Finding a way to make money out of milk

North Yorkshire-based organic dairy farmer Steven Lofthouse freely admits he was happy to plod along when milk prices were high enough to pay the bills.

However, a series of events which led to a Nuffield scholarship to investigate milk processing and marketing has meant that part of his daily working life has changed beyond recognition over the past year.

Although he is still milking his herd of 42 Holstein Friesians on a low-input organic system at Scow Hall Farm, near Otley, Steven has also set up a new business – Organic Dales, which he describes as an interface between organic producers and retailers.

One example of how the business operates can be illustrated by his relationship with farmer-processors Gary and Tom Rawson, a father and son team who are already retailing their organic Clever Cow-branded milk and cream to outlets close to their farm near Dewsbury.

Since last autumn, Steven has been out looking for new retail customers for Clever Cow-branded milk in a different part of the county, delivering the milk using his own refrigerated trailer. Organic Dales is currently supplying Clever Cow products to three retail shops and eight schools around north Leeds, Harrogate and Bradford, and is keen to source and market a wider range of organic products.

“People like the Rawsons are often too busy to market all their produce themselves, and that is where I come in. Although I take a margin out of the transaction, I am also increasing their customer base and improving their profitability. I am currently paying them a farmgate price equivalent of 29ppl,” he says.

Three generations

Things could have been very different for Steven if milk prices had remained where they were a decade ago, when he left college to work on the farm that has been in his family for three generations.

However, during 2000, the drop in milk prices prompted a re-think, which led to the 48ha (120 acres) holding moving into organic conversion. But by the time the farm was fully certified, organic milk prices also fell. Steven then turned his thoughts to the added value market.

Having been awarded a Nuffield scholarship to study processing and marketing, he says the information he gathered after visiting several different countries and touring the UK opened his eyes to new possibilities.

“I concluded that there are too few links between producer and retailer in the milk industry. It was also clear that retailers do not want to deal with individual producers – they prefer to have one point of contact for several different lines.

“Ironically, I secured a profitable organic contract for my own milk last autumn, just after I formed Organic Dales,” he explains. “I may end up selling my own milk, but I find it more cost-effective to pick up a branded product from the Rawsons.”

Despite his involvement in direct marketing, Steven is fighting to lift milk prices and banish what he describes as the injustices and discrimination of volume variation. He is a Dairy Farmers of Britain district chairman, and firmly supports the development of added-value products like yogurt drinks.

Steven is now so busy he has had to employ a part-time worker to help on the farm two mornings a week. He is hoping to expand, and has ambitions to set up similar projects in other parts of the country.

“There is no reason why Organic Dales can’t operate in counties like Derbyshire or Cumbria, perhaps on a franchise basis,” he says.

“There are successful companies which trade in organic produce globally, but I want to continue to milk cows, because it is what I enjoy. Being a farmer also gives me a marketing edge when I am talking to potential customers,” he adds.