Farmers form new company to market Maine organic milk

The ups and downs of dairy farming are back on the upswing, and three Washington County farmers are hopeful that a new venture focused on local production, a buy local campaign and ownership by the farmers, who will benefit from any profits, will help ensure a sustainable future for their farms. "There's something special about saving dairy farms," says one of the farmers, Aaron Bell of Tide Mill Farm in Edmunds. "The dairy industry is highly visible, and people want to support that."

The last dairy farm had disappeared in Washington County in 2001, but then nearly four years ago three farmers in the county were courted to produce organic milk by HP Hood, which was willing to truck the milk for free over 800 miles to upstate New York. With the demand for organic milk growing, Tide Mill Farm was featured by HP Hood on promotional brochures for the Stonyfield Farm organic yogurt and milk brand. Then last February Aaron Bell and Carly DelSignore, who run the farm, were notified by Hood their contract would not be renewed in November. Nine other Maine dairy farms, including two in Washington County -- David James' in Charlotte and Herb McPhail's in Perry -- were also being dropped by Hood because of the downturn in the economy.

Now, after many months of organization and planning, those 10 organic dairy farms, joining with the Maine Farm Bureau and the Maine Organic Farmers and Gardeners Association (MOFGA), have formed Maine's Own Organic Milk Company (MOOMilkCo), a special form of limited liability corporation. The Maine Farm Bureau and MOFGA put the project together with support from the Maine Department of Agriculture. Bell notes that the new organic milk brand should be on store shelves on November 30.

Bell observes that there was "unprecedented cohesion" among the different farm groups in the state to focus on the local organic brand. They also are being assisted by private businesses. The milk will be trucked by Schoppee Milk Transport to Smiling Hill Dairy in Westbrook, where it will be processed on an organic production line now being installed. It will be packaged under the MOOMilkCo's own label, which will include use of the Maine Farm Bureau's "Maine Produces" logo. Other products including butter, yogurt and ice cream may become part of the mix in the coming years. Oakhurst and Crown O' Maine Organic Cooperative will distribute the product. Hannaford, Associated Growers and a number of natural food stores have agreed to stock it, and sales negotiations are in process with Shaw's and Wal-Mart. Stores that are interested in carrying the brand can contact the company through its website at <http://moomilkco.com>.

The milk will be homogenized and pasteurized but not ultra-pasteurized. "The milk will be on the shelves within a few days of the cows having been milked," points out Bell. Large companies that ultra-pasteurize their milk can extend the shelf life to five or six months and thus can warehouse their inventory. "Our milk will be so much fresher," says Bell, noting that it may have only an 18-day shelf life, but it will be a "more nutritious product."

"Hopefully this is a stable connection between the farmer and the consumer," says Bell. "The closer the farmer is to the consumer and the more educated the consumer is, the more stable the farmer is."

"I think the consumers are really going to get into this," Bell predicts. "People buying organic milk in grocery stores want to buy local." Noting that the California Milk Advisory Board has been advertising that "happy cows" are in California, he believes that the Maine organic milk brand -- built on quality, authenticity and nutritional value -- can become successful not only in Maine but in other states, too.

The company's goal is to keep the member farms in business by offering them a fair price for their milk. When fully operational, the farms will be paid an advance price of $24 a hundredweight each week after they ship the milk. There is no reference to the federal order in the contract, so $24 is the floor level payment. Farms will receive an additional payment the month following shipment after all expenses have been paid. The short-term goal is to have the two payments total $30 a hundredweight, with a long-term goal of $40. In all, 90% of the company profits will go directly to the farms as payment for their milk. The remaining 10% will be retained for expansion, maintenance and balancing cash flow.

This arrangement is possible because the farms are part owners of the company and thus owners of the milk from the time it is produced until the time the consumer buys the product. "It's not really a cooperative, but it is a farmer-operated company," says Bell. The farmers will own 10% of the company, but the farms collectively will own 45% of the voting units of the company and elect three of the seven board members. An additional 45% will be owned by investors now being sought to provide half-a-million dollars in equity. The Maine Farm Bureau and MOFGA will each own one half of one percent, four percent will be owned by the three-person team C all Farm Bureau members C who formulated the development plan, and the last five percent is being withheld for future employee performance incentives.

The model is different from what is common in today's Maine dairy industry, with the farms taking responsibility not only for the production of the milk but the processing, marketing and distribution as well. While this model was common in earlier times, when individual farms bottled and sold their own milk, what makes this project different is that 10 farms are working together in all aspects of the company management.