7 Keys to Dairying, Cheesemaking Success By Gianaclis Caldwell From the July 2015 issue of Acres U.S.A. magazine No one becomes a dairy farmer or dives into cheesemaking because they are looking for a simple, easy life with a large pot of gold at the end the rainbow. But if a cheesy (I like to think of that as a complimentary word) life appeals to you, and you choose to turn it into a business, it must be one that is sustainable — worth continuing from the aspects of workload and income. Being a successful farmstead cheesemaker is no longer just a matter of gathering together a beautiful herd of dairy sheep, cows, goats, or water buffalo and making great cheeses. Not only are feed and infrastructure costs higher than ever, but the artisan cheesemaker faces stiff competition from imported cheeses and those that appear to be made domestically but are made in part using imported milk (in the case of some water buffalo mozzarella), imported frozen curd (for some fresh and ripened goat cheeses), or simply made overseas (utilizing milk from mega-dairies) to make a custom-label cheese. To the consumer buying cheese from a dairy case, there is no easy way to distinguish your barely-break-even $25 a pound cheese from a similar one that is half the price. While there are no easy answers that will properly deal with every facet of the job, if you clearly define your business, both before selling that first wheel of cheese and periodically over time, you are likely to be a success. Here are seven key topics that when properly considered will make your business a satisfying achievement. 1. Choose Your Cheesemaking Business Model Americans typically define success by income. The traditional business model dictates that a successful business creates jobs, growth and profits — a growth model. While no dairy farmer or cheesemaker starts out intending to lose money, many begin with a different business model, the lifestyle business model. In this model, there is rarely enough income to put money away for retirement, but there are other, equally rewarding benefits for those who find the lifestyle appealing. Living on the land, working where you live, sharing that life and its work with a partner, creating a product you can take pride in, and raising a family in a wholesome environment are just a few of the payoffs to which a price tag cannot be attached. Growth requires increasing production, which requires scaling up equipment and other increased costs. This model offers some financial incentives that are easy to miss and should be maximized — with the help of an honest tax accountant. A home business requires that many of your day-to-day costs, such as phone bills, property taxes, etc. are related to the work of the farm and can therefore be paid for by the farm. We farmers tend to be honest, straightforward thinking people, so often the convoluted tax system and the breaks that are legally taken by larger businesses may seem a bit slimy and sneaky, but if th ey are legal, you should not short-change yourself these opportunities! A farm that starts out as a lifestyle business does not necessarily need to stay that way. If the kids move away and show no signs of wanting to return, the model can change into one of modest growth that becomes an asset that can be sold when you no longer wish to run it. Or you may find that growth and expanding your product line is necessary to deal with increasing costs. Growth should be approached with much planning; otherwise it may prove more costly than the income you thought it was going to provide. Growth requires increasing production, which requires scaling up equipment and other increased costs. Unless these are forecast properly, with payoff times realistically projected, the growth might cost more than it produces. No matter which model you choose, one of the most important things to do is decide how you want to leave the business — an exit strategy. This plan will include when you think you will want to stop the work, if you will sell the property or just the equipment, brand and animals, etc. Even if you feel you want to do this work well into your golden years, have a plan. Your plan can change over time, but it is probably one of the most important, and most ignored, aspects of a successful small business. 2. Choose Your Product Footprint How far and wide you plan to sell your cheese may seem like an unimportant or malleable decision, but it will dictate many of the other choices that will have to be made later, especially your regulatory model and product line, so I suggest considering it early in the process. There are three possible product footprints for most cheesemakers: local and regional sales only, small production with broad brand recognition and broad distribution. If your product will be limited to only local and regional sales, you will need to figure out the market potential in venues such as farmers’ markets, community supported agriculture (CSAs), farm sales, local retailers and restaurants. This type of product footprint is probably the most volatile. In some parts of the United States local sales options are increasing — with more customers supporting local farmers and a growing taste for artisan cheeses — but in others, the number of competitors is growing faster than the market, meaning you will have to either make a product better than anyone else, different from any other products, or less expensive. To keep your product sales stable in a local market will require attentiveness to many details, including keeping your product quality consistent, sharing your story, checking in with chefs and retailers to keep them in stock and building loyalty to your farm and cheeses. I call the next product footprint model “small output with broad branding.” In this model, the producer does not make a lot of product, but ships or delivers their cheeses to larger, more elite markets, often far away, where customers are accustomed to paying more for fine cheeses. This model is especially useful if your local market cannot support your prices or doesn’t have a large enough population to support the number of producers making cheese. This model relies upon getting your cheeses into the hands of people in the know — from authors to high-profile cheese sellers (mongers). You might enter cheese competitions to help further this goal. As in all of the models, creating a story and an identity is important as well as consistency and communication with whoever is selling your products. The last model is that of broad distribution such as a high-end grocery store like Whole Foods and even Costco. Your product might still only be marketed in limited regions by these chains, so you don’t necessarily have to be a huge company. This model will require working with distributors and perhaps even brokers and will most certainly require that you have a complete food risk reduction program (often called HACCP) in place. This model is, not surprisingly, best suited for more of a business growth model. 3. Consider the Regulatory Model In some cases, you have no choice regarding the standards to which your facility is built, and the state regulations may require the same minimum as do federal regulators for all producers. But in many states, the state requirements are less limiting (rarely more) than those set by the federal government through the Food and Drug Administration (FDA). Beau Schoch stacks forms for pressing cheese at Schoch Family Farmstead. Whatever the state requirements, I suggest building and operating at the federal minimum — unless you are certain that your product will never leave your state. Even then, you may wish to broaden your product footprint one day and then be limited by your facility. To sell any product out of your state, you must meet all FDA requirements. Also keep in mind that the FDA has broad rights when it comes to inspecting food production facilities — very wide-sweeping and sometimes vaguely defined. You should always ask yourself how your business would fare should a surprise visit by government overseers take place. 4. Define Your Product Line I’d say that this is one of the toughest choices for the artisan cheesemaker. We tend to be driven by our interest in our craft, not our business plan. But in order to be sustainable, the product line should be defined by the needs of the business. There are two basic models for product line that might be right for a lifestyle or growth model and any of the product footprint models. The first is a focused product line, where only one or a few cheeses are made. The other is a broad product line with many different cheeses or dairy products. If a focused line is the right choice, it should be based on several things in order to succeed. First, there should be a demand for that product. Second, you might choose a product based on your skills and ability of your facility to properly produce that product. Lastly, it should also be produced based on the natural terroir (the French word for “a sense of place”) that your location, the type of milk you use and your region can truly impart to the product. The focused product line works especially well with the footprint model of small output with broad branding and the broad distribution model. A broad product line is often created more out of boredom and the excitement of creating something new (I have most certainly been guilty of this). It is also sometimes based on customer demand, but you have to watch out for this. People will recommend, suggest, and even beg for many products that do not have a broad audience or would disrupt the efficiency of your production. Make sure a new product will add true value, fits easily into your workday, requires minimal new investment and needs little or no additional marketing. New products might also be crafted in order to build your brand by making your products available to a variety of markets and therefore a larger number of people. The broad product line works especially well for the local and regional footprint model, where returning, frequent shoppers crave variety. 5. Choose Your Farm Visibility Model One of the most valuable assets you have as a farmstead cheesemaker is the connection that can be created between your customers and your farm. Remember, no matter how many robots the industrial cheesemaker can invent to try to duplicate handmade cheeses, they can never lay true claim to being a small farmer. How you share this reality with your customers depends in part on whether your farm is completely private and inaccessible to the public or is visible to the community and your customers. A private farm has its advantages in uninterrupted work and, of course, more privacy. It may be the only option for a farm that is remotely located or because of zoning, property limitations, insurance liability concerns, unhappy neighbors, etc. A farm that is open to the public might only be open occasionally for special events or tours. You don’t need to turn it into a petting zoo or roadside attraction to have public visibility. I believe that finding some way to periodically make your farm visible to the public is a great choice. The connections you can create between your community and your farm are invaluable, and like I said earlier, it is that visibility of an honest, small, hard-working farm that is one of our most intangible assets when it comes to persuading consumers that our cheese is worth more than those created on a mass scale. Not to mention that public events are a great motivation to make that run to the landfill and recycling center that we all put off as long as possible. If you choose a public model, or think you might go in that direction someday, be sure to think about accessibility when designing your buildings and layout. Pathways and viewing rooms that are safe and navigable by seniors and the physically limited are essential. If your farm is to be part of certain tours, it may need to have an Americans with Disabilities Act accessible bathroom. These are things to keep in mind early in your decision and design process. 6. Choose Your Livestock Management Model The small farmer has the option of managing their herd in a much different fashion than the industrial dairy producer. This is another model choice that should be maximized when marketing your product and informing your customers. There is a good reason that many cheeses are cheap, and most of it has to do with the massive scale of some farms and the commodity manner in which the livestock are managed. The conventional and industrial dairy farm focuses strictly on high-volume milk production when it comes to managing their animals. This by no means suggests that they do not care for them well — indeed a healthy, content herd is at the core of good milk production. But it does mean that the animals are managed in a way that is efficient to the maximum. While the small farmer is unlikely to have a robotic milking machine or even humans milking a constant stream of animals 24 hours a day, they might still prefer to treat the herd in a more casual, less personal manner. There is definitely less management time involved when dealing with livestock in this manner — recordkeeping is minimal, breeding season is simply a matter of placing a willing male with the herd, and young stock are sent away or raised in more confined or human-friendly setups. The livestock management model that I encourage is one that involves turning your herd into an asset. It definitely involves more management time and recordkeeping. But the payoff is that over time you need fewer animals to produce the same amount of milk, and the young stock become a valuable asset to others — meaning they will pay you more money for animals from your herd. In addition, this model has the power of helping the public relate to what you do. While none of us consider our dairy herd as a bunch of pets, there is a bridge that is created between the non-farmer and the farmer when animals have names and the public perceives that they are important for more than just their milk. Again, we are not doing this simply to placate the public; we are doing it to increase the value of our product and the willingness of people to pay for that value. I believe that tapping into people’s sentimentality and showing them that by paying more they are helping animals is a real yet underutilized strategy. 7. Optimize Resource Management How you design and set up your management of resources such as feed, water, waste and labor gets into the nitty-gritty, day-to-day realities of the dairy farm and cheese plant. These areas are often out of our control regarding costs, but they must be considered early and frequently for the business to thrive. In the best case scenario the dairy farmer will grow most of the feed that their herd needs. When this is not possible, the farm will be subject to increasing costs and feed quality fluctuations that can drastically impact the business. Developing a strategy to acquire and/or grow high-quality feed is a make-or-break part of remaining in business. In addition to growing your own feed insuring your survival as a business, it is a powerful part of imparting — and marketing — the terroir of your products. Water and waste management are often dictated by regional weather and regulations. Even so, the way you use and manage wastewater and manure can be turned to the advantage of your land and your marketing. When designing your facility, consider innovative uses of water that minimize what is needed and maximize how it is used. While each situation will be unique, some examples are grey water being used to flush manure through gutters, “living machines” that convert chemically laced waste water and whey to usable water and to feed plants and managing your water and waste with the permaculture model in mind. If you are new to permaculture, one of my favorite books on the topic just happens to be an Acres U.S.A. book called Restoration Agriculture by Mark Shepard. Many of the decisions that will keep your business sustainable are those that will occur behind the scenes. Others, though, can be shared and used to help the business succeed. I really can’t emphasize enough the importance of understanding and harnessing the unique assets that only the small farmer and cheesemaker have. As so many costs increase and the industrial dairy industry starts (or rather continues) to try to mimic and capitalize on the appeal of traditional, handmade, artisan products, small and farmstead cheesemakers must learn to sell our reality. If we don’t recognize what we can do differently and why our products are unique, consumers will turn to the well-marketed imported cheese that is half the price — and tastes great. No matter what models you choose, try to remember why you went into this business — one with long hours, hard labor, life-and-death decisions and low wages. Keep your vision in focus, and don’t undersell your product or your image. In addition to managing their herd of dairy goats, Gianaclis Caldwell is the cheesemaker and owner (along with her husband, Vern, and their daughters Phoebe and Amelia) of Pholia Farm, a licensed dairy located in southern Oregon. Pholia is well-known for its artisan, aged raw milk cheeses; classes on small-dairy, goat husbandry and cheesemaking at all levels; and off-grid, sustainable lifestyle focus. Caldwell is the author of several books including The Farmstead Creamery Advisor, Mastering Artisan Cheesemaking, The Small Scale Cheese Business and Holistic Goat Care.