Wednesday, June 27, 2012

The Chobani Paradox

Stealing from the Wall Street Journal bia Keith Good, just because I'm interested in NY dairy (the background is the rise in popularity of "Greek style yogurt":
The Journal article noted that, “Meanwhile, the long-struggling dairy farmers of New York aren’t seeing their bottom line soar thanks to the Greek yogurt boom—and they aren’t adding to their herds to meet the demand.
“So instead of expanding his plant here—in a region trying to reverse a trend of population and job loss—Mr. Ulukaya is building a factory in Idaho, in part because he can be sure of a steady supply of milk there. The New Berlin plant will remain open, but Mr. Ulukaya said he might have expanded it instead of opening another if he knew he could get enough milk.
Milk production in states such as Idaho has surged in the past decade. Land is cheaper and dairy farms tend to be larger than in New York, making it easier for farmers to grow their herds. New York farmers say they are weighed down by property taxes and the high cost of land. Since their herds are smaller, expansion tends to be riskier.”
 Much of upstate New York is hill and valley country.  In the old days, your hay fields would be the valley and lower slopes, the pastures would be the steeper slopes.  But farmers have discovered that cows waste energy walking to and from pasture, so that sort of dairying is less economical.    If you can grow or buy corn, you can feed your cows all year round.  I assume those are some of the facts behind NY's loss.

Another factor would be interstates: presumably Idaho yogurt can be economically shipped around the country, just as Wisconsin cheese can be. That's unlike whole milk, where getting it to New York City was the big hurdle, first solved by the railroads, then by trucks.

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