These farmers have constructed an on-farm processing plant and are using the milk produced at their farm to make cheese, yogurt and bottled milk to sell direct to the consumer or through high-end retailers.
During the Canadian Dairy XPO (CDX), held April 6-7 in Stratford, Ontario, a group of four on-farm processors from across Canada gathered for a panel discussion to share what they have learned in making specialty dairy products.
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Hennie Bos from Bles-Wold Dairy in Lacombe, Alberta, milks 340 Holsteins. When they couldn’t find a high-quality nutritious yogurt without added sugar for his daughter with Type 1 diabetes, Bos and his wife started producing their own yogurt in 1997.
Now their yogurt, drinkable yogurt, Greek-style yogurt and sour cream are sold in approximately 110 stores throughout Alberta.
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Jenny Butcher and her partner Wes Kuntz decided to open an on-farm retail store, offering products almost exclusively made on the farm. They make artisanal cheeses from the milk produced by 40 Jerseys at their farm, Little Brown Cow Dairy in Paris, Ontario.
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Bonnie den Haan and her husband John of Sheldon Creek Dairy in Alliston, Ontario, have been dairy producers for the last 40 years on a 450-acre farm with 60 Holsteins.
They began processing in 2012 and now their milk products, including cream, cheese, white and chocolate milk, eggnog and strawberry milk yogurt, can be found across central Ontario and downtown Toronto.
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Hetty Smyth’s parents, long-time dairy farmers, began Armadale Farms Dairy in Roachville, New Brunswick, in 1990.
As a second-generation on-farm processor, Smyth and her husband, with the occasional assistance of her parents, produce several types of cheese, yogurts and dips.
The milk comes from Armadale Farms, a 100-cow Holstein farm run by her brother. The products are distributed across the province at local farmers’ markets and country stores.
How would you compare expanding the dairy farm itself to adding on-farm processing?
BOS: If you look for a place for your family members to have employment, on-farm processing is an avenue. You have to set it up right, and you have to look at whether they are competent to do it.
You have to look at the market as well. Is there a place in the market? Is there competition from other on-farm processors? You have to find your place to do something different than the rest of us do.
BUTCHER: We found the economics of on-farm processing is really similar to the economics of dairy farming. It is like starting another dairy farm in that you lose a lot of the qualities of skill just by dividing your full focus of your business.
den HAAN: Starting an on-farm processing plant is much different than farming; it is a totally different business. You would have to look at your core competencies of people or your children coming on.
Are any of them interested in marketing? Are they interested in being in a dairy processing plant? It is a lot different than working in the barn.
SMYTH: To start an on-farm processing business is quite an investment. The equipment you need, especially to make it compatible with the CFIA regulations, is actually quite expensive.
That is not to say it is not doable. You just need to do your research, get in touch with your regional health inspectors and find out what are the regulations to stipulate what equipment you need and how to set it up.
What steps did you take from having nothing to having product for sale?
BOS: We built our plant in an old barn; through years we occupied the whole barn step by step. We had the CFIA follow us through every step. Our philosophy is to stay ahead of the inspector. We had a lot of cooperation from Alberta Agriculture.
They were helping us along with technical issues, which was great and we appreciated it a lot. Hard work and stay at it. Don’t give up when you run into a wall; try and find your way out.
BUTCHER: No matter how long you think it is going to take – realistically, it’s taken almost everyone we are aware of so much longer. As farmers, we’re all used to hard work being the only thing between point A and point B. In the processing industry, unfortunately, that’s not true at all.
What is in between is a lot of bureaucracy and just plain old patience. Before you even think about anything, you need permission to either alter the facility you are at or build a new one.
den HAAN: It is a long process, but the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) does help you out when you start up.
Our first advice is to phone the OMAFRA and have them send you the paperwork that details the exact regulations for your plant as well as all of the different levels you should approach along the way. If you do the steps in sequence, it can cut down on your time and your frustration an awful lot.
SMYTH: Health regulations vary from province to province; it is supposed to be the same, but it isn’t. They also vary from region to region and from inspector to inspector.
What one inspector sees, another will not see; what one inspector understands, the other will not understand; so there is that to bear in mind as well when you are comparing or visiting other processing plants within the province.
Does all of your milk leave the farm through product?
BOS: In our case, it varies between 5 to 10 percent of the total milk production of the farm that goes to yogurt production. It is a big advantage being in this [supply management] system because our market goes up and down a little bit.
If we require less milk, then the rest goes to Alberta Milk, which gives our processing plant a lot of flexibility.
BUTCHER: That’s a huge advantage of being a part of supply management, that we can use whatever milk we choose to use. At the moment, we are only at 20 percent.
den HAAN: We’re currently at 50 to 60 percent of our quota, depending on whether we make eggnog that month or not. The rest of the milk gets shipped.
We put a plastic clothespin on our dipstick that determines how much milk we want to keep, and then the milk truck driver pumps the milk out until they come to the clothespin. Then we come over with our transport vehicle and remove our milk ourselves.
SMYTH: We use about 10 to 15 percent of our farm’s milk. The rest is shipped to Dairy Farmers of New Brunswick. The milk we use doesn’t leave the farm; it comes right up from the cows as they are being milked. We have a bulk cooling tank, and the milk truck comes and takes the rest.
What is your biggest seller?
BOS: In our case, the best seller is plain yogurt at 35 percent of our sales, which surprises a lot of people. I believe a lot of people use it for breakfast and either add something to it or not. We sell a lot to families in 2.5-kilogram containers, and it goes extremely well.
BUTCHER: We make soft cheese, some hard cheese and cheese curds. Cheese is our best seller at the moment. We started making cheesecakes with our own cheese in November. We are now selling more than what we can dream of making in a week out of our commercial kitchen.
We never would have imagined that’s where that product would go, but we probably sell 10 to 12 times the volume of fresh cheese in the form of cheesecakes because that’s what the customers have told us they want.
den HAAN: By far, whole milk is our biggest seller; second would be our chocolate milk.
SMYTH: Our biggest seller would be our raw milk Gouda cheese. We make several varieties. Along with mild, medium and aged, we have herb, onion garlic, paprika, stinging nettle, peppercorn, red-hot chili peppers, smoked – and probably 18 more that I can’t come up with right off the top of my head.
Second to that would be our yogurt and quark. Quark is a type of soft white cheese very popular for cheesecakes. The yogurt we make is two different kinds – plain and Balkan, which has skim milk powder added to it to make it thicker.
What is your marketing approach?
BOS: We started with an on-farm store and farmers’ market. In 20 years, it has evolved to 50 percent fine food stores, especially in Calgary and Edmonton, and the other 50 percent in grocery stores. We find we have the best market in the stores and places that support our philosophy.
BUTCHER: When we started dairy processing, we made a pact with ourselves that the cows would always come first, even if it meant missing a customer.
We made the decision never to leave the farm with our products, at least for the foreseeable future. We are on a fairly well-traveled highway, and that has allowed us to develop our on-farm store quite well.
If we were to hit the road selling to grocery stores, we feel our cows would suffer. If we went to farmers’ markets, we are really sure that our cows would suffer.
You hear stories of people getting up at 3 a.m. to head off to farmers’ markets in the city, and that kind of thing is just not conducive to our lifestyle or to the dairy.
The other thing I truly believe is that on-farm processors have an onus to bring consumers to the farm. We really are able to bridge the gap between the consumer and the farm.
den HAAN: Probably 75 percent of our product is off the farm, away from the farm store. We have two small refrigerated vans that deliver it to the Toronto area.
We are in just about every fine food store in Toronto. We have no desire to be in the big chains. Even the smaller grocery stores that are fairly large still challenge the price because yogurt is made very cheaply on a commercial basis. You have to stand firm on your pricing or you lose on every truckload you take out.
SMYTH: Our biggest avenue that we sell our products at is the farmers’ markets. We have two farmers’ markets that we go to that are year-round. My husband and I both do the markets, going in different directions on Saturdays.
We also sell to local country markets and health food stores in southern New Brunswick. We generally stay away from grocery stores. I found they want to charge you for shelf space, and they don’t want to pay you until three months later, and they want to give you back expired product that doesn’t sell.
What are you doing as far as food safety and your experience working with the inspection staff?
BOS: It is a big responsibility [providing product to consumers]. It is the thing that can wake you up in the middle of the night. Sanitation is key because we make a natural product, and you can’t mask anything with preservatives or anything else.
To take control of sanitation, you have to do it yourself or assign it to one of the best people in the plant. My wife is very good at always finding something.
It has become second nature to be hospital-clean. In our situation, we have a HACCP-based food safety program, which we follow to the letter, and we work closely with the CFIA inspector.
BUTCHER: OMAFRA really has put some effort in being great to deal with for small on-farm processors. They have been patient and understanding, and they are a great help as well.
What we find interesting is when the inspector comes to test our plant, they pick the most interesting places to test – under wheels, under tables and about 6 inches deep into our drains. We’re very, very stringent on food safety in Canada, and that’s a good thing.
den HAAN: It’s a little overwhelming when you start. If you have been in the dairy industry and milking cows, then all of a sudden you’ve got inspectors coming in with swabs, swabbing your plant. You get used to it. We’re provincially inspected, not CFIA.
Our inspectors always have been phenomenal; we learn a lot from them. They’ve been willing to share advice of what they see at other plants.
We are the same in very diligently cleaning. If there is a lightning show, you get up in the middle of the night and you make sure coolers are still at the right temperature.
SMYTH: When it comes to food safety, the important thing I find is to be one step ahead of everything. You have to have a good working relationship with health inspectors.
That makes all the difference in the world when you have a health inspector who wants to work with you, who isn’t necessarily there to just enforce the rules.
Another thing is being proactive to keep everything clean. I clean it after it has been cleaned. I take the valves apart at least once a week. If I see a spot or a little bit of protein buildup or something that doesn’t look quite right, I just go ahead and clean it again.
We have a local inspector that comes once a month to take samples. Our inspector for the region comes twice a year.
Do you have anything else to add?
BOS: It’s very rewarding to be in this business. If I recall the people we have met through the years, it is incredible and it adds another dimension to your life as a farmer.
It gives you an appreciation of the work and the processes we are doing. It is a very rewarding business when you walk through a store and you see your product on the shelf and people looking at it, picking it up and putting it in their cart.
BUTCHER: We’ve been in business a year now. I think the dairy industry has a lot to be proud of that we’ve learned from our customers. On our farm we sell vegetables, dairy, beef, pork and honey – all produced on our farm – and if there is one thing that customers do not come to us for because they don’t trust the grocery store, it is the dairy products.
If they come to us, it is because we are more convenient, they want to support us and because it tastes better. They are not coming to us because they don’t trust the dairy products in the store. We can’t say the same thing for some of our other products.
The other thing I want to say is we’ve really found that transparency is everything with dairy products. I encourage everyone to open up their farms. The solution to negative publicity, I truly believe, is just 100 percent transparency. Farm with glass walls.
den HAAN: I was expecting to be asked what the biggest challenges were. To start, we really put a lot of effort into making the best product and having the cleanest plant. We overlooked our bookkeeping.
We used Quicken at the farm and went to QuickBooks at the dairy. We should have hired somebody who knew QuickBooks right off the bat. A good foundation for your financial record-keeping is imperative.
In year four, we are just getting it all straightened around. It is really tough going back and changing some of those categories and moving stuff around when you have been in it that long.
If you are going to start up, get a good bookkeeping program, and if you can’t do it or you don’t have the time, get somebody who does.
SMYTH: Whenever you have your own business, you have to have a passion for it or you just will not enjoy it. It’s not always easy – it’s long hours, things sometimes can be frustrating, product may not turn out, and you are losing money on that.
Then there is the flip side to it, too; you are talking to customers at the market every Saturday, and you hear so many nice comments. You get to know your customers and you develop a relationship with them, especially when you have been in it as long as we have. PD
PHOTO: Four on-farm processors took the stage at the Canadian Dairy XPO (CDX) to share what they have learned in starting a business adjacent to their dairy farms.Processors included, from left to right, Hetty Smyth, New Brunswick; Jenny Butcher, Ontario; Bonnie den Haan, Ontario; and Hennie Bos, Alberta. Photo by Lora Bender.
