Wednesday, June 6, 2012

Family Milk cow project: Raw milk and money

I've written a series about raising a family milk cow.  To see the first entry in the series, click here.
To see the previous entry in the series, click here.

I look at a family milk cow as being part of a basic ladder of farm animals that a homestead needs.  My personal goal is to raise as much of the food that I eat as I can.  I look at a family milk cow as being a step along that progression.

Anytime I look at adding an animal to my farm it's part of my nature to look at the money that it might make for the farm, and there's something very interesting about raw milk right now.

It's selling for $13 a gallon. 

For me, at that price, it's very interesting.  A good cow will produce between 4 and 6 gallons of milk a day -- and that means a potential revenue of $52 to $78 a day.  Using the lower figure, and figuring on a milking cycle of 10 months, we're looking at a revenue of $15,600 per cow. 

The sharp reader will note that I'm skipping various costs; licensing, feed, shelter, equipment and so on, but the bottom line is that it's an interesting enough business that it's worth exploring a little. 

Dungeness valley Creamery reports on their website:

"...Besides selling milk at the dairy, the Brown’s sell their milk in a number of stores across Washington. They can sell their milk for 4-and-one-half times the price they received when they sold it to the coop. While there are some new expenses, the profits, besides keeping Sarah on the farm, have allowed the Browns to hire additional help...."

Now that sounds pretty darned good for the business model.  Sell the same product at 4.5 times the price other people do, keep the family on the farm, provide a good income.

The downside is that there's always the chance that your dairy operation will get linked to an outbreak of something.  Dungeness valley Creamery had that problem in 2009:

"...The patients all report drinking raw milk produced by the Dungeness Valley Creamery in Sequim. No E. coli has been found in samples from the dairy's current batch of milk, but during an investigation at the dairy, WSDA found the same bacteria that caused one of the illnesses...."

I want to be clear here:  I don't make any judgement on Dungeness Creameries product or practices, and I don't know anything more than what I've read.  But even if you're not at fault, defending yourself against civil suits costs money, and sometimes a lot of money.  

Food liability law
Jason Foscolo is an attorney whos area of practice includes food law and related disciplines.   Here's what he says about raw milk in this blog entry:

"...The reason we are seeing more outbreaks also stems from ignorance of the law. Even in states where selling raw milk is legal, dairies still have to face strict liability in civil court for the harm caused by their products. If farmers had a better understanding of the almost-absolute duty the law imposes on them to make food that is safe to eat, they would either leave the raw milk business altogether or implement the technologies and practices that would lower the overall incidence of infection. The up-tick in outbreaks tells us neither is being done, and that is a shame for the farmers who may have to part with land to compensate the sick."

So let me paraphrase what he's saying here:  If the outbreak of illness is serious enough, you may lose everything in the resulting lawsuits related to the outbreak.   You may lose your farm or some portion of it.  That's a pretty serious penalty.

Distributors and retailers are at risk, too.

Whole foods and Puget Sound Consumers Coop (PSCC) no longer carry raw milk products on their shelves.  There are probably a variety of reasons for that choice, but one of them might be what happened to Jensen farms.

A quick summary:  Cantaloupe grown at this Colorado farm were linked to an outbreak of illness in 2011.  The outbreak was serious, and the cantaloupes were shipped to 30 states.  According to the story linked to above, the outbreak of illness killed at least 30 people, sickened at least 146 and caused at least one miscarriage.  

Jensen farms itself has declared bankruptcy.  The company that installed equipment and a safety-audit firm and the insurance that the farm itself had resulted in a pool of about $4 million to pay the victims, but it doesn't end there.  From the story:

"...The plaintiffs might also pursue claims against others involved in the distribution and sale of the cantaloupes."  Bill Marler, attorney for 39 of he plaintiffs.

This is a huge risk, and one that many small producers of milk or food products in general might overlook.  With this in mind, it makes selling the raw milk a lot less attractive.

 Managing risk
Businesses usually manage this sort of risk by both adopting the best practices and by carrying both the right kind of and an adequate amount of insurance.   If I were to start a raw milk operation I'd probably want to spend a reasonably large sum of  money on attorneys to set up a business structure that would help my farm survive in the event of an outbreak. 

Here's a fellow who was apparently involved in the Dungeness creamery outbreak:
"Greg - January 15, 2010 7:39 PM
I am a huge supporter of raw milk and of buying all my food local, but I am also the "Vancouver man in his 30's" who got sick presumably from this milk. While I know it could have been from a number of sources, I am fairly sure it was the milk. I purchased the 1/2 gallon on Oct 28th at Whole Foods in Vancouver and took it straight home. I poured a big glass, took 2 huge gulps and nearly threw up, it was absolutely awful. It was acrid and sour and smelled so bad I nearly threw up again. Four days later my stomach started hurting, 7 days later I was in the ER in incredible pain. I missed nearly 3 weeks of work it was so bad. While I am nearly positive it was the milk, I did not lawyer up like the others and have asked nothing from the company, that would go against everything I believe in, although it did make me look a little stupid to get sick from something I am always telling others to do. Maybe one day I will have the nerve to drink raw milk again but not yet. "

I must say that I admire Gregs resolve and convictions in this case; he believes in choice and that he made an informed choice and decided to take responsibility for that choice personally.  But I can't bet my farm on finding customers who have Greg's amazing willpower to stick to his principles. 



BigGAdawg said...

Here in Georgia, raw milk can only be legally sold for pet consumption. While this is an insult to the consumer, it may provide some extra protection for the vendor. The milk is labeled, "Not Intended for Human Consumption." Of course, what one does with it when they get it home is still their own business. And that still comes down to making a personal choice and an informed decision.

becky3086 said...

I really like how you presented this. It isn't enough to just say that everyone should be able to drink raw milk, you have to think of the consequences to the farmers as well as people. Very nice post.

off grid mama said...

It's only that profitable if people will buy it at that price. Here in ks people choke over $6/gallon and we have to sell it for at least $8. As for liability you could have a liability waiver requirement. It could offer a little protection ... maybe.

Throwback at Trapper Creek said...

I like my farm too much to risk selling raw milk anymore. I'm happy to help anyone get their own cow, but that is about as close as I want to get to anyone besides my family drinking raw milk.

Incidentally, not 100% positive but the cows in the Oregon outbreak are for sale on CL, the ads are kind of sketchy, cows in Oregon, phone number in Washington, and written by someone who really knows cows, but each a little bit different...not one mention of them having e coli...

Buyer beware!

Bruce King said...

Throwback, I think you're talking about the case from foundation farm, near Wilsonville, OR. You can find details here:

The story notes that the farmers own 4 children are among the 19 people who are sick, and that one of the 19 is in the hospital in critical condition, while a total of 4 have kidney failure.

From the pictures, I am a little skeptical about the farm carrying enough insurance to compensate for the medical bills for even one child. A single day in an intensive care unit can be $50,000.

Foundation farm was operating on a herd share arrangement, where they would buy a share of the cow and by doing so wouldn't be considered 'customers' of the farm; on the theory that they were "owners" of the cows. A federal judge called that arrangement "mere subterfuge" for direct sales; that particular legal structure may not survive judicial scrutiny. You'll find details of that here:

Bruce King said...

Throwback: The dairy in the recall is listed as being in wilsonville, the cows as being for sale in aurora; those two towns are only 6 miles apart. The picture of the dairy shows jerseys; the cows for sale are jerseys.

Another place that I'd expect recall-related cows to show up is at auction.

Joanne said...

Bruce and Throwback, those cows are for sale. I know the farm and know Tricia, one of the farmers. I used to be a customer of theirs before they moved to Willsonville. If I had the time and the land for a full time milk cow, and the ability to use that much milk, I would buy one of those cows. They're very nice cows and the thing about that strain of E. coli is that it can come and go. It can exist in a cow's rumen when the rumen is neutral or when the rumen becomes acidic. So the fact that the cow(s) had it at one time isn't necessarily an idicator that they've got it now.

I think that's one reason why the health department doesn't care whether a particular animal tests positive or not in an outbreak like the one from Foundation Farm. And they don't care if there's salmonella present in the eggs that a farm sells. With some health departments, if there's a salmonella outbreak and there were unpasteurized eggs in the home or restaurant, or raw chicken, then it's assumed that it was the chicken or the eggs that caused the outbreak, no testing needed.

All of us who produce food for sale to the public are at risk for something like this outbreak. I don't care if you sell livestock/poultry to the public, eggs, raw milk or produce. Look at the strawberry farm in Oregon that was involved in the 0157:H7 outbreak last year. Health department comes out, finds deer droppings and either tested and found the strain or assumed that the strain had contaminated the berries (I've heard conflicting reports as to whether the droppings were actually tested or not), and the farm's berries being the thing that the victims had in common and so tag they're it.

I grow produce and operate a 25 member CSA program from my farm. I live in constant fear that someone will get sick from my produce. The way things are set up, you either follow the California Leafy Greens Marketing Agreement and make your farm a sterile wasteland or you allow the wildlife in (like you could keep it out anyway short of growing everything in a greenhouse) and take your chances. I inform my members that the produce is out of doors and is exposed to wildlife and they all know that I have livestock and poultry on the farm, but still, bad things can happen no matter what you do. All a person can do is mitigate the risk as much as possible.

That's why there are two things I will not produce on my farm, no matter how much money I could make - dairy (raw or pasteurized) and sprouts. There's just too much risk for those products.

Bruce King said...

Joanne, you're right that anyone who produces food can potentially have an outbreak of something.

Have you looking into insurance policies that might give you some coverage?

I've got a fleet of trucks that we use to pick up food for the pigs and I know that I sleep easier knowing that I've got a good commercial policy that covers them.

Throwback at Trapper Creek said...

Joanne, I understand they are just trying to recoup their money on those cows, but the very nature of selling milk year round is fraught with problems from a cow feeding standpoint, and most people don't get it. They want milk year round like from the store, and raw milk produced in the rainy season from a cow that shouldn't be calving in the fall or winter is not the same as milk produced during the late spring and summer into fall. It's hard for the farmer to sell seasonally (as you know) and it's hard for the consumer to see the differences between the store and the small producer.

A friend of mine has a u-pick strawberry farm in Scappoose and they have to either fence deer out, or flag any deer poop or bird poop with a caution tape so the u-pickers can avoid the droppings. It's a lot of labor to monitor two acres of berries, and it's a lot of money to put up an 8' deer fence. These are ODA guidelines they are supposed to follow.

It's tough being a small producer these days, people expect to be protected from themselves practically and it is sad.

And the milk police are out there, a friend selling raw milk was delivering it (no-no) and the very day he decided to stop because of the Foundation Farm outbreak, the delivery point got a visit and a cease and desist order from the Health Department.

Driving things like raw milk underground is silly, and I think Oregon should change the laws and make it legal with inspections like Washington. There will still be outbreaks but at least it won't be such a big surprise.

I'm glad I have my own cow, and even that is no guarantee that you will have perfect milk.

off grid mama said...

Here's the problem with "good" insurance policies: They MAKE you a target. Ah look! I'll get money out of them! Frankly, we have a survey for potential customers to take. Then we select who can get milk from us. We don't sell to whomever wants a gallon of milk and we certainly don't sell to someone "passing through."

Walter Jeffries said...

Another thing to do with raw milk is feed it to pigs to produce pasture/dairy fed pork which is delicious and sought after. We have a free supply of dairy right now but if I had to I would setup my own dairy for the purpose of milking for the pigs. I think I can make more money that way than milking for humans and the regulations & liability is lower.

Jeff said...

I have a hard time believing it would make sense to milk cows for pigs. Seems like a major waste of feed conversion--just eat the cows instead!

Bruce King said...

Walter, you've said that a couple of times, and I just don't see it being viable, either. I can see it if you use the milk to produce cheese and use the byproduct to feed pigs, sure. But dairy farming is an awful lot of work as a source of animal feed.

I think that dairy farming is the hardest sort of farming. It's relentless.

off grid mama said...

Ah Jeff, cows don't make BACON! I've met many vegetarians whom say bacon was the hardest. Walter, we actually have "pig milk cows." But it's no big deal to make a big batch of cheese from it then the pigs get the whey. Your feed conversion depends if you are 100% grassfed or if you heavily grain them. So far what we've found is you can skip the soybeans and frankly have a fairly incomplete feed ration and do pretty good.