Yogurt production growing in NY but not cow herd

ALBANY, N.Y. (AP) -- The recent yogurt boom in upstate New York has meant more jobs and more economic activity. But it has not led to many more dairy cows in the state, even as Greek yogurt leader Chobani reaches beyond New York for some of its milk.

There are a number of reasons for the static herd numbers, including struggling dairy farmers leery about making long-term investments in more cows. And while the Greek yogurt market grows like gangbusters, Americans have been drinking less milk over the years.

"We would be swimming in milk if the yogurt guys weren't here," said farmer Ben Simons, who keeps 80 milking cows in Remsen, north of Utica.

Greek yogurt has gone from being a niche product to a $1 billion-plus seller in a short time, and New York has been a big beneficiary. Chobani has increased production at its central New York plant, and the Fage plant less than 60 miles away in the Mohawk Valley also is growing.

South American yogurt maker Alpina Foods opened a plant in Batavia in western New York in September, and Muller Quaker Dairy, a joint venture between PepsiCo, Inc. and the Theo Muller Group, is building a yogurt plant in Batavia that is expected to be in production this summer.

It takes about four gallons of milk to make a gallon of Greek yogurt, which is thicker than traditional yogurt, and the Chobani and Fage plants are voracious consumers. The Chobani plant alone used 1.26 billion pounds of milk last year, a 48 percent increase from 2011. The plant in New Berlin takes in about 70 tanker loads a day.

"As we've grown, so has our demand for milk. More than 90 percent of our milk comes from New York farms, but we are having to reach out to neighboring states for the remainder," Chobani spokeswoman Lindsay Kos said in an email. Chobani recently built another plant in Idaho. "While we continue to invest and expand our New Berlin facility, we are actively looking into ways that will allow us to continue to add capacity at the site despite the constraints of the current milk supply."

Even as more tankers offload at yogurt plants in New York, the number of milking cows in New York has held steady since 2010 at an average of around 610,000, according to federal agricultural statistics. Farmers and dairy experts explain that the path from the farm to the supermarket shelf is complex and an increased demand in one area can be offset in other areas, such as the long-term drop in milk consumption.

"The fact that we're seeing this growth in these yogurt plants is valuable and is important, but you have to keep in mind it is within a dynamic system," said Andrew Novakovic, a professor of agricultural economics at Cornell University. "So for example, the big offset is the reduction in milk that is being used in beverages."

Wholesale milk prices are not a simple matter of supply and demand. Dairy farmers typically belong to cooperatives and do not sell directly to yogurt makers. Federal marketing orders set minimum wholesale prices under a complicated system that farmers complain is volatile and can leave them producing milk at a loss. Dairy farmers, already dealing with high feed costs, think long and hard before spending money on more cows.

"Do we want to go back into debt and expand the dairy to double the size? ... The general consensus of the family is no," said Simons, treasurer of Boonville Farms Milk Cooperative. "And the reason that decision was made was because of the insecurity ... the price of milk is never stable."

Still, New York farmers produced 3 percent more milk in January compared to a year before thanks to more production per cow, a long-term trend related to how cows are bred, fed and treated.

David Fisher, a dairy farmer in Madrid near the Canadian border, said it's not uncommon for dairy farmers to use nutritionists who balance the cows' food down to each amino acid.

"High-producing cows are getting almost like a finely tuned athlete," Fisher said.

Still unclear is how the herd will handle any future uptick in demand in milk related to yogurt. Fage spokesman Russell Evans said New York dairy farmers have been very flexible so far and they do not expect a problem.

Some farmers hope help will come from regulations pending before the Cuomo administration designed to lift burdens for small dairy farmers who increase their herd. Currently, farms with up to 200 cows are exempt from regulations requiring extra steps to prevent pollution from waste. The administration has proposed raising the limit to 300 cows.