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November 2012 Archives

The Food Industry Center goes to Dairy Academy

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IMG_20121129_175056.jpgOn November 2nd, The Food Industry Center co-hosted a Dairy Academy Tour for University of Minnesota students with the Midwest Dairy Association. The Dairy Academy is an educational program for retailers, wholesalers, and other students of the dairy industry, sponsored and organized by the Midwest Dairy Association (MDA).

The goal of Dairy Academy is to foster knowledge of the dairy industry from farm to fork,and help individuals understand the dairy supply chain. Our Tour schedule worked backwards, from fork to retail. We started at a local retail grocery store. Not only did the grocers give us insight into the layout of the store (i.e. the produce is to the right of the door because produce has high margins) we also learned specifically about how products in the dairy aisle are stocked and organized. Our discussion gravitated toward the current popular trends in yogurt products. Where there used to be just a few kinds of yogurt, the section is rapidly expanding to specialty varieties such as greek or kefir.

Our second stop was a visit to the First District Association cheese plant in Litchfield, MN. Our group toured the Association's new processing facility where we learned how the milk is inspected and taken in upon arrival, then subsequently processed into cheese. FDA is in the process of expanding, but currently receives over 4 million pounds of milk each day. Clint Fall, CEO of First District, who was a Food Industry Leader in the Classroom speaker last spring, explained that the byproduct of cheese making is whey. He noted that while cheese is still the big money maker for their cooperative, whey plays a critical role in improving the bottom line of plants.

During lunch, we sat down with local dairy producers to learn about their farms and their work with MDA. One farmer had invested in a methane digester to generate energy from waste. University of Minnesota dairy extension specialist Jim Paulson provided a discussion on sustainability and the challenges dairy producers face in the near future in demonstrating sustainable agricultural practices to consumers. TFIC researcher Dr. Marin Bozic and TFIC Director Dr. Mike Boland offered an analysis of the complicated structure of milk pricing.

The day ended with a tour of a local dairy farm. Our gracious hosts showed us around their 800 cow milking facility, explaining how sick cows are cared for and how the rest of the herd is moved through the milking parlor. The farmers were very proud of their facility and very eager to show us their family operation. At the farm, as well as the grocery store and the processing plant, our hosts explained why they enjoyed a career in the dairy industry and the opportunities and challenges they faced in the future.

The Midwest Dairy Association is a Sponsoring Member of The Food Industry Center. MDA represents more than 9500 dairy farms across 10 Midwest states. They are funded through the dairy check off program and receive $0.10 of every 100 pounds of milk sold by the dairy farmers. They work to increase consumer confidence as well as improve sales and understanding of dairy products. A very special thanks to Midwest Dairy Association and the local businesses that hosted us throughout the day!

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The Organic Thanksgiving Premium

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America just celebrated Thanksgiving! While a time for family and food, Thanksgiving also marks the start of the holiday spending season and a boost to the US economy. Thanksgiving itself is the most traveled holiday of the year, where AAA expected 43.6 million Americans to travel 50 miles or more for the weekend with 3.1 million of those traveling by air to their holiday destination. Even with the slow economy, the National Retail Federation projected 147 million shoppers to turn out for Black Friday.

Fortunately, for consumers, the price of a Thanksgiving dinner didn't increase much in the last year. Despite drought across much of America's farmland, the annual American Farm Bureau Federation's informal price survey of 155 volunteer shoppers across 35 states expected the cost of Thanksgiving for a family of 10 to be $49.48 compared to last years $49.20. Shoppers looked for the cheapest prices without using promotions or coupons. The following table highlights the price differences from last year.

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While not a formal comparison, at The Food Industry Center we were curious about the price premium on an organic Thanksgiving meal compared to a conventional Thanksgiving. I went to a local organic and natural food store and a conventional grocery store in St. Paul to record comparable prices of the items in the Farm Bureau survey. I followed the same method, looking for the cheapest priced product without the use of coupons and chose grocery stores as close to each other as possible.

The prices from the conventional grocer were quite close to the estimates from the American Farm Bureau Federation. If we assume the relish tray and the miscellaneous ingredients to be the same price as the Farm Bureau estimates, the conventional grocery price was $51.94, just over the AFBF estimates. Under the same assumptions the organic Thanksgiving dinner had a premium, coming in at $99.31, almost 2 times the price of the conventional grocer. For the most part on items such as peas, pumpkin pie, and dairy products, the prices were very similar. The organic premiums came from only a few items. The organic rolls and cranberries were both two times more expensive than the conventional ones. The organic turkey is where the price of an organic Thanksgiving really hits at a whopping $63.84 ($3.99/lb) for a 16 lb turkey compared to the price of $1.49/lb for a conventional turkey.

We hope everyone had a great Turkey Day, and wish safe travels for your trip home!

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