Maximizing value by minimizing volume

CEW-MR-2-Cayuga Milk2A progressive group of New York dairies pool resources

by Steven E. Smith
Slated to be operating by July 2014, Cayuga Milk Ingredients will be a 108,000 square foot milk processing plant, owned collectively by 21 of the Cayuga Marketing Members with the goal of converting more than 1.85 million pounds of these farmers’ own milk through ultra-filtration into high quality dairy ingredients. The 25-acre site in the Cayuga County town of Aurelius near Auburn, NY, was designed to produce milk protein concentrates, milk protein isolates (85 percent and 90 percent), 42 percent cream, skim milk powder and whole milk powder.
According to Kevin Ellis, CEO of the Cayuga Milk ingredients, “the group established Cayuga Milk Ingredients, to manufacture superior quality dairy ingredients for use in the global food and nutrition industries.”
Once in operation, the Cayuga Milk Ingredients plant will take inbound milk from its dairy farm owners. The first step in the process will be cream separation followed by pasteurization of skim milk and cream. From this point, skim milk can be standardized for protein to make skim milk powder, standardized for protein and milk fat to make whole milk powder, or separated via ultra-filtration. Ultra-filtration is accomplished by passing milk under pressure through a thin, porous membrane to separate the components of milk according to their size. When skim milk passes through ultra-filtration, the smaller lactose, water, mineral, and vitamin molecules to pass through the membrane and collecting the larger protein molecules are retained and concentrated into milk protein concentrates and isolates.
“Our milk ingredients will be ready to enter the domestic and export market because our farmers and production facility will be focused on making high quality/low spore products that are desired by customers. We have found that customers want to source from alternate producers of whole milk powder, skim milk powder, milk protein isolates, milk protein concentrates to lower their purchasing risk. In addition to the aforementioned ingredients, the plant will also be capable of producing condensed milk and nonfat dried milk for the domestic market. Furthermore, we will be able to customized powders to customer specifications,” stated Ellis. “Our core focus is to produce protein isolates. These ingredients have gained in popularity in the human nutrition because they are natural proteins, more bioavailable, and concentrated sources of branch chain amino acids. These are ideal protein sources for muscle repair or building in fitness or athletic training as well as for improved nutrition for dietary programs.”
Some 20 years ago, a progressively minded group of eight dairy farms in New York set out to collectively obtain a market for their milk with the goal of achieving a higher milk price. Since that time, the Cayuga Marketing group was established and has grown to 29 member farms that comprise more than 36,000 cows.
While others in the dairy industry consider supply management, risk management and other focuses to improve the economic viability of the dairy sector, the Cayuga Marketing farmers took a look at milk processing innovations that could be realized to reduce their significant transportation costs and gain market share in a growing global dairy marketplace.
The milk plant concept resulted from the group’s research into affordable solutions to their increasing transportation costs for milk. The group began taking a hard look at this option during the low milk price timeframe of 2009. “To reduce trucking costs, they concluded that building a value added processing plant close to the farms was the best strategic long term endeavor for them,” Ellis said.
“After a lengthy and complex planning phase, the group decided on size of the plant to handle 1.85 million pounds of milk capacity daily because it was not economically viable to be any smaller than that. We have the production through as our farms that are producing upwards of 2.6 million pounds of milk per day,” said Ellis. The group decided on their location in Cayuga County because it is located in close proximity to their farms. “We have a strong base of family farms, many who are multiple generation family operations and others that include aggressive, bright young managers who want to make this business their career. It is the mindset of all involved that this project is in line with these longstanding goals and the right strategic business move for the member farms.”
“Cayuga Milk Ingredients will take the orders and make the product to specifications with known margins. The multiple product capabilities allow for added flexibility in production. “We know we can’t try to be all things to all people but we will be able to flex between product lines in order to maximize value and return profit to our shareholders. That should be the best opportunity for farmer member ownership,” stated Ellis.
Once online, the Cayuga Milk Ingredient plant will employ about 55 people who will join the roughly 600 employees already working at Cayuga Marketing Group farms.
As part of the mission of the group, there is an important emphasis on stewardship of the land, care of their animals and the production of quality milk as they more than 960 million pounds of milk from more than 36,000 cows raised on over 55,000 farmed acres.
Cayuga Milk Ingredients will join DairyGold, Idaho milk products, Grasslands and other facilities throughout the U.S. that are processing milk in this fashion to use technology to reduce transportation costs and make milk products that are in consumer demand. The importance of dairy ingredient product production is significant because of the increased importance of dairy exportation on U.S. milk demand. These processes extended shelf life, increase product utility and ultimately enable the U.S. dairy industry to reach and better compete throughout the global market place.

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