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Genesee County Agricultural and Farmland Protection Plan

Genesee County Agricultural and Farmland Protection Plan

APPENDIX C: AGRICULTURAL

APPENDIX C: AGRICULTURAL DEVELOPMENT CASE STUDY SUMMARIES THE TILLAMOOK COUNTY CREAMERY ASSOCIATION: A Case Study in Farmer Cooperation in Value-Added The Tillamook County Creamery Association (TCCA) was organized in 1909 as a quality control organization for ten cheese factories operating in Tillamook County Oregon. Later, TCCA expanded to incorporate all 25 operating cheese factories in Tillamook County. In 1918, TCCA originated an advertising program and was credited for being the first community to brand its cheese and for advertising it under a brand name. TCCA is a cooperative owned and operated by 150 dairymen, nearly all of who reside in Tillamook County. The Tillamook area has proven to be ideal for dairy farming and is home to more than 20,000 cows. The county receives more than 80 inches of rainfall each year, providing lush green pastures. TCCA has a raw milk supply of 175,000 gallons/day from 150 members that have herds averaging 135 cows. The grazing dairies lead the nation in milk quality and have done so for the past several years. The continued success of the TCCA is that it has the highest quality product coming in and they do not cut corners in the production of their dairy products. The highest quality milk and highest quality ingredients produce a winning formula for the TCCA. In 1963, a dispute arose among the members with some wanting to close the pool to additional Grade A producers. The majority, however, favored continuing an open pool policy. This resulted in a loss of some membership, but the open pool prevailed and the Growth of Grade A milk production has continued. In January 1969, all members were merged into one cooperative and the Association no longer was a federation of cooperatives. Since 1909, TCCA has matured into a national marketer of quality dairy products such as naturally aged cheddar and a variety of other cheeses, butter, and an extensive line of premium ice cream, sour cream and yogurt. The TCCA is now looking into expanding its product line into bottled milk drinks. The retail appeal for the Tillamook brand is so high that the TCCA receives more for their product than other brands at the wholesale level. Tillamook provides full color recipes and a full colored gift catalog that offers a variety of gift packs with cheeses, preserves, nuts, sausages, popcorn, candy, cookies, smoked beef, meat sticks and jerkys. The non-dairy items in the gift packs such as the processed meats, preserves, cookies, etc. are not produced by the TCCA, however, they are produced locally. The TCCA has formed a marketing alliance with the producers of these goods to offer more variety in their gift packs. This year, TCCA completed a 35 million pound capacity automated storage and retrieval system (ASRS) cold storage warehouse, including a seven-bay shipping dock with refrigerated staging areas, new shipping offices and a new electrical distribution and refrigeration system. Copyright©, 2000: Agricultural & Community Development Services, Inc, Columbia MD 8

APPENDIX C: AGRICULTURAL DEVELOPMENT CASE STUDY SUMMARIES The TCCA has 45 professional employees and over 350 employees that staff the new state of the art manufacturing plant. The plant processes 1.5 million pounds of fresh milk daily, seven days per week, into products, which yield rewarding economic returns to its members. TCCA has never sold surplus product to the government. Oregon has a very large tourist industry. As a result, nearly one million visitors tour the plant each year to watch the production, manufacturing and packaging of cheese products. The tourists also purchase ice cream for immediate consumption and dairy products to take home. The high customer satisfaction from the tourist trade has built a premium into the marketing program. The premium the dairy farmers receive is primarily a result of the tourist industry. The question the TCCA members are confronted with is how much do they want to capitalize on their one million tourists. (i.e. gas stations, hotels, etc.) Tillamook represents about one-third of all milk produced in the state of Oregon. 100% of all the milk produced in Tillamook County goes to the creamery. TCCA members, however, do deliver skim milk to other coops. The TCCA is an open member coop only in two counties, Tillamook and Clatsop. 30-40% of the milk received at the creamery is purchased from nonmembers. The TCCA is closed outside of these two counties. In 1999, TCCA recorded $199 million in total sales and handled 635 million pounds of milk. Of this total, 458 million pounds came from its own patrons and other producer groups supplied 177 million pounds. Of that amount, 70 million pounds of milk were delivered to the Portland market by the Association’s fleet of milk transports, 7 million pounds were used in ice cream and butter manufacturing, and 558 million pounds were used in cheese making. Sales are mainly in the Pacific Coast states of Oregon, Washington and California, with an ever-growing volume going to all parts of the United States, including Alaska and Hawaii. Since January 1, 1986, all patron milk has been paid for at a uniform price. As of January 1 2000, the price is based on a cheese yield formula. Mailbox checks of TCCA members are much higher and less volatile than those of dairymen dealing with other more traditional milk coops. According to the Tillamook County Dairy Extension Specialists, members of TCCA receive anywhere from $1.00 to $2.00 more for their milk. The TCCA consistently pays a premium above the Federal marketing order. TCCA members do not receive a 13 th check. Capital for the cooperative is furnished from the retention of member earnings, and nonmember retained earnings. It is the intention of the Board to pay out 30% of member earnings in cash, and to revolve member outstanding allocutions at the rate of 10% each year. No interest is paid on member allocutions and there is no stated due date. Line of credit borrowings from C-Bank and US Bank are available up to $47,500,000, and are secured by inventories and accounts receivable. Term debt from Co-Bank is used for the purchase of major assets. Copyright©, 2000: Agricultural & Community Development Services, Inc, Columbia MD 9

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