Schumer’s plan could help New York dairy farmers meet yogurt demand

ALBANY, N.Y. — U.S. Sen. Charles E. Schumer, D-NY, recently announced that he is launching a two-pronged plan that will provide New York dairy farmers, who wish to expand their operations to meet the demand being substantially fueled by the Greek yogurt boom, with the financial tools they need.

Thanks to new plants including the Quaker Muller plant, Alpina, Fage, and Chobani, the New York Farm Bureau predicts that New York’s dairy farmers must be able to expand their output by 15 percent in order to take advantage of the opportunity that Greek yogurt presents for our farmers.

To help dairy owners who wish to expand, Schumer plans to introduce bipartisan legislation – the DAIRY (Dairy Augmentation for Increased Retail in Yogurt products) Act – with Sen. Mike Crapo, R-Idaho, that would establish federal savings accounts targeted to farmers to help them save and grow during booms and to weather market downturns.

The accounts would be structured to reward savings during periods when business is strong and defer taxes on those savings until farmers must withdraw funds to cover new expenses or manage cash flow. Schumer also introduced a second bill that will allow farmers who purchase cows that are already in production to write off the cows as a capital expense, lowering their overall tax burden.

“Upstate New York was recently dubbed the ‘Silicon Valley of Greek Yogurt’ and I want our dairy farmers to have the financial tools to keep pace with that exciting growth in a way that stabilizes risk for them during the up-an-downs of the market,” said Schumer. “That is why I am launching a two-pronged plan that will create a savings bank to help dairy farmers manage profits during boom years, and also lower dairy farmers’ tax burden when they expand. Upstate farmers have got milk, and now we need to help them get more of it on store shelves across the country to keep the dairy engine revving in New York State.”

With high production costs, volatile milk prices and the recent weather extremes, dairy farms need risk management tools at their disposal now more than ever, he said.

Greater stability

Schumer’s proposal for tax deferred farm savings accounts will give farmers greater stability in the tough times by allowing them to invest in their own future. Not only will it serve as a safety net, but it will provide added incentive to save as dairy farmers look to grow their farms to capitalize on the increased consumer demand for dairy products made in New York,” said New York Farm Bureau President Dean Norton.

Over the last several years, Upstate New York has become home to several new dairy-intensive Greek yogurt and yogurt product plants that have resulted in a spike in demand for New York milk. Greek yogurt produced at plants like Chobani in Chenango County and Fage in Fulton County requires roughly three times the amount of milk as standard yogurt.

Alpina and Pepsi are both building plants in Western New York to produce various yogurt products. Thanks to the spike in demand from the growing yogurt industry, the state produced just under 370 pounds of milk in 2010, which represents an increase of almost 40 percent from 2009.

Yogurt has exploded in popularity due to demand in New York City, Upstate New York and other pockets across the country. The Chobani plant in Johnstown has 1,000 direct employees, plus close to 300 temps in South Edmeston, with 175 plus in Norwich. Fage said it currently employs 250 and is seeking to hire an additional 140 workers.

Recently, the New York Farm Bureau stated that New York’s dairy farmers would have to increase their milk output by 15 percent in order to meet the demands of the rapidly expanding yogurt industry in the state. Between the Fage, Alpina, Chobani and new Pepsi Project Wave yogurt product plants, New York farmers will have to produce 1,879,860,000 additional pounds of milk each year to keep up.