The long-term outlook
By divesting its fluid milk business and focusing on specialty cheeses, Swiss Valley Farms has put itself in a good position for increasing sales. The forecast for 2012 is to grow 8% overall, including the branded and private-label cheeses and whey powders. Swiss cheese and new accounts are expected to increase 1-3% a year, and specialty cheeses are growing at 5% a year, Jirik says. Purchasing Faribault and the White Hill Cheese joint venture give the company more capacity. Demand for blue cheese is exploding. The Faribault and Mindoro plants have increased production 20%, as measured by pounds.
Cheese processors used to dispose of whey by spreading it on fields. Then they discovered the economic potential of the byproduct. Cropp calls whey a “high-value commodity” that is “a bright spot in the dairy industry.”
Swiss Valley Farms recognized the potential in whey powders and has built a booming revenue stream. Exports are a growing part of the co-op’s revenues. Saforek says the company could export nearly all the whey powder it produces, but won’t because it has domestic customers to serve. Swiss Valley Farms sells whey powder, cream cheese, Swiss cheese and blue cheese to customers in Mexico, South America, Asia and the Middle East.
“The global market is coming to the United States,” Boelens says. Standards in the U.S. cheese industry are high, and that helps all processors, he says. Swiss Valley Farms is a member of the U.S. Dairy Export Council. When talking with potential export customers, the conversation first turns to the strengths of the U.S. dairy industry, Saforek says. Those strengths include an educated workforce, an established infrastructure, low transportation costs, a viable economy that can still invest in manufacturing and high standards for safety (meaning no melamine scandals), he says.
Then Swiss Valley Farms talks about it strengths, including processing whey with desirable color, taste, mineral content and nutritional value. The co-op points out that whey is produced from a single source of milk and a controlled milk supply. Consistency helps maintain the quality, Saforek says. Swiss Valley Farms took first place for its sweet whey at the 2011World Dairy Expo.
Cropp says the challenge for dairy cooperatives is to be profitable so they can invest and grow. Co-op processors in the upper Midwest have to run efficiently because they pay a higher price for milk, compared to those in southern states. By restructuring its business, investing in its cheese plants, manufacturing branded and private-label cheeses, and developing export customers, Swiss Valley Farms is adding value to its members’ milk, building equity in the co-op and returning profits to the farmers. It is also producing cheeses its customers can sell and that consumers can enjoy. The turmoil of the last decade has passed.
2011 Cheese Honors
Blue Cheese
1st Place (St. Pete’s brand), Minnesota State Fair
Grand Champion, (St. Pete’s brand), NCCIA Cheese Making Contest
1st Place (St. Pete’s brand), National Milk Producers Federation
2nd Place (Verdant brand), National Milk Producers Federation
3rd Place, National Milk Producers Federation
Gorgonzola
2nd Place, Wisconsin State Fair
2nd Place, (AmaGorg brand) NCCIA Cheese Making Contest
Swiss
1st Place, Illinois State Fair
1st Place, National Milk Producers Federation
Baby Swiss
2nd Place, Illinois State Fair
2nd Place, National Milk Producers Federation
Neufchatel
3rd Place, World Dairy Expo
3rd Place, Illinois State Fair
Cream Cheese
Grand Champion, Illinois State Fair
1st Place, National Milk Producers Federation
Sweet Whey
1st Place, World Dairy Expo
