Gingeriches Pin Hopes on Ohio Yogurt Partnership
Published: Friday, March 15, 2019
Bruce Gingerich is pulling up roots and venturing east to pursue a better opportunity in the dairy industry.
Discouraged by four straight years of negative margins, the Millersburg dairyman and well-known Holstein breeder is moving to east-central Ohio to partner with a dairy farmer there who has his own on-farm processing operation.
The transition has already started. In late December, Gingerich and his wife Tricia moved their small Holstein herd (23 cows) to the farm located in Holmes County, Ohio. Once they sell their Elkhart County home and farm this spring, they will relocate to Ohio and become partners in the on-farm processing business.
The joint venture will produce yogurt and, later, ice cream and cheese. The farm also will make a milk-based dog food, known as kefir, that looks like yogurt and contains probiotics.
It's a gamble, but Bruce figures their chances of success are much better if they merge with an existing operation. With the Ohio farm, for example, the processing infrastructure is already there and permitted. If he were to do the same thing in Indiana, it would take at least 18 months and many thousands of dollars in capital investment just to get started.
Gingerich, a third-generation dairy farmer, says that if he were younger, he might be willing to make the long-term investment and build an on-farm processing facility here. But at age 50 and with no children interested in carrying on the dairy tradition, the future is now. Gingerich and his wife plan to use the money from their farm sale to self-finance their share of the joint venture—rather than having to get a loan from a bank.
Tricia, whose passion is show dogs, will be involved in the farm's marketing, cow care and breeding work.
Just a few years ago, when milking cows was profitable, Bruce and Tricia were expecting to live out their days along C.R. 42 in eastern Elkhart County. But the dairy economy has soured, causing them to look for a different business model.
The farm has three revenue streams: selling registered Holsteins and high-genomic cattle, transporting commercial cattle, and producing milk. The first two areas were profitable last year, but Bruce says the farm as a whole lost money due to a "devasted" milk market.
"The sheer losses . . . of shipping milk for a living just took all the profits and more," he said. "I've been preaching for years that we've got to be direct to the consumers, unless we want to be big. This looked like our best way to accomplish that."
Gingerich believes there is plenty of money flowing in the system between producers and consumers, but he said producers are receiving very little while co-ops and other players are making huge profits. He figures the best way to change his fate is by positioning himself closer to consumers.
One reason for the current downturn, Gingerich said, is overproduction. Thanks to sexed semen technology that increases the likelihood of female births, dairy farms have continued to add cows even while milk prices have dropped.
"My dad always joked, 'Nobody hates prosperity like a dairy farmer,' and I believe there is a lot to that," he said.
Dairy farmers across the Midwest, including Indiana and Ohio, are suffering equally. But Gingerich believes the environment in Ohio is more "conducive" for on-farm processing, more so than in Indiana.
"Nobody will admit it, but in Indiana here, most things are catered toward helping Fair Oaks (Farms) get better and better," Gingerich said, referring to the state's largest milk producer and flagship farm for the Fairlife milk brand. "And, believe it or not, there's a lot of us that are not Fair Oaks that have some pretty good ideas."
The Hoosier state currently has just under 900 Grade A dairy farms, including 15 that are processing their own milk, according to Denise Derrer, public information director with the Indiana Board of Animal Health.
By contrast, Ohio currently has 1,651 Grade A dairy farms, of which there are 30 on-farm processors, according to Roger Tedrick, a spokesman with the Ohio Department of Agriculture. These farms make any number of products, from Grade A fluid milk and yogurt to cheeses and ice cream.
Tedrick added that milk producers are entering their fifth straight year of low milk prices. As profits have disappeared, interest in on-farm processing has picked up.
"Whenever the price of producer milk goes down or is in a depressed state, we get many more phone calls looking into on-farm processing, all in an effort to get closer to the consumer dollar," Tedrick said. "We know it as vertical integration."
Gingerich said that Holmes County, Ohio is home to many small dairy farms and resembles what Elkhart County looked like 20 years ago.
As he grows increasingly discouraged with the current state of the dairy industry, Gingerich hopes that on-farm processing will allow he and Tricia to continue doing what they love to do.
He admits there is a chance this may not work out, but he and Tricia are animal people and wouldn't adjust well to a career change at this point. Bruce says he has the heart of a dairyman, and knows that this industry is "where he belongs."
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