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Milk marketing: Risks and rewards for agri-entrepreneurs

Posted December 15, 2014

Dairy farmers are making calculated risks with their fortunes and futures to become entrepreneurs – and to mitigate market risks for those with the moxie to join them.

Nathan Rudgers ’82, the state’s former commissioner of agriculture and markets, highlighted the risks and rewards of entrepreneurship during a panel discussion at the Agribusiness Economic Outlook Conference in Cornell’s Warren Hall Dec. 9. Co-panelists with Rudgers were Cornellians Bill Morgan ’89, chairman of Cayuga Milk Ingredients, and Christopher Noble ’03, MBA ’09, general manager of Craigs Station Ventures LLC, two start-up dairy product manufacturers with different approaches to marketing.

“When I talk about their efforts to reduce risk, it is about reaching up or down the supply chain and taking on an additional initial risk, deploying their own and other people’s capital,” said Rudgers, director of business development for Farm Credit East. Both farmer-entrepreneurs, Rudgers said, “have the objective of bringing back a higher return, and taking better control [of] market risk in their enterprises.”

In addition to a panel discussion of “Agri-Entrepreneurship,” ag industry representatives and Cornell students heard the perennial “Current Situation and Outlook for the National Economy” by Steve Kyle, associate professor and chief prognosticator at the Dyson School.

Rudgers, who served in former New York Gov. George E. Pataki’s administration and now works to capitalize agriculture-related projects, defined an entrepreneur as, “An individual who manages a business or enterprise and deals with higher-than-normal risk … always moving and changing and trying to adapt … while reducing or mitigating risk.”

That definition seemed to fit the founders of Cayuga Milk Ingredients, whose recently opened Auburn, New York, facility turns bulk milk from 29 area farms into products like milk powder for the protein-hungry global marketplace.

Noble, whose brand-new,  $12 million cold-separation plant on the family farm in Linwood, New York, processes milk from eight farms participating in the joint venture, sells a variety of premium products through the national dairy cooperative Dairy Farmers of America. Like Cornell’s new dairy plant on Tower Road, the Craigs Station facility features floor-to-ceiling windows so passersby can watch modern milk processing in real time – all in the name of “transparency,” Noble said.

All milk at the Craigs Station plant comes from cows that do not get injections of synthesized bovine somatotropin (rBST). Recombinant BST was tested at Cornell, among other places, when Rudgers was a student here, and he listed it as one enabling technology for agri-entrepreneurs. Then why, Noble was asked, did the high-tech Craigs Station venture decide to forgo the controversial growth hormone?

Not all member dairies were ready, at first, to go BST-free, Noble said. But that’s what consumers in the target marketplace want, he said, “so we decided to take a chance.”

Source: Cornell University

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