Food Service & Agriculture and Government

USDA honors Michigan milk and sugar co-ops

In 2013, the dairy group shipped 8 million pounds of butter to the Middle East.

October 24, 2014
| By Pete Daly |
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Two of the many agricultural cooperatives in Michigan have been put on the USDA’s list of the Top 100 co-ops in the nation based on their volume of business.

In East Lansing on Oct. 16, U.S. Department of Agriculture Rural Development State Director for Michigan James J. Turner said the strong performances of the Michigan Milk Producers Association and the Michigan Sugar Co. highlight the state’s strong rural economy.

“Michigan’s biodiversity and strong agricultural sector are driving economic growth in rural areas,” said Turner. “USDA is proud to support farmer-owned local cooperatives.”

The Michigan Milk Producers Association, headquartered in Novi, saw revenue increase from $854 million in 2013 to $957 million in 2013, moving it up the list from 39th to 34th place.

Michigan Sugar Co., headquartered in Bay City, saw its revenues increase from $595 million in 2012 to $611 million in 2013, and held steady at 62nd place. Its membership includes more than 1,000 farmers growing sugar beets on more than 160,000 acres, mostly in the Thumb Region of eastern Michigan, but also some in adjacent Ontario.

Like the nation’s ag co-op sector as a whole, the top 100 cooperatives enjoyed a third consecutive year of record sales, as reported in the Sept.-Oct. issue of USDA’s Rural Cooperatives magazine. The article examines some of the financial trends in agriculture.

Bob Kran, a dairy farmer in Freesoil in Mason County and vice president of the MMPA, said the association’s members are anticipating slightly more than $1 billion in revenue in 2014.

Dairy is a growing industry, according to Kran, and Michigan has been “one of the leaders in production and will continue to grow.”

Kran, who with a partner has a herd of 500 cows, said Michigan production “has increased as high as any state in the country” over the last decade or so for a variety of reasons. One is the drought in California, which is a big dairy state. There is also the excessive heat in the southeast states, which cows don’t like.

The advertising line about milk from “contented cows” is no joke.

“A happy cow is more productive,” said Kran, which is why the most successful dairy farmers invest a lot in advanced veterinarian care and the latest nutrition, plus comfortable barns for their herds.

Kran said Michigan is an ideal state for the dairy industry.

“Michigan has an abundance of water, a good climate for cattle, and a lot of (dairy farmers) grow their own feed. We have a lot of natural advantages,” which has been shifting the focus on dairy production from the west and southwest toward the Midwest.

MMPA represents about 1,200 dairy farms and a couple thousand individual dairy farmers, more than half of the dairy farms in the state. The MMPA is a marketing cooperative, which sold more than 4.3 billion pounds of milk in 2013. It owns and operates milk processing plants in Constantine and Ovid.

Kran said MMPA products are sold to American consumers under company labels such as Kroger and Country Fresh. He said from a quarter to a third of MMPA milk goes to the Leprino Foods plant in Allendale, one of the largest mozzarella cheese plants in the world.

But MMPA does have its own label, and many people are familiar with it far beyond U.S. borders. Kran noted the distinctive shape of Michigan with the Great Lakes around it is probably more easily recognized than any other U.S. state, and that’s what the label shows.

“We have exported about 25 percent of the butter we produced last year to the Middle East,” said Kran — all unsalted because the culinary culture there calls for unsalted butter.

The dairy industry as a whole in the U.S. is benefitting from increased exports, said Kran, driven by developing nations with a growing middle class. Those parents want better nutrition for their children, especially the protein that “we can supply,” said Kran.

He said about 17 percent of U.S. dairy production last year was exported — “phenomenal, compared to 10 years ago.”

According to Sheila Burkhardt, a spokesperson for MMPA, in 2013 it exported a total of 8,045,898 pounds of unsalted butter to the United Arab Emirates, Saudi Arabia, Bahrain and Israel. Bahrain took the most: more than 6.2 million pounds.

MMPA also exported 5.8 million pounds of nonfat dry milk, or 7.5 percent of that production, to the Netherlands, Mexico, Algeria, Libya and Chile. The Netherlands took the most at 1.7 million pounds.

MMPA also exported 342,020 pounds of whole milk powder to Columbia and South Korea.

In September, at the 12th annual World Dairy Expo Championship Dairy Product Contest in Madison, Wis., the MMPA Ovid Plant took first place in the unsalted butter competition and second in the open butter class. The Constantine Plant placed third in the unsalted butter category. In addition to butter, MMPA’s plants make nonfat dry milk, condensed skim milk, cream and whole milk powder.

Michigan is a noted beet sugar producing state, although North Dakota and Minnesota are bigger.

While many Michigan dairy farms are located in West Michigan, the west side of the state has few sugar beet growers. One is Theron Eicher, who has about 300 acres of sugar beets west of Carson City in Montcalm County. He is a member of the Michigan Sugar Co. cooperative, which was founded in 1906 and is the third-largest beet sugar processor in the U.S., producing an annual average of more than 1 billion pounds of sugar. It is sold nationwide under the Pioneer Sugar and Big Chief Sugar brands.

Eicher, who has been a sugar beet grower with his father since 1986, said there are quite a few challenges in the sugar industry, “but I think we’re going to overcome the biggest challenges.”

One of the biggest challenges currently is the “spat” with Mexico, according to Eicher, who added Mexico has been “dumping” its sugar in the U.S. market. He said he thinks the U.S. government is going to resolve the problem in favor of U.S. growers.

In late October, U.S. and Mexican government officials were trying to reach an agreement on the sugar spat. Mexico has been a member of NAFTA — the North American Free Trade Agreement — since it formed it with the U.S. and Canada in 1994. The general principle of NAFTA is that its members can export to each other in unlimited quantities without tariffs.

U.S. sugar producers had complained Mexico was flooding the markets with cheap, subsidized sugar, so the U.S. Department of Commerce recommended anti-subsidy duties on Mexican sugar imports. If Mexico agrees to limit its sugar sales to an agreed amount and not below a certain price, the U.S. would defer the proposed import duties.

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