CROPP contracts brings profitability
to Ohio grass-based, organic dairies

Small-scale, enterprise-integrated Amish farmers were already using the breeds, pasture-management, and herd-health methods favored by many certified organic farmers. Now, two-year contracts for national organic market bring stability, strong returns.

By Jason Witmer

 

 

 

 

 

Surging conventional, organic prices test CROPP’s “stability” commitments

While Owen Nisley is relieved that someone else is doing his marketing, that someone else is perplexed in a time of unprecedented chaos in the national organic milk market.
It’s a new market situation for George Siemon, chief executive officer of CROPP/Organic Valley Family of Farms, and it has him in a dilemma.

For the first time in history, the current surge in both conventional and organic milk prices means that CROPP is no longer paying the highest price to its farmers, but a lower price than most conventional and organic buyers.

Nisley sells to CROPP, the largest organic farmers’ cooperative in North America, based in LaFarge, Wisconsin. Dairy producers from the Northwest, upper Midwest and Northeast (including Pennsylvania and Ohio) make up 450 of its 636 family farm members. Their milk is marketed nationally under the Organic Valley™ brand label For CROPP details:
http://www.organicvalley.coop/
who/index.html

“You can never pay farmers too much,” said George Siemon, chief executive of Organic Valley, to show where his farmer’s heart lies. But his executive responsibilities force him to ask CROPP dairy producers: How much can we ask consumers to pay for organic milk? With a half-gallon of Organic Valley milk costing at least $3.29 a half-gallon at retail already, “you’ve gotta start being concerned” about any further price hike. This leads, he said, to the deeper question begged by the current price situation: How different can the price of organic milk be from the price of conventional milk in the long-term?

Seeking predictability
CROPP/OV uses long-term contracts to build predictability into the organic dairy sector, something missing in the conventional milk market, Siemon explained. In the conventional market, prices that were at the disastrously low level of $10.50 per cwt. last summer many places are now at $20. The conventional fluid milk average for the last 10 years, broadly speaking for the Midwest, has been around $12.50 – a price below the cost of production for many farms.

Contributing the price hikes is growing demand in the face of an actual production decrease this spring. Replacement heifers are getting harder to find as small dairy farms – the usual source for the bigger dairies that dominate production – have been forced out of business. The mega-dairies – which often use BGH that tends to shorten the productive life of its cows -- also can’t get fresh young Canadian milkers because of BSE-related import restrictions.

High prices for soybeans and hay are pushing up dairy feed costs for all producers, most significantly for those who rely the least on pasture-based systems. These costs have a special impact, however, for CROPP’s contracted producers with their fixed price.

The organic co-op’s contracts to farmers vary by region to reflect differing costs of production, but fall in the range of $18.45 to $20.75 per cwt., plus incentive pricing for seasonal production, milk quality and hauling costs.

Dairy producer/members of CROPP’s dairy executive council met this spring and did not press for increased contract price, Siemon said in an interview with NewFarm.org this week. They saw the conventional milk price strength as being some good news for their neighbors, he said.

It’s not so much the current higher conventional prices that have him anxious. (Yet he admits that the nine-month run for the conventional fluid milk price spike, three months longer than the average, might become more problematic for his producers.)

Rather it’s recently announced price increases of $1 to $2 per cwt. by other organic buyers that have so changed the CROPP traditional position of being the price leader. National organic competitor Horizon Dairy announced a $1.50/cwt. hike this spring, and Siemon has heard that new northeast regional competitor Hood apparently topped Horizon’s milk pay price to farmers.

CROPP’s only concession has been to skip the lower “disincentive” prices usually used during the spring flush of higher milk production. These are off-set by higher prices offered during lower-production times in the winter to work at consistent volume throughout the year. Trying to match the Horizon and Hood hikes would mean shifting CROPP’s long-term contracts upward a dollar or two per hundredweight and would take million of dollars that CROPP doesn’t have on hand, he explained.

Good signals from buyers

CROPP had to actively defend its higher-cost milk to its commercial buyers a year ago when conventional prices were “rock-bottom low,” explaining its goal of slow, steady growth in the organic milk supply. “We’re getting good signals now from these buyers,” Siemon said. “We see our role as to hold a steady rudder.”

“We’ve loved our stable world, and we are not going to be easily jagged out of it.”

As competition for organic milk intensifies, Siemon said the farmer-members of CROPP will continue to position the co-op for long-term success. So far, this has meant holding steady prices tied to two-year contracts to its farmers and suppliers in the face of the “roller-coaster” variations. But being lower in its farmer price for a longer time ahead while demand for organic milk stays strong will put new kinds of pressure on this arrangement.

It’s farmers like Nisley, Siemon said, who help maintain the resolve to resist chasing high prices – then risking getting caught on the down side. “These are generational thinkers who want to make sure CROPP is a community vehicle,” said Siemon.

“We’re trying to deliver sustainability, and that sticks out like a sore thumb in the world of cheap food,” Siemon said. – Greg Bowman

June 11, 2004: Situated among the rolling pastures near Baltic, Ohio, Owen Nisley’s organic “Evergreen Acres” farm features an on-farm market, a variety of spelt products, a flock of free-range chickens, and a certified-organic herd of 42 Jersey dairy cows. His enterprise choices combine a deep personal commitment to providing healthy food for his customers, with some concessions to his own chronic health limitations that would have sidelined people of lesser determination.

Nisley is a tall, thin, man wearing the dark blue, zipperless clothing and a beard indicating, in the Amish tradition, that he is married. Needing some mineral supplements for his cattle, he politely asks for a ride in my car, as the trip would take some time in his horse and buggy.

On the way to and from the local distributor, we pass horses pulling black carriages, farmscapes devoid of telephone lines, and earth-toned garments pinned to clotheslines. Nisley points out an Amish neighbor who manages a herd of Jersey cows organically just as he does, but who isn’t certified.

“Will he become certified?” Nisley wonders aloud. “I don’t know.”

Nisley explained that he has always farmed organically. “For me, growing up without using chemicals, it’s just so hard to understand how people can still be using them,” he said. “My dad farmed organically always. He never believed in using the chemicals. Then when I started farming I was committed to farming organically because I had health problems and didn’t want to compound those problems and challenges with chemicals.”

Energy from sun, wind and natural gas
Nisley has battled digestive problems and chronic fatigue. Though he has been laid up for periods of time in bed, he is fortunate enough to have a supportive community nearby, including siblings and neighbors, who help with chores when he is unable to complete them. With adequate rest, Nisley is usually able to work. But he has invested in solar panels, a windmill, and an engine that runs on natural gas that comes from a well on his land. Even more, he has become passionate about providing healthful organic products to his family and to consumers.

Several years ago, Nisley became interested in spelt because it is easier to digest than grains such as wheat. Nisley began raising spelt and used a popper to process the grain. He sold the majority of the it wholesale and also offered spelt products at his market. Combined with his other endeavors, however, wholesale spelt production proved to be too much work. Nisley sold his popper and now processes most of his grain elsewhere. He continues to sell products at his market, and still makes spelt flour and rolled spelt with a small roller and grinder. He also uses spelt straw and husks as bedding for his livestock.

When we arrived back at his farm and unloaded the minerals, Nisley showed me the 250 chickens that produce eggs to sell at his market. He has strikingly beautiful striped gray Barred Rocks in with his Rhode Island Reds, two heirloom breeds. Though they produce fewer eggs than newer varieties, he believes the eggs are more nutritious.

Quality over quantity -- always

“I’m always looking for quality over quantity,” Nisley said. “I’m always looking to improve the nutrition of my products.” Nisley also raises Cornish cross broilers for meat in the spring, takes orders for them, and processes them on his farm.

"I’m always looking for quality over quantity… .I’m always looking to improve the nutrition of my products."
Nisley is a firm believer in letting all of his chickens range freely rather than being cooped up in buildings. In the winter he lets them out in the afternoons. In the summer he keeps them in pasture and houses them in a mobile, screen-bottomed trailer. The trailer is powered by a Honda motor and Nisley moves it often to ensure that his chickens have fresh clovers and grasses.

“Every day I move it a couple hundred yards,” he said. “It’s more work but boy is it worth it. Once daylight comes they’ll scatter out and have a fresh patch to scratch. Its heaven for chickens compared to those factory farms.”

A few of his 50-cow Jersey herd goes each year for meat, which he sells at his store. “Jersey meat is the most tender meat there is,” he said. “It takes the least amount of pressure for a knife to go through a steak of Jersey meat.”

Most of his cattle, however, he keeps for milk production. “The Jersey cow is a gentler cow than most,” he said. “That’s what we like about them. Plus they have a higher butterfat and protein content. If you take a gallon of milk and let it sit for a day you’ll see an inch of cream on top. The higher butterfat gives it a better flavor.”

Nisley milks his cows in a long parlor lined with tie stalls. A natural gas engine runs a vacuum pump, a cooling compressor, an alternator, and lights. He still dumps the milk in buckets and carries the buckets to the milk tank. Before adding this technology five years ago, he had milked by hand, using lanterns for light.

To keep his milk house clean, he uses hydrogen peroxide and an organic non-chemical cleaner. “It might take a little more elbow grease, but we’re doing pretty good keeping the bacteria down,” he said. “Hydrogen peroxide works really well.”

Pampering cows with rest and comfort

One of Nisley’s most recent dairy health challenges has been dealing with respiratory illness. A veterinarian told Nisley to give them vaccines. The vaccines have kept pneumonia away but, being live instead of dead, Nisley believes it is the main cause of a persistent cough that many of his cows have battled. Since administering the vaccine, Nisley has learned of an organic vaccination that he vows to use in the future.

“I favor diversity all over my farm. It is healthier for the land and the animals.”

He is also working on tweaking his cows’ diet. Besides, free-choice mineral supplements -- which allow the cattle to choose how much of which mineral to eat -- he has tried increasing the energy of their diet to include more foods such as corn, grains, and even molasses. “It’s a challenge to keep everything balanced,” he said. “It’s a learning process.”

Nisley has also been trying to give his cows adequate rest and comfort. In the past, he pastured his cattle all winter, but he has recently built a new addition on his barn. This keeps them warmer in the wintertime, and it also enables Nisley to save manure for compost.

Nisley also gives his cattle a full year between calves, including a two-month respite from being milked every year to let them recuperate. This is usually during winter months when they’re heavy with calf. Nisley does not artificially inseminate his cows, choosing to run a bull from June to October instead.

Grazing “fits” small-scale, sloping pastureland

As with his chickens, Nisley believes in raising grass-fed cattle and so keeps most of his land in pasture. “I like to have most of my land in grass,” he said. “I like it better than corn. My dad used always say the small guys are less equipped to raise corn – let the big guys do that.”

Barred Rocks and Rhode Island Red comprise Nisley’s heirloom laying flock, breeds selected for the nutritional value of their eggs, he says. All photos by Jason Witmer
Nisley manages his pasture intensively, by rotating the space where he allows his cattle to graze. His pasture is divided into two main areas, separately fenced. He subdivides each pasture into 36 squares by rotating fencing. This ensures that his cattle always have fresh grass and gives his pasture a chance to rest when he moves the cattle. It is also a much cleaner system because it spreads manure to different areas and keeps his pasture evenly cut, as a mower would.

The rapid, intensive movement increases plant diversity. In many pastures, cattle will favor certain areas and let others grow up. By allowing the sun to shine on the ground in the well-grazed zones, heavy grazing pressure promotes the growth of rye grass and native clovers, which he planted. This is exactly what Nisley is striving for. “I favor diversity all over my farm,” he said. “It is healthier for the land and the animals.”

"Once daylight comes they’ll scatter out and have a fresh patch to scratch. Its heaven for chickens compared to those factory farms."
While intensively managed pastures are becoming increasingly popular in dairy circles, they aren’t novel in the grand sweep of European Alpine dairy history. “Its not a new thing,” Nisley said. “They used to do it in the old country but now many have gotten away from it,” referring to Swiss farmers.

Nisley sells his milk to CROPP/Organic Valley (www.organicvalley.com) based in Wisconsin. CROPP is the second-largest organic dairy co-op in the country and the largest organic farmer-owned cooperative in North America. Originally, Nisley was part of a nine-member organic co-op in the area. There was benefit to membership but marketing still took a lot of time and didn’t always result in a premium for organic production.

Farm at a Glance
Owen Nisley
Evergreen Acres
Holmes County, OH

Size: 70 acres in pasture and fields out of 110 acres owned
 
Location: East-central Ohio
 
Certified organic
 
Primary crops: pasture, spelt for grain and straw

Primary livestock: pastured dairy and laying chicken

More than a year ago, they decided to join Organic Valley. While they still do their own handling, they get higher prices and don’t have to worry about marketing. “A few years ago we didn’t get any premium for organic production. It was just a personal commitment to stewardship,” he said. “At that time it was hard work. Now we’re reaping the benefits.”

Their success with Organic Valley prompted four others to join their co-op, which continues to seek new producers as it locks in larger contracts over time for its organic dairy products. Nisley sees good opportunities ahead for other Amish families that farm without using chemicals but aren’t yet certified organic.

Bob Penelberry, a milk inspector who was checking Nisley’s farm, has seen several farmers in the county become organically certified and feels that it is a good way to go for many. “Organic dairies are starting to catch on,” he said. “I hope they do. They make sense for the small-time farmers.”

It certainly seems to be working well for Nisley. He has been able to combine making “a decent living” with his passion for raising healthful products. “Our hope is just to be good stewards of the land,” he said. “And to produce quality, nutritious food for our own family and consumers.”

As I was leaving, Nisley loaded me up with six dozen huge brown eggs, a jar of homemade pear jam, and three packages of steaks and roasts – all in exchange for driving him, he said.

As I was eating a supper of grass-fed, organic Jersey steak later that evening, I couldn’t help but think that I got the better end of the deal.

Maybe he’ll need more minerals some time.

Jason Witmer is a freelance writer and photographer in Pittsburgh, Pa., with his eye on the future of agriculture.