Dairy Channel: New Mexico dairyman creates niche by processing his own dairy products

You have studied for the priesthood, but decide you are in the “wrong line” when it is time to take the vow of celibacy. What to do next? If there is a hint of dairy disease in your personality, you get into heifer raising with the ultimate goal of owning your own milking herd.

This describes Allan Sanchez, a high-energy, friendly man who is obviously at ease with the many people that visit his dairy.

“Jersey Gold All Natural Milk” is sold in and around Albuquerque, N.M., in white, chocolate, cappuccino, strawberry, banana and orange cream flavors.

Why “Jersey Gold”? Because this dairyman/entrepreneur was pretty sure that name would market better than “Sanchez Jersey Dairy.”

Had to be different. Five years ago, Allan Sanchez bought a 200-cow dairy on the edge of the New Mexico State Game Refuge south of Albuquerque. Three dairymen had already tried to establish a dairy there and each had failed. One factor was size. The average herd size of New Mexico’s 160 dairies is 1,500 cows, so each family faced an uphill battle.

When Sanchez purchased the dairy, he knew he would have to do something different to succeed. With virtually no Jerseys in New Mexico at that time, and a high quality and high solids product to sell, he felt that bottling and marketing his own milk might be that niche.

The numbers looked promising. The herd’s milk was worth $14/hundredweight sold to the cooperative. By processing himself, that same hundredweight was worth a minimum of $24 sold by the gallon.

The real potential profit would be in selling pints at $68/hundredweight and half pints at $89/hundredweight (wholesale, that is.) This is the market that Jersey Gold targets.

Hoops to jump. The first challenge was getting approval for the “all Jersey, all natural” labeling. While the “all Jersey” wasn’t particularly problematic (90 percent of the herd has to be Jerseys), “all natural” was. Approval had to come from the Food and Drug Administration.

Finally, FDA granted approval for the labeling with the stipulations that the herd does not use bST or steroids, and interestingly, does not dry treat animals. Sanchez can treat cows for mastitis during the lactation, but the herd’s protocol is to separate any suspected cases from the herd, diligently hand-strip for two days before antibiotic treatment is considered.

Once approval was gained, the focus shifted to building a processing plant. In a win-win situation, New Mexico’s dairy inspectors helped design the mini-plant (how can they not approve something that they designed?) They also use it in their training programs. To control costs, all used equipment was used except for the chiller.

The chief inspector advised Allan that getting the milk cooled rapidly and correctly would be a major factor in the quality of his product. The new chiller unit will cool milk from 165 degrees to 33 degrees in 7 seconds. By investing in this technology, they are able to achieve a shelf life in the 28- to 32-day range. By labeling product for a 16-day sell-by date they are able to keep a high-quality product in the buyer’s refrigerator.

The plant went in 20 feet from the milkhouse for around $300,000. Their payment was approximately equal to the cooperative dues that the herd was currently paying. This made it a relatively easy sell to the bank.

Words of wisdom. Getting a project like this up and running is not a process to be taken lightly. When asked what helped make this project successful, Allan replied that you “…have to have a very good banker and a very good lawyer.”

Frankly, I was shocked and disappointed that he speaks to his lawyer almost daily (something he did not expect.) Basically, the cooperatives did not want anyone, even a small operation like Jersey Gold competing in the area. They had to defend the “all natural” labeling in court as well as get a restraining order against one co-op when 3,000 of their milk crates disappeared off of grocery store loading docks.

Unfortunately, there have been other underhanded strategies like taking pictures of the dairy during the rainy season and sending them to stores. Seems a pretty stupid strategy since Jersey Gold is one of the few farms with freestalls in the state, so it probably looks better than most other farms during the rainy season. I was truly disappointed in the ethics of some our industry’s members.

Environmental concerns. On the environmental front, the dairy can not have any runoff, so cow lots drain into a lagoon. Dry manure is taken to the game refuge where it is used as fertilizer on corn planted as feed for migrating birds. Dairy wastewater is used to irrigate 50 apple trees.

The dairy is required to have monitoring wells that are tested every three months. The farm pays an independent contractor to come in and collect samples and send results to the environmental monitors.

While the monitoring process costs the dairy around $1,600 per year, they consider it a good investment. Allan indicated that they have only seen change in one well’s results and that can be directly correlated with the construction of a “subdivision” to the east of the dairy.

Why “subdivision” in quotes? We all expected a nice little neighborhood quite a ways from the dairy. Wrong. The “subdivision” was three trailers and a flimsy-looking house barely 100 yards from the feed alley. Then the residents have the nerve to complain about flies. (The dairy uses parasitic wasps as well as good sanitation to help control fly populations.)

What does the future hold for Jersey Gold? They just started making a premium ice cream. At 18 to 20 percent fat, it has several important qualities for them. When they bottle skim and 2% milk, they have extra fat available.

Ice cream can be held and marketed over the next nine months. As Allan put it, “Holy Cow ice cream should be a money maker…ice cream is 50 percent air!”

Jersey Gold has successfully broken into the local market. They have paid little or nothing for shelf space in stores, a potentially formidable cost. After a year of selling at lower prices, they raised their prices and did not lose accounts. Some buyers quit ordering for three days, but consumer demand brought them back.

They successfully bid for the Tastee Freeze ice cream mix contract and are now looking at school milk contracts.

Besides a good and differentiated product, one of Jersey Gold’s biggest assets is Allan Sanchez himself. It was clear that his energy, enthusiasm, positive attitude and ability to deal with adversity in a positive way have made the Jersey Gold story one that every dairyman can feel good about.

(The author is the northeast Ohio district dairy specialist with OSU Extension. Send comments or questions in care of Farm and Dairy, P.O. Box 38, Salem, OH 44460.)

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