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Seeking the niche

Pine River's new organic cheese heralds a whole different approach in the dairy industry

by Keith Roulston

Sitting in the curing room at Pine River Cheese and Butter Cooperative, it looks no different than any other cheese around it. Taste it and 99 per cent of consumers won't be able to taste the difference. But this natural-coloured cheese is part of a revolution in the milk marketing system in Ontario.

Sometime toward the end of the year the first certified organic cheese in Ontario will go on the market. Marketed under a new label, Country Meadow, it will give Pine River an opening into a rapidly expanding market. It is the culmination of nearly eight years of efforts by the company and a small group of organic dairy farmers.

Efforts by dairy farmers to find a niche market began with a visit from Laurence Andres of Tiverton back in 1987, recalls Jim Gardner, plant manager of Pine River. He wondered if there was any way the factory could work with organic farmers to keep their milk separate from the regular milk pool. Gardner was interested. "Anywhere you can get into a niche market is good," he says.

At first it was difficult to persuade authorities at the Ontario Milk Marketing Board that something could, and should, be done. Gardner credits the arrival of Bob Bishop as OMMB general manager, with opening the door to the opportunity to develop a niche market product. He and Peter Gould, director of the OMMB Marketing Division, have been very supportive of the efforts by both Pine River and the group of 15 dairy farmers. Ted Zettel, one of the farmers involved, said it was a matter of getting to a point in time when other farmers could see the wisdom of going after a niche market instead of having just one pool of milk. After discussing the possibility with OMMB staff, the farmers and Pine River finally spoke to the entire board.

It's a tricky situation, Zettel says. The theory behind the milk marketing board has been that all milk is pooled and all farmers benefit equally. "We had to show them that we don't want to throw a monkey wrench into the whole system," Zettel says, "but we convinced them that if we don't (produce organic cheeses) then other people in other jurisdictions will fill the niche. We'll lose our share."

The problem is how to go after the niche market without losing the marketing system that has protected the livelihood of dairy farmers over the past three decades. "None of us want to see that wide-open, dog-eat-dog world again," said Zettel of the days before the marketing board brought order to pricing.

That's the concern about letting one group of farmers cut a deal to supply one cheese plant. And it's a concern on the part of the farmers involved that they must get a premium for producing the organic milk that is needed to go after this premium market. "There has to be an incentive or you won't want to go to the bother (of being certified organic)" Zettel says.

This, he acknowledges, seems like a contradiction on the part of organic farmers who have always maintained they could produce at competitive prices with conventional farmers. But going to certified organic milk production is an expensive step by comparison to organic cropping. Most farmers who were calling themselves organic couldn't qualify for certification by the Organic Crop Improvement Association (OCIA) because certified organic soybean meal protein supplements are not available. Farmers who wanted to qualify for certification have had to replace soybean meal with roasted soybeans and certified organic beans at double the cost.

All but two of the original group have had to make major changes in their operation to qualify for certification. Zettel, who says he had streamlined his system in preparation for the move, was one of the two who qualified immediately. So far six farmers have been certified. Two of the group are too far away to be included in the experiment.

The issue of premium pricing for the organic milk has still not been settled. A proposal would see the OMMB pay the farmers the same as for all other milk. Pine River is willing to pay a premium to the farmers to get their certified milk. It raises a serious concern for the board that a small group of farmers could cut a special deal with a processor. If a precedent was set that was expanded in too many areas, the board could be undermined.

There's also concern about the perception that a premium is being paid for this milk, that it somehow denotes that the milk is better than the milk produced by the neighbours of the organic farmers.

There are other details still to be worked out. "I have to give them a lot of credit that they allowed us to begin (without having all the details nailed down)." Zettel says. The Board has agreed to a two-year trial period. "They want to find out if there is a genuine demand for the product like we say there is," he says.

A trial run was made last spring to pick up milk from the farms of 10 of the members. This gave the OMMB an idea of the travel involved and provided Pine River with some milk to experiment on. This milk was made into cheese but it was marketed as regular cheese through the ordinary channels, not as certified organic cheese. The real thing began in September when three truckloads of milk in a row were picked up from the certified farms and delivered from the plant.

When the milk arrives at the plant it is held in a separate tank. This is the first milk into the system the next morning, Gardner says. It's channeled to a special vat for cheese making. It will be given a special lot number so it can be followed through the system of storage and distribution.

There has been little difficulty for Pine River to adapt to producing the organic cheeses. "The dairy industry is as far ahead on the environment as anyone," says Gardner. All the disinfectants used, for instance, already meet O.C.I.A. standards. The milk is heat treated for pasteurization. No rennet is used in the cheese making process. Rennet is no longer used in other cheeses at Pine River either, allowing all the factory's cheeses to qualify for sale in health food stores. There's a large objection among health food advocates to using rennet, obtained from calf's stomach. The industry has responded by finding alternatives. "We felt we were doing everything right before," Gardner says of the move to meet health food standards, "we just didn't tell anyone."

For Pine River, the biggest disappointment in the process was not being able to convince marketing officials to allow the experiment to be carried on outside of its regular quota. The company tried to convince the Canadian Dairy Commission that because of the experimental nature of the move they shouldn't have to use their regular quota but was turned down flat. Finally, to get the experiment off the ground, Pine River said it would use its regular quota if necessary.

Early indications are that there is plenty of demand for the new cheese. Gardner travelled to the Canadian Health Food Association Trade Show in Toronto in mid-October and came away with a stack of inquiries from wholesalers and retailers. One distributor from western Canada offered to take about one third of the company's organic cheese production.

As the only producer of certified organic cheese west of the Quebec border, Pine River stands to stake-out a virgin piece of territory that can be valuable in helping it survive in a world of ever-larger giants. One of the few original co-operative cheese factories left in business, Pine River employs 24 full-time and 10 part time staff at its factory and its store outlets. In the past three years the company has turned its attention to developing its own wholesale markets and now has customers spread from Fort Erie to Gravenhurst (skirting Toronto) and to Windsor in the south-west. Fifty per cent of the total production now goes into wholesale sales to food stores. "Our goal is to have Pine River Cheese as a major supplier and there's nothing to stop us as far as I can see," says Gardner.

With the move into new markets like organic cheese, Gardner sees a bright future for his company and the greater flexibility shown by the OMMB is a start in the right direction, he says. "They have to make the milk available in the areas needed," he says. "We have the market but we don't have the milk to fill it."

In the long run, while only a handful of farmers are involved in the organic cheese experiment, and only a small percentage of the over-all market will be supplied, this small move into niche marketing may be the biggest change in milk production in Ontario since the OMMB was formed three decades ago.

Reprinted from The Rural Voice, November 1994.

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