregators - some having waited multiple years already - found out that they would not be needed after all. Many already in the industry found their prices drop and maximum quotas imposed. Farms lost ten, twenty, sometimes thirty percent of their income in just a few short months.

The Coleman’s, because of their direct to consumer sales, weathered these challenges better than most. They had not just their dairy, but chicken, beef, and recently added pork products to support and help insulate their farm. But dairy was still their bulwark, what paid the bills, especially during off months when direct to consumer sales were slow or sluggish, like in the summer, or when expenses were high but there was little to sell, like early spring.

They crossed their fingers, said their prayers, and hoped, like many other small farmers across the country, that the organic commodity dairy market would eventually come out of the storm. Little did they know that their little boat was about to be rocked once again.

Mergers, Acquisitions, and Issues

In mid 2016, Horizon had major news for their suppliers. Back in the early 2000s, Horizon had been acquired by Dean Foods. They were a part of the early wave of organic acquisitions that mainstream food giants saw and adapted to quickly changing consumer preferences. Now, French giant Danone was shelling out 10.4 billion dollars to acquire Whitewave (Dean’s new name after a slew of acquisitions).

In spring of 2017, Horizon held an in person meeting with the farmers to discuss the new contract and new rules for their suppliers.

Many changes came to the farmers because of the acquisition. Their already ailing milk checks took another hit. Farmers would now need to carry fifteen million dollars of liability insurance. They would also need to forecast their milk supply to within 5% on a month by month basis. Danone had the right to forgo purchasing excess milk - forcing the farmers to dump it. Even more head scratching, they could also make the farmer pay for any shortfalls in what they supplied.

Of all the changes, one in particular took aim at what was now the main support of the Coleman’s young farming operation - their direct to consumer dairy sales. The new contract barred suppliers from exchanging in such commerce, regardless of their state’s laws and regulations.

The Coleman’s had to make a choice. Give up a significant part of their direct to consumer business and stay in the uncertain and volatile organic dairy commodity market, or give up the stability of a monthly, guaranteed milk check that that market provided their still relatively new farming operation.

They opted to cut dies with the organic commodity dairy market.

What happened next? A great deal, which I hope to explore in a future installment.

John is a homesteader, farmer, father to five, writer and speaker for numerous publications, websites, and magazines, and author of the Frugal Homesteader Handbook .

You can connect with him at his website, Homesteader Handbook.

Article Added

John Moody Irvington, KY
Jul 12, 2018
A Tale of Two Dairies - Part Two

A Tale of Two Dairies - Part Two

This is part two in my series exploring the stories of various farmers around the country of all kinds, shapes, and sizes. You can catch part one here, A Tale of Two Dairies - Sweet Grass Dairy There is a stretch of interstate that runs crooked across...

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