How much should raw dairies charge for their milk?

That question has been the subject of intensive debate on the Raw Dairy listserve over the last week after a dairy farmer new to the list introduced herself by saying she’s selling raw milk for $16 a gallon, and has no apologies about it.

I bring it up partly because it’s a question that relates directly to the issue of whether and how to establish an association of raw dairy producers. More on that in a bit.

First, the debate over pricing. Here’s one fairy typical comment: “For someone to charge $16 for one gallon is unethical in my mind. I am sure that the costs are much less. Hate paying my $8.00 a half gallon from Organic Pastures. Unfortunately, I only buy it for ‘medicinal’ reasons…”

And another: “It saddens me to see people entering these niche markets that are so important in moving the evolution of our species forward–organics, raw milk, etc.–and using corporate standards, the get-all-you-can-get mentality, to set their prices. I understand it, and if I were a dairy farmer I’d probably feel the same way. But unfortunately, many people like me will not be able to take advantage of this highly desirable product because you’ve priced it so high…You didn’t price it based on what it cost you to produce it.”  

These two consumers obviously think producers of raw milk are somehow different than other businesses–that they should be pricing their milk according to what people are used to paying, or want to pay, or some very limited notion of what farmers’ expenses are. There’s also a suggestion that raw dairies are somehow different from other businesses in that milk prices have always been low and, besides, the farmers should want to be helping people by providing a healthful product.

I’ve spent much time with people who have started businesses, and are trying to figure out how to make them succeed. I always ask this question: What do you want to be when you grow up?

The answers invariably fall into one of two categories. Either you want to create what is sometimes referred to as a “lifestyle” business– a business that allows you to pursue activities you enjoy, support your family, put away some money for the future…or you want to create a growth-oriented business, where you are continually looking for new products to produce, new markets to serve, with the idea of creating an enterprise you might sell off or hire others to run for you or hand off to your children.

One farmer who commented illustrates the lifestyle approach: “I feel that I do very well at $8.00 a gallon and I am only milking three cows. That is all I want to milk…I am not organic but then I don’t want to be. I am natural and I am soy and corn free and all grass fed which I think is more important. I make a profit on my milk and pay my son to work for me. I take my bonus from being able to do the things I want to do with my horses which comes from my milk income. The farm also provides us with all of our meat and dairy needs and keeps us out of the grocery store. What is that worth? I think it is priceless.”

I’d say an enterprise like Organic Pastures Dairy Co. in California illustrates the growth-oriented dairy. It is continually developing new products, figuring out ways to enlarge its herd, grow its market.

Either approach is fine from a business point of view. It can save a lot of confusion to know which approach you want to pursue by guiding pricing, marketing, promotion, and other activities.

As for consumers, they will adjust, and make their decisions based on their own perceptions of quality and self interest, as this person pointed out on the listserve: “As a raw milk consumer in South Florida, I can buy my milk from a farmer that charges $7/gallon for 80% grass-fed milk and I can buy from another that charges $13/gallon for 100% grass-fed milk.  Each has its benefits. Sometimes I have the extra cash to buy the 100% pastured product that I prefer; sometimes I only have enough to buy the part grain/part grass product. I’m glad I have a CHOICE.”

My larger point here is that dairies in the raw milk arena have an opportunity that conventional dairies don’t have and never will have: They are free to set their own prices, and because of that have the opportunity to enjoy life as regular businesses. Of course, they have a political problem in that the government wants them to go away.

What do businesses do that have political problems? They form associations, hire lobbyists and lawyers, and figure out how to turn enemies into friends, or at least reduce the impact of the enemies. If there is concern about product safety, they develop standards their lobbyists and lawyers can use to make their case. The standards may well cover a number of areas–in the case of raw dairies, they may well extend to areas like soil, animal diet, and bacteria counts.  Winning the political battle, though, isn’t about who has the best product or the right science. It’s about winning friends and influencing people and convincing them you are dealing with whatever problems they might perceive. Complaining to local politicians when there’s a raid, or practicing civil disobedience are appropriate weapons as well. It’s about rights, but it’s also about the right to do business.

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Speaking of political problems, I’ve just written an article for Grist about the growing number of raids on food producers. It provides suggestions about what to do if your farm, food club, or home is raided by regulators and police. 

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I knew that Canadian dairy farmer Michael Schmidt puts on a “Symphony in the Barn” each summer for his herdshare members and neighbors, but I never knew he actually writes music. It turns out he’s written an opera, “Milk Trial By Jury” that will be performed later this month at his farm. He explains all in this video. Can’t wait to read the reviews.