Here's a riddle: Why would a dairy choose to stop selling milk to Houston resellers for $5 a gallon and instead sell it all to a giant co-op for a mere $1.62 a gallon?
The answer? Unbearable pressure.
Local milk producer Way Back When Dairy, run by the Ganskey family, has become a valued resource for restaurants, coffee shops and small retailers who want to offer fresh, local milk. They've also been a regular vendor at the Urban Harvest Farmers Market on Eastside on Saturdays. The small dairy has been selling a portion of its weekly production to places such as Revival Market, Underbelly and Greenway Coffee & Tea, as well as to individuals who attend the farmers' market.
This was no small feat on the part of the Ganskey family. They'd drive their refrigerated truck into Houston on Friday, a 200-mile trip one-way, to make deliveries. They'd spend the night in Houston, then get up bright and early to sell the balance of their milk at the Urban Harvest Farmers Market. Then they'd make the long drive back to the farm.
Concerns about additives in commercial milk, such as hormones and antibiotics, set the stage for an eager response to Way Back When's milk from health-conscious Houston consumers. Way Back When also enabled local businesses to provide high-quality products that people could feel good about.
"Sourcing local, high-quality and sustainable products is a responsibility that we have to our community that supports us. It is irresponsible to sell low-quality products when we have the opportunity to provide a much higher standard," said Max Gonzales of Catalina Coffee.
Greenway Coffee typically went through 40 gallons a week, while larger Catalina Coffee used a whopping 100 gallons. David Buehrer of Greenway Coffee & Tea, who has purchased the milk for the past several months, estimated that local businesses and individual market shoppers may have purchased 30 percent of Way Back When Dairy's production weekly. Sadly, it has not been enough to enable them to continue their independent sales.
With only a small percentage of the milk being purchased by independent entities, the dairy had to also sell the bulk of it to another organization: a co-op named Dairy Farmers of America, or DFA for short. "Co-op" sounds like some kind of small community group, but DFA is a behemoth. It has more than 4,000 employees and secures milk from more than 15,000 dairy farms.
Mark Ganskey of Way Back When says that DFA has issued an ultimatum that either the dairy sells all of their milk to them, or the co-op would no longer purchase any of it. "They said we could either give up our bottling permit or our commercial permit." Even before the ultimatum, DFA was charging the Ganskeys 50 cents per bottle for each bottle they sold independently. "They were charging us a transportation fee, even if they had nothing to do with it."
I requested a statement from Dairy Farmers of America on their buying practices and received this via e-mail from Kristi Dale, their Director of Media Relations:
"As part of their agreement with Dairy Farmers of America, all dairy farmers who choose to be DFA members are expected to market 100 percent of their milk production through the Cooperative, with the exception of milk for home consumption. This ensures that, in the cooperative spirit, all members are sharing equally in the market. In certain circumstances, DFA allows members to buy back a portion of their milk production at federally regulated market rates for their own commercial use. A condition of this arrangement is that members are required to comply with federal milk pricing regulations and any other relevant state or local rules, including reporting their complete production volume to DFA."
Why does DFA want so badly to make sure that dairy farmers sell all of their production to them? By making sure the farmers have no other customers, the DFA has the freedom to set prices to whatever they see fit, in this case, $1.62 a gallon.
Mark is not happy about having to withhold his farm's milk from his longtime customers. "We've spent five years building up clientele in Houston. We have a heck of a market there. Those people are not just our customers, they are our friends."
Mark Ganskey asserts he did not breach his agreement with DFA. "We were not breaking contract, because they made us report how much milk we bottled. We had to pay them for the ability to bottle some of our milk," he explained.
Even if Way Back When hit a break-even point monetarily by selling fewer gallons at the higher prices to resellers, the cows producing the excess would have to be sold. That's a financial loss that would be unbearable for the Ganskeys. "Look at the drought last year," said Mark. "No one wants to have to buy feed for a bunch of cows."
"When we started in 1989, there were 56 independent dairies in our county," said Mark. "Now there are only three left. We've lost four producers in the past month." (Way Back When Dairy is in Cherokee County.)
The loss of accessibility to Way Back When milk has sent restaurants and retailers scrambling to find a replacement supplier. Max of Catalina Coffee called an "emergency dairy summit" yesterday morning to discuss the available options. Company representatives from Fat Cat Creamery, Southside Espresso, Pearland Coffee Roasters, Greenway Coffee & Tea and Sycamore Grounds were in attendance. As Max pointed out, "Many of us in attendance are local coffee roasters, so we also represented our clients who use Way Back When Milk."
Morgan Weber of Revival Market explained why Way Back When Dairy's milk was preferred by so many companies. "Way Back When Dairy was producing a product that met everyone's standards at a price most could afford. Not all milk producers are created equal. Not only are we losing a small producer, but one that produces exceptionally high-quality milk."
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I asked Mark if he had enough customers in Houston who could buy all of his production if he'd have to continue dealing with the co-op. "No, at that point we could let them go," he replied.