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Dan Hust | Democrat

Consultant Marc Baez presents his findings on a proposed creamery to the IDA board on Tuesday in Monticello.

IDA study: creamery not feasible

By Dan Hust
MONTICELLO — June 11, 2010 — The Sullivan County Industrial Development Agency (IDA) board was told on Tuesday to hold off on building a creamery, even a small-scale one.
“Is construction of a creamery valid? It depends,” remarked IDA consultant Marc Baez. “It’s hard to answer that question.”
But he had been paid $5,000 by the IDA to answer that question, and so he presented a 36-page report to the IDA board at its regular meeting.
“I think the focus should be ... to develop small niche businesses that are creating product right now,” he concluded.
He cited Tonjes Farm near Jeffersonville, which has found success producing artisan cheeses. Such diversification, Baez said, could help the county’s remaining dairy farms survive.
“I think most farms are just hanging in there,” he told the board, noting that three or four of the 30 existing dairy farms in Sullivan County will likely be out of business by January.
So why not construct an area creamery to reduce transportation and operation costs for local farmers?
According to Baez’s calculations – using what he termed “very favorable assumptions” – a creamery would be lucky to break even unless it diversified beyond simply processing and shipping fluid milk.
“The economies of scale work against all but the smallest and most specialized operations (e.g. on-farm cheese production) developed incrementally from the ground up or the very largest of facilities such as operated by the major players in the market,” Baez wrote in his report.
“Small- to medium-size operations focused on fluid milk do not work, and even specialized facilities only work at a tiny scale.”
“Your best bet,” he told the IDA board, “is to focus on yogurt, cheese and premium ice cream.”
He referenced Hudson Valley Fresh, Ben & Jerry’s and Stonyfield Farm as groups that have found success in the specialty market, promoting unique niche products to consumers. Considering the area’s proximity to New York City – where appreciation and demand for such products is high – Baez believes a local creamery could duplicate the triumphs of those businesses and cooperatives.
His research indicated the majority of local farmers are receptive to the creamery idea, but he added that they must first diversify into areas other than just fluid milk so as to create a demand for the creamery.
“This will allow the demand and supply sides to grow together and even perhaps establish a base from which a local creamery on a very small scale could later be developed, the market having been proven,” he concluded in his report.
IDA CEO Allan Scott said the IDA’s efforts to aid local farmers will not end, however. He promised meetings will continue, including discussions with Formaggio Cheese in Loch Sheldrake about purchasing local milk and farm vegetables directly.

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