It’s the year of yogurt, as existing plants in upstate New York plan to expand and perhaps another looks to join the fray. And the increased competition brings hope of big business for local dairy farmers and could nourish a recessed economy.
Agro Farma Inc., the Chenango County-based company behind the Chobani yogurt brand, announced in August plans to expand its facilities. Fage USA, another contender in the Greek yogurt industry, recently announced plans to expand its plant in Johnstown. A third company, PepsiCo Inc., also might be looking to construct a yogurt plant in Batavia, though the company would not confirm it.
With possibly three yogurt plants in upstate New York, farmers would need to increase production 15 percent more, said Matt Nelligan, manager of public affairs for the New York State Farm Bureau.
More production benefits dairy farmers, said Jennifer Huson, director of communications for Dairylea Cooperative Inc., a supplier through Dairy Marketing Services. “Over the years the Northeast has seen processing and manufacturing facilities in the region come and go, so this growth is welcomed and provides excellent opportunities for dairy farmers and their communities,” Huson said.
Agriculture is the No. 1 industry in the area, said Dave Collins, president of the Oneida County Farm Bureau. “Any kind of positive thing with milk will help us out,” he said. “If they can guarantee the milk price, I think farmers would increase their production.”
Increasing milk supply would result in an investment for dairy farmers, such as purchasing more cows and equipment, building larger barns and increasing the amount of feed produced, he said.
Milk from Finndale Farms in Holland Patent goes to many producers, including Fage, co-owner Travis Finn said. “Our feeling is the more companies there are, the more it’s going to help,” he said.
The demand also will increase the number of jobs, not only for those working in the manufacturing plants, but also on the farms. “If there’s a market for the milk, we’ll produce.” Finn said.
Agro Farma uses almost 3 million pounds of milk per day, an amount it expects will increase after the expansion is completed, Director of Communications Nicki Briggs has said.
The company plans to invest $97 million to build and equip a new dairy processing facility in the town of Columbus, retaining 368 employees and creating 450 jobs.
The Johnstown Fage plant is producing up to 600 million pounds of yogurt per year, said Russell Evans, director of marketing. “It takes four gallons of milk to make one gallon of yogurt,” he said.
The manufacturer plans to double the size of the plant, and in turn the amount of yogurt produced, Evans said. The plant opened in 2008 and has 240 employees, and would be adding another 150 after the expansion is completed, he said. Construction is expected to begin this spring.
Page 2 of 2 - Meanwhile, PepsiCo would not confirm its possible interest in Batavia.
“PepsiCo is considering several sites for manufacturing new product innovation and hope to complete our investigation over the course of the next several months,” said Heather Gleason, senior manager of the company’s media bureau.
According to an article in The Wall Street Journal, PepsiCo is “closing in on a joint venture” with German dairy company Theo Müller Group. And according to a November article in The Batavian, a newspaper in the town of Batavia, executives behind development at the Genesee Valley Agri-Business Park in Batavia said PepsiCo is likely behind “Project Wave,” but executives did not want to be identified. The project would involve construction of a plant scheduled to open in 2013 that would employ 600 people, according to the article.
Finn said he was excited about the idea of PepsiCo going into the yogurt business because of its international reach. “My hope would be that Pepsi would be able to move our dairy products around the world — I’d be excited to bring money back to the U.S. from overseas,” he said.
After its expansion announcement, Agro Farma did question whether state dairy farmers could produce enough milk to sustain its needs.
Fage, however, is not worried about having enough milk, Evans said.
“We haven’t had any issues,” he said. “New York is a large market for the supply of milk. The New York farmers have shown that they have the ability and the flexibility to be able to increase their production as this demand has continued to take off.”
Having three facilities is a “huge, huge thing for us,” Nelligan said, because it drives the ability of the dairy industry to grow.
An increase in demand means the farmers will have to expand, which gives the industry a chance to reinvest in itself, Nelligan said. “Farmers are smart business people and when they see the market changing, they’re going to change with it.”
The increase in demand shouldn’t have an impact on the cost of milk for consumers because farmers will be able to plan ahead and compensate for the increase, he said.
The demand, however, could help bring stability to the milk price for farmers, he said. This is crucial because though the price has risen almost 12 percent from November 2010 to November 2011, it has fluctuated greatly, according to statistics from the state Department of Agriculture and Markets.
The price of milk per hundredweight was $19.48 in November last year compared to $21.56 in November 2007, an almost 10 percent decrease, according to the statistics.
Price stability not only would benefit the farmers but also the communities they live in, Nelligan said.
“This is a great thing for upstate dairy. There’s no question — over time we’re going to be able to meet the demand,” he said.