PastureLand Cooperative

Their Own Brand

PastureLand Cooperative in southeast Minnesota is marketing cheese, butter, milk and ice cream made from the milk of grass-fed cows. Together with six Rochester area producers, the co-op aremarketing their own brand of cheese and milk.

It wasn’t just low milk prices that prompted members of a Rochester-area cooperative to create their own brand of cheese and butter. It was mainly fear they would have no place to sell their raw milk. “We all have low-cost operations,” says Dan French of Dodge Center, president of PastureLand Cooperative, a group of six southeast Minnesota milk producers who use intensive rotational grazing. “We can produce milk as competitively as anybody, as far as price. For us, future market access was the biggest driver.” The co-op’s members manage small dairy herds, ranging from 65 cows to 165. As small, seasonal producers, “we are concerned about being locked out of the market,” Dan says. Those fears are heightened by consolidation throughout the dairy food chain and by regional shifts that are pushing the dairy industry west and south.

A Natural Route

PastureLand growers had been meeting informally for several years to talk about finding new outlets for their milk. They also wanted to get more value from the distinctive qualities of their milk. Grass-fed cows produce milk with high levels of certain nutrients, including Omega-3 fatty acids, beta carotene and conjugated linoleic acid, French says. There’s evidence these nutrients have important health benefits, he says, but their value is lost in commodity marketing channels. Growers decided on marketing their own brand to preserve those qualities. In 1999, with help from the Agricultural Utilization Research Institute and the Minnesota Department of Agriculture’s Co-op Development Program, French’s group formed a marketing cooperative to sell grass-based dairy products under the PastureLand brand.

Last spring, Eichten Cheese of Center City, Minn., began processing cheddar and gouda for the co-op. Members sold the cheese at the Rochester Farmers Market, moving 1,500 pounds the first season. Though labor intensive, selling at the Farmers Market was a good way to test consumer response, French says. “We were trying to see what people were interested in.” What mattered most to consumers? “Taste and quality,” French says. “We found that if we could get people to taste our cheese, our rate of sales was very high.” Buying a locally made product was important to consumers, too, the co-op learned. “People want to know who they’re buying food from,” French says. Customers also responded to PastureLand ideals that embraced:

• sustainable farming practices
  environmental stewardship
  humane treatment of animals

“To our customers, it’s important that their food comes from cattle in the pasture, not confined.” Some responses were surprising. PastureLand growers don’t use antibiotics or bovine growth hormone. “That was important to consumers,” French says, “but not as important as we thought it would be. Taste and locale were bigger.”

A Customer Core

At the Farmers Market, PastureLand developed a core of regular customers. That helped the group place cheeses in several Rochester-area food co-ops and HyVee stores. By working with local grocers, the co-op avoided paying steep up-front “slotting” or shelf fees, which often doom start-up food companies.

Last fall, PastureLand added butter; premium ice cream is in the works. And the co-op is exploring the fluid milk market. “But it’s much more risky,” French says, “more price competitive, more perishable. And we would need a hefty amount to interest a processor.” PastureLand looked at doing its own bottling, French adds, “but we’ve ruled it out for now. It’s too heavy an investment in money and manpower.”

PastureLand growers hope their marketing strategy will earn the equivalent of $17.50 per hundredweight of milk — about 35 percent more than average farmgate milk prices in 2000.

The PastureLand brand faces plenty of obstacles, acknowledges French, a former IBM draftsman who has been farming for 20 years. But the group believes demand for grass-fed dairy products will rise. French points to an explosion of organic milk sales, which jumped 73 percent between 1996 and 1997, and continue to grow at about 20 percent a year, according to a 1999 AURI market study.

“Organic milk is a good niche now,” French says. “But we think there’s going to be a lot of competition there soon. So we’re looking beyond organic to the next niche.”