Goat milk: Dairy's fastest growing sub-sector
Sunday, April 3, 2011
Production of goat milk is increasing at double-digit rates each year and, say insiders, the demand is being driven more by health reasons than ethnic preferences
by MIKE MULHERN
February was scrambling time for Ed Donkers. His goat herd was birthing at up to 94 babies a day and it was all going to happen in about a week. He had extra staff and the barn was humming.
Donkers had compressed his breeding season and knew he was in for a busy time, but he had no regrets. "If you asked me if I would do this again, kid out in a week instead of going for a month," he says, "yes I would. One very busy week and I'm done."
Donkers and his neighbour Peter Kerkvliet live west of St. Thomas, just a few hundred yards from each other. Both are former cow dairy farmers and they both started in the goat business about three years ago. Kerkvliet, who is milking 340 goats, expects to cap his operation at around 500 milking goats, while Donkers is already at close to 500 and planning eventually to reach 1,500.
"I liked being a cow farmer, but I love being a goat farmer," says Donkers as he bottle-fed a day-old doeling, one of 500 he expects to see in his nursery this kidding season. With the new crop of does, he reckons his herd will be up to 1,250. To accommodate a group of duration goats (older females that milk, but won't be bred again), he is adding 11,000 square feet to his 17,500-square-foot barn and milking parlour in Elgin County. Construction is to begin in May.
In 1997, there were fewer than 100 licensed goat milk producers in Ontario. By 2010, there were 262 goat milk producers divided almost equally between two dominant brokers, Hewitt's Dairy and the Ontario Dairy Goat Co-operative (ODGC). Both Donkers and Kerkvliet are members of the goat co-operative, which was started in 2002 and was strictly a broker of goat milk.
Hewitt's Dairy, which has been in the dairy goat business for more than 40 years, buys from 130 producers. Most of the milk is brokered for cheese production, while eight per cent of the milk Hewitt's collects goes into fluid milk production.
Mornington Heritage Cheese and Dairy Co-operative was also a player in the goat milk and cheese market, but that changed recently with Mornington's absorption by the ODGC.
Bob Reid, chair of Mornington for the past six years, says the acquisition was part of the natural order of things. "Bigger companies buy smaller companies for the economies of scale, all the usual stuff," he says. "They (ODGC) had dabbled a little bit in processing, but we had worked a little bit more on it, acquiring shelf space that is giving them a running start."
Reid, who farms near Shakespeare and milks 150 to 200 goats, says his days of being in the board room are over for now. "I just want to be a humble goat farmer."
Milk from Reid and 10 other former Mornington producers will now go to the ODGC, which has been something of a Cinderella story. In nine years, the co-op has grown from an initial membership of 13 – all farmers from Grey-Bruce – to 119, including the 11 from Mornington. The goat dairy farmers are spread across the province as far north as New Liskeard, as far east as Cornwall and as far west as Wyoming, near Sarnia.
Last year, ODGC members moved 14.3 million litres of milk. This year, members are going to be allowed an increase in milk volume of 25 per cent, which will include development milk used primarily for new retail products.
To put that into perspective, the upstart co-op moves more milk now than was produced in the entire province in 2004. Back then, Ontario produced more than half of the country's 21 million litres of goat milk. About a quarter of the province's goat milk was consumed as fluid milk. Most of the rest went to cheese.
Co-op provides stability
Dirk Hoogakker of Cargill, near Walkerton, was one of the 13 initial members of the ODGC. "We thought," says Hoogakker, "that, if milk is brokered anyway, we might as well do it ourselves and that's basically how it happened."
Hoogakker, past chair of the co-op, was milking cows when he got into goats, partly because a farm business partner moved back to Holland. "We split up the farm and I had to start up small with the cows. I thought I might as well sell the quota and go into goats."
Now, he milks 400 goats and he says that's enough for income but not enough to add staff.
"The only reason I will increase the herd is to have full-time employees, so we can take a day off once in a while."
Future expansion will be through his own stock. "The herd is closed," he says, "except for the bucks." He brings in purebred Saanen bucks, something he has done for the last five years.
Hoogakker is happy with the co-op because it provides some stability. "Before," he says, "you were acting by yourself. If the broker decides you are the one who cannot ship, you got bad luck. Now, the ups and downs are carried by all the members. If we get too much milk, there will be a percentage reduction shared among all members in the co-op. Everybody has to go down a little bit."
It has been more ups than downs for co-op members. In 2010, they increased volume by 10 per cent to meet demand. This year's board-approved increase of 25 per cent is big, but it's not the biggest. That was in 2008-09 when volume went up 31 per cent, largely because of a jump in membership.
Both Kerkvliet and Donkers have double-24 milking parlours with rapid exit, allowing them to milk 48 goats at a time. When one group is milked, the gate the goats face either raises or pivots and they are gone in an instant, allowing the next group to come in. They also have transmitters on each animal and metering at each milk station so the operators know what each goat is producing. Kerkvliet and Donkers each averaged 850 litres per goat last year for the 300-day milk cycle (goats go dry for about two months a year).
Goat dairy farming and cow dairy farming are similar, goat farmers say, but the numbers are different.
"With goats, everything is times 10," says Kerkvliet, using hoof trimming as an example of the challenges involved in managing a much greater number of animals. On the other hand, goats are smaller than cows and easier to handle.
Both Kerkvliet and Donkers breed their does with bucks, but Kerkvliet is also doing some artificial insemination to improve his genetics. "With insemination," he says, "you get 40 to 70 per cent success rates. With bucks you get 100 per cent." He says they had a 70 per cent success rate with insemination on the farm this year.
Donkers' barn expansion this year is to accommodate 200 to 300 duration goats. "The duration group," he says, "is a group of goats after the third or fourth or fifth kidding, depending on the quality of the goat. They just milk. They don't have any more kids and you milk them until they are not profitable." He says they produce for up to two years.
During a recent trip to Holland, Donkers was impressed with the precision and scale of goat dairy operations, up to 5,000 milking goats in one barn being milked by one or two staff using large rotary milking parlours. His ambition is for an operation less than half that size, properly staffed and efficiently run.
Both Donkers and Kerkvliet grow wheat for straw bedding and bale it in large square bales. For feed, Kerkvliet grows corn silage, haylage, corn and soybeans, which are slightly roasted and rolled. Donkers feeds pellets.
Kerkvliet estimates his feed costs at 17 cents per litre of milk produced, while Donkers says his feed costs are 25 cents per litre. He argues he makes up the difference in convenience and time saved. Both farmers have a good land base, with Kerkvliet at 300 acres and Donkers at 260.
New product lines
Lisa Thompson, who has managed the Ontario Dairy Goat Co-operative from their head office in Teeswater since 2004, sees a future in both milk brokering and retail markets.
"We incorporated in November 2002," she says. "Our sole purpose was to broker goat milk and that is still our No. 1 priority." However, she adds, the co-op is also diversifying. The acquisition of Mornington Dairy gives ODGC members instant entry into cheese, fluid milk and butter markets. In addition, the ODGC has already created one new product – a yogurt drink called Kix – and is working on others, including fluid milk products, ice cream and frozen yogurt.
"We've taken a year to test the market with a goat milk yogurt drink," she says. The drink is co-packed by Hans Dairy in Etobicoke. It will be on the shelves this spring in 19 Fortinos grocery stores in the Greater Toronto Area. In addition, they have "eight or nine distributors" they will be working through and they are in talks with an unnamed retailer with stores throughout the province. Some Mornington products they are acquiring are already marketed nationally.
At the moment, they are not getting any government help with marketing. But the ODGC plans to apply for money this year from the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) to help with market product development.
For now, membership in the co-op is being held at 119, but there is a waiting list. So far, most of the milk has gone to make cheese, 90 per cent in Ontario, with 10 per cent of the milk going to Quebec for cheese production.
Thompson says the co-op has experienced positive growth over the years, but she's not taking anything for granted.
"We have not had a down year . . . huge growth years you take in stride, but you don't count on them. We've got to be very strategic and very well thought out in terms of what we can sustain and that's part of our business plan."
As for return, ODGC producers get what the co-op gets minus a two-cent-per-litre checkoff. In 2010, that amounted to a top price of 85 to 90 cents per litre, minus the checkoff. The price per litre can vary from the high seventies to the maximum rate depending on fat and protein content (each batch is tested). There is a $500 initial membership fee and a $100 initial administrative fee. Shipping shares cost $100 for every 500 kilogram of milk (about 4,000 litres) shipped. Thompson says ODGC members milk 300 to 400 goats each on average. Christine Rohrbach, general manager and controller at Hewitt's, says its milk goes into cheese produced in Ontario, Quebec and the U.S. states of Wisconsin, Illinois and Vermont.
"Goat cheese in general has been one of the strongest growing products," she says. "It's been a good strong commodity in Canada and the United States." As well as brokering milk, Hewitt's has its own milk and cheese products, including organic milk and cheese.
"We sell organic milk in glass bottles and we also have some of the milk made into cheese," Rohrbach says. All Hewitt's organic goat milk producers happen to be Amish, but that's not a requirement, she says, noting that there are other producers ready to be certified when market demand allows. For competitive reasons, Hewitt's does not disclose volume or return to producers.
Sales expected to thrive
According to a 2010 OMAFRA report, "goat milk was the fastest growing sub-sector (in milk sales) in 2009. Goat milk sales experienced a six per cent volume and eight per cent value increase that year, bringing in close to $24 million."
Although the report predicts that purchases of total milk from cows will drop by 11 per cent by 2020, goat milk sales are expected to thrive. "The volume of goat milk sold in Canada has risen 20 per cent from 2006 to 2009," the report says. "This rise is expected to continue through to 2014 where the volume of milk sold will increase by 38 per cent between now and then."
But who is buying the goat milk?
An Agriculture and Agri-Food Canada overview of the goat milk industry six years ago said immigrants were driving goat milk sales. Hewitt's Rohrbach disagrees. She believes milk choices are driven by health and price. Goat milk, she says, is not sold along ethnic lines; it is purchased for health reasons.
People who come to Canada from countries where milk is derived from goats quickly shift to cows' milk, she says, "because it is cheaper." She says goat milk is found mainly in the health section at food markets because the demand is not yet there for it to move into the mainstream.
Reid agrees that cow's milk has a definite price advantage over goat's milk. "There is a much bigger mark up on goat's milk than cow's milk. Often, supermarkets use cow's milk as a loss leader, but you never see that in the dairy goat industry."
Reid says goat milk "is often thought of as a health product for people who are lactose intolerant." (Statistics indicate that 1.5 million Canadians are lactose intolerant.). Reid adds that "people who have milk allergies can sometimes use goat milk."
A 2005 Agriculture and Agri-Food Canada overview of the Canadian goat industry said that goat milk has 13 per cent less lactose than cows' milk and smaller milk fat particles, making it easier to digest. BF
SIDEBAR: Government support helps the big players
Bruce and Sharon VandenBerg, co-owners of Mariposa Dairy Ltd. in Lindsay, will be milking 1,500 goats on their Lindsay area farm this year. Mariposa's soft goat cheese products are sold in grocery chains in Canada and the United States. Mariposa buys additional milk through Hewitt's Dairy.
Bruce VandenBerg sees the goat cheese business getting better and better and he credits the person he calls "our No. 1 customer."
"I call my No. 1 customer a young, middle-aged woman," he says. "If she has a young family, they are buying it (goat cheese) for health reasons."
He says the next generation of 18, 19 and 20-year-olds are also stepping up to buy the cheeses their parents got them started on.
VandenBerg says he's not afraid of competition. "As long as we put out excellent product," he says, "we're all helping each other."
The VandenBergs made their first cheese in 1989 in an 800-square-foot facility on their farm. They now operate a 20,000 square foot plant in Lindsay making primarily soft cheeses, although they recently won an award for a cheddar they plan to bring to market and sell in specialty cheese shops.
Mariposa has received Ontario government grants totaling $380,000 over the last two years. In 2009, it received $172,000 from the province's Eastern Ontario Development Fund. In 2010, Mariposa got a grant of $208,000 from Ontario's Rural Economic Development program. VandenBerg says the government money helps bridge the gap between what the company needs and what banks are willing to lend.
VandenBerg isn't the only large, independent player to get government support.
Skotidakis Goat Farm in St. Eugene, near the Quebec border, got up to $350,000 last year from Ontario's rural economic initiative. The money went to help the goat farm create 10 new jobs adding to the 45 that already existed. It also went to purchase filling and wrapping equipment, produce and test new cream cheese bars, manufacture 30,000 cases of private label cream cheese bars for a major grocery chain in Ontario and Quebec and process an additional seven million litres of milk. According to the Skotidakis website, Peter Skotidakis began milking 20 goats in 1975 and has expanded to 3,000. The plant processes 15 million litres of milk per year and produces such products as Greek yogurt, feta and ricotta cheeses. BF