Associated Milk Producers Inc. (AMPI) produces upwards of 640 million pounds of cheese, 140 million pounds of butter and 175 million pounds of powdered products each year. Despite those impressive figures, most consumers have never heard of the New Ulm, Minn.-based dairy cooperative.

But AMPI is perfectly fine with that reality. The cooperative wants its foodservice, private label and co-pack customers to shine — bringing to market dairy products of only the highest quality.

“The vision statement adopted by our board is ‘We make the dairy products that make the brand,’” explained Sheryl Meshke, AMPI’s co-president and CEO. “We are the products behind many of the leading brands.”

And award-winning cheeses are among those products, a fact that goes a long way to enhance customer satisfaction. For example, the cooperative recently received back-to-back gold medals for its colby jack cheese in the Wisconsin Cheese Makers Association’s World Champion Cheese Contest, as well as first-place honors for both its medium cheddar cheese and Parmesan cheese in the National Milk Producers Federation’s Championship Cheese Contest. Products entered into such competitions are pulled from existing stock, noted Mike Wolkow, senior vice president of operations, which speaks to the products’ consistency in terms of quality.

“It’s a lot of pride that we see from those brands when they update their labels to talk about all the award-winning cheese,” Meshke said.

 

Positioned for success

Forty-nine-year-old AMPI — which was actually the largest dairy cooperative in the nation before its Southern Region became part of Dairy Farmers of America in 1998 — now counts approximately 2,000 dairy farm families among its owners. Those families are spread across Wisconsin, Minnesota, Iowa, Nebraska, South Dakota and North Dakota. Together, they own four American-style cheese plants that produce 640-pound blocks of cheddar, colby, Monterey Jack and more; a barrel-cheese plant; one Italian-style cheese facility that makes 22-pound wheels of Parmesan, Romano and Asiago; one butter plant; one cheese packaging plant; and two nonfat dry milk facilities — all located in the upper Midwest, Wolkow said.

“On the whey side of things, we dry straight sweet whey,” he added. “We also dry whey protein concentrate — 34 and 80 — and lactose.”

A big plus for AMPI and its farmer-owners is the fact that two of the categories in which it operates, butter and cheese, are in a strong growth mode, said Marshall Reece, senior vice president of sales and marketing.

“Both of those categories are doing very well and continue to grow each year,” he noted. “And within cheese, I would say we’re seeing really good growth in the premium category … like pepper-style cheeses.”

AMPI often works hand in hand with its customers to produce on-trend products ranging from clean-label cheeses to flavored cheeses, he added.

Another positive is the fact that the cooperative is vertically integrated.

“Our farmers market their milk all the way from the time it leaves the bulk tank until it gets to one of our customers,” said Donn DeVelder, co-president and CEO. “So the dairy farmer has total control of that product. In today’s environment, that’s becoming a bigger and bigger deal all the time.”

That also means that when customers ask about issues ranging from animal care to plant-level sustainability efforts, Reece is able to respond knowledgably, Meshke stressed.

 

Local, with scale

AMPI’s consistent milk supply and multiple plant operations also contribute to its success, offering its customers a comfort level in the event of weather-related and other unforeseen disasters.

“We can go back to our other facilities and make adjustments,” DeVelder explained.

Perhaps equally important, the multi-plant configuration allows the cooperative to “do local on a large scale,” Meshke pointed out. Milk typically travels no more than 100 miles from a member farm to a plant. For members positioned farther away, AMPI engages in milk swaps with other dairy organizations to achieve distance reductions.

“When you think of attributes that today’s consumer looks for in a locally sourced product, there’s so many ways AMPI fulfills that,” Meshke said. “Our dairy farmers across the upper Midwest are producing this milk and taking it to the plant nearest them. They own the plant; they employ people in their communities to make their cheese and their butter. That is as local as it gets,” she added. “We just happen to do that on a large scale.”

 

Investing in technology

To support its growth and help ensure continued success for its farmer-owners in the years to come, AMPI has been putting major enhancements into place at some of its plants. A few years back, for example, it invested in new cheesemaking technology in its Jim Falls and Blair, Wis., facilities. And more recently, it made investments in its Sanborn, Iowa, cheese plant — expanding and adding eight new vats, increasing automation and upgrading the whey processing and storage area. (See our Inside the Plant story)

The Sanborn facility is well-known for its high-quality cheddar cheese — earning first place in the Mild Cheddar category three years in a row at the Championship Cheese Contest. The expansion not only doubles the plant’s cheese production capacity (to 300,000 pounds a day), the company noted, but also adds new cheese varieties to the facility’s repertoire.

“Sanborn has long been known for its cheddar — really good cheddar,” Wolkow said. “But with this new plant upgrade, we’re able to make Monterey Jack, marble jack, colby and some other varieties of cheese.”

With the increased amount of cheese produced comes more whey, of course. So the Sanborn facility is also adding whey protein concentrate and whey permeate to the traditional condensed whey it has long produced, he noted.

Other improvements for the cooperative are in the works, too. For instance, AMPI is currently upgrading its Paynesville, Minn., plant to incorporate new vats and other cheesemaking equipment. The project will increase cheese production from 2.4 million pounds a day to 3 million pounds a day, Wolkow said. The production of whey protein concentrate, 34 and 80, will increase as well.

 

Advocate of ‘smart growth’

AMPI also plans to update technology in its cheese plants that have not yet received new vats. Such investments “really cement” the cooperative’s commitment to being a long-term player in the cheese industry, Meshke explained.

But as it moves forward, AMPI is committed only to growth that lines up with the needs of both its farmer-owners and its customers.

“We take a long-term view of our business,” explained John Radi, senior vice president of finance and chief financial officer. “We have an evolving five-year view of our business. And at least once a year, we refresh that, [asking] what we need to do, what areas we need to improve.”

AMPI is not chasing a specific “magic number” in terms of sales growth, DeVelder added.

“[We’ll get] as big as our customers want us to get and as big as our dairy farmers want us to get, along with our customers,” he said.

Any planned expansion, therefore, calls for extensive communication with customers and farmer-owners, Meshke pointed out.

“We believe in all arrows pointing green before we go ahead with a project,” she said. “And our internal buzzword — often said — is ‘smart growth.’ It starts with Marshall’s sales team and then goes to Donn’s team and the milk, and then it goes to Mike to make sure we can have the manufacturing infrastructure to make that work. And then obviously there’s John, who makes sure we have the financing to do all of it.”

 

Taking a proactive stance

Its cheese and butter businesses might be booming, but AMPI is not blind to the challenges facing its dairy farmer-owners and the dairy industry as a whole. In fact, the cooperative is decidedly hands-on when it comes to addressing those challenges. One such challenge is declining fluid milk sales.

“It is important for our dairy farmers to have good bottled milk sales,” DeVelder explained. “That’s the highest value thing you can do with milk. … So that is really important to us.”

In addition to helping farmer-owners find markets for bottled milk, AMPI belongs to numerous dairy organizations and works with them and policy-makers to promote fluid milk sales, Meshke said. It also invests energy into conserving the value of dairy as a brand. For example, Meshke serves on the board of the Innovation Center for U.S. Dairy, which has been evaluating the impact of fear-based labeling claims (essentially, deceptive absence claims) on dairy as a brand.

In addition, the cooperative has been lending its voice to efforts aimed at stopping dairy alternatives from using dairy-specific terms such as milk and cheese.

“Most recently, I was privileged to go to an FDA visit with some of our fellow industry folks, and we asked FDA to step up and to help us preserve that brand,” Meshke said.

Individual farmer-owners are very involved, too, when it comes to taking on issues of concern, Radi noted.

“They all know their congressman; they’re all very involved,” he said.

 

Guided by core values

As it moves forward in its smart growth strategy, AMPI will not stray from the vision set forth by its farmer-owners and board: “We make the dairy products that make the brand,” Meshke said. Its core values include commitment to quality, responsibility to others and determination to succeed. And the cooperative will also continue to operate under the conviction that what the cooperative is made of is as important as what it makes.

“We absolutely adhere to that in our day-to-day decisions; I can point to two or three things that we as a team decided today based on that philosophy,” she noted. “And it speaks to what’s on our wall, that we really regard our products and our people as ‘genuine by nature.’ I think that sums up our culture.”

That said, performance evaluation in relation to AMPI’s vision, melded with the seven cooperative principles widely adopted by cooperatives around the world, will be getting more attention in the near future. Performance measures, set forth by AMPI’s board, include thriving members, engaged employees, satisfied customers, enriched communities and profitable growth.

AMPI is already measuring thriving members, satisfied customers and profitable growth, Meshke said.

“For the engaged employees and the enriched communities, we’re working to put metrics around them to better answer whether we’re performing like our farmer-owners have asked that we do,” she said.

The effort should only improve upon what’s already a highly successful operation for AMPI’s farmer-owners — and a source for consistently high-quality dairy products for its loyal customers.

“There are many customers that we do business with who actually tell us that they love AMPI because they don’t have to think about us. If they have to think about us, that means there’s a problem,” Reece said.

“I think that’s one of the biggest compliments that we can get,” he added. “We’re selling award-winning cheese that just works and performs.”