Thoughts from the Daughter of a Dannon Producer

In the last couple weeks, there’s been a lot of hate on yogurt maker Dannon, due to their more-than-a-year-ago announcement that they would be switching some of their product lines to non-GMO derived ingredients. I admit, I raised my eyebrows at this announcement, particularly because I believe that GMOs have a place in helping agriculturists continue to feed a growing world population. However, the decision has been made, and it’s time for us to move on.

My intent in this piece isn’t to continue the beaten horse arguments about pro- and anti-GMO stances. Plenty of other skilled, knowledgeable, and credible people have already done so. My aim here is to shed some light on how Dannon is going about sourcing their milk for the non-GMO product lines they are introducing.In January 2015, my family dairy, located in the western United States, switched from shipping our milk to a co-op, to directly shipping our milk to Dannon.

Why, you ask? The answer is both simple and complicated. The simple answer is, reduced volatility and a guaranteed profit every single milk check. (We’ll get into how that works later on.) The complicated answer: My parents started dairying in Connecticut in 1982. My mom grew up on a small Guernsey dairy in eastern Connecticut, while my dad started working for a dairyman in western Connecticut when he was 12, and eventually (at the ripe old age of 20)  bought the cows and facilities to dairy on his own. My folks started out with around 70 cows, and eventually grew their herd to 400. For that location and point in time, that was a pretty good sized dairy. The problem was, being about 80 miles from the middle of New York City with people who owned weekend houses moving into the beautiful agricultural area of Litchfield County, Connecticut meant that there wasn’t an awful lot of room to grow the business.

Why grow the business you ask? Because of my brothers and me. My parents wanted to have the kind of farm that if their kids wanted to come back, they could, and it would be a strong, viable, and sustainable enterprise, without the need for generating off-farm income. Knowing that that couldn’t happen in the place they called home, in the summer of 1995, my folks packed up three kids, a dog, my retired extension agent grandpa (it was really his idea), 400 cows, a whole lot of machinery and milking equipment, and countless memories, and moved West.

We started out with our 400 cows, and quickly grew to 1,000 head (remember, the goal here was to provide a viable enterprise for my siblings and me). We continued shipping to a co-op, and for awhile, we did ok. The ups and downs in the milk market were still there, but by then my folks had a pretty good grasp on sound risk, production, and financial management. Then came 2009. And 2012. And, planners that my parents are, they knew that the three year cycle of a couple months of high milk prices, preceded and proceeded by vicious lows that all but wiped out our equity, would just continue.

In the midst of the hell that was 2012, my dad penned an article titled, “Hope is Not a Strategy.” His gist was that as dairymen, we need more control in our markets. Our family decided to take control. We were presented an opportunity to work directly with Dannon, and after a LOT of thought, consideration, discussion, heartache, and yes, hope, we made the decision as a family to transition to what is called the Dannon Cost Plus program.

This program is unique from a traditional co-op/producer relationship, in that we are paid a certain amount over cost of production each and every milk check. At the beginning of each year, we project cost of production and according to our contract with Dannon, are paid a certain amount over that cost of production, which results in a consistent price year-long according to those projections. What this means is that no matter the price of milk, we are making money. True, we might miss out on the really high price periods (brief as they are), but we also avoid the devastating lows that have been wiping out American dairy farms in the last few years.

I could go on and on about what this incredible opportunity has meant for my family, the families of the people we employ, for our cows, our facilities, our machinery….but I promised to talk about non-GMO sourced feed so we’ll do that instead. Let’s start with some questions and comments/complaints I’ve heard and received about this transition.

How long will Dannon pay you to do this?

Dannon contracts with their dairy family partners, so they will pay us as long as we are contracted with them. Most Dannon Cost Plus producers have multi-year contracts with the company.

How long until you run out?T

he feed stockpile (mainly forages) on my family’s dairy will take us through the fall of 2018. All forages being put up now are non-GMO, which we will start using next year.

Is there a price difference in producing non-GMO milk?

You bet. Most of the forages grown in the United States are GMO crops, and in the interest of preserving sustainability, both Dannon and their dairy producer partners wanted to keep as much feed sourced from within our borders as possible. So, Dannon went to the people who grow feed for our cows. They paid for our grower partners to plant their fields to non-GMO forage crops (non-GMO corn silage and alfalfa in particular for my family’s dairy), and then, and I think this is very important to note, also paid for the yield loss associated with planting all new varieties and types of crops all at once as well.There is a cost increase in producing milk from cows fed non-GMO feed. However, due to our budgetary projections and cost-plus agreement, that increased cost reflects in our milk check in a positive way. Put another way, yes, it costs more to produce milk this way, but because of our arrangement, we and our feed growing partners are still able to make a profit. We don’t eat the cost for what Dannon does with its marketing.

When the Dannon Pledge was announced, what reason did they give the dairies for the change in feed?

Dannon said they were responding to consumer requests and preferences in the marketplace. Before you roll your eyes, think about what you would do as a business owner and your customers started asking for something different. Tell them to get lost and lose your marketshare? Or would you try to adapt to their requests, and retain customers and their brand loyalty?

Follow the money. Dannon is only doing this for their bottom line.

Pardon me, but duh. Refer to the answer above. Dannon is a for-profit company. They are in business to make money. And before you start yelling at me, think about your own business or operation. Isn’t your goal to make money as well? I know that for us in agriculture, there is also the passion part, where it’s in our blood to do what we do, but we also have to make money in order for us to keep doing what we love. Dannon saw an opportunity to expand their brand, and hopefully their customer base, and they jumped at it.

My family has been dairying for five generations. Rising feed costs, co-ops who have forgotten who they really work for, and the breathtaking volatility of the milk market have combined with other factors to make it very difficult for America’s dairymen to make milk at a profit. I mentioned above that agriculture is in our blood. Dairying is certainly in my family’s blood. I can’t think of anything else we would rather do than care for cows.

Dannon helped make my family’s generational business more sustainable and profitable for my family now, and hopefully, for the next generation.  Dannon is helping my family do that, and I say a prayer of thanks every single day that there is a viable dairy farm for me to go home to.

While I welcome and enjoy lively discussion, disrespect in any form will not be tolerated on this post. Keep it classy folks!