Volume 31 July 1, 2011 Number 23 INSIDE Experts discuss strategies for F Guest column: businesses to stay profitable ‘The successful idea of DBIC.’ By Alyssa Sowerwine no way out. knowledge base is so impor- capitalize on each new trend, For details, see page 4. Meanwhile, starting up a tant,” he says. I think that’s a good strategy.” MADISON, Wis. — It’s tough new business venture in this In addition, it is essential to Johnson notes many new F FDA approves changes out there. Unemployment is environment may seem like a understand and be aware of cur- cheesemakers also do not know for cottage cheese. high, Congress is struggling to daunting prospect, but experts rent market dynamics for the how to properly price their For details, see page 5. craft a budget and control the say the key to success is exten- development of a business plan. products. nation’s rising debt, and many sive market research and a solid Tom Johnson, artisan busi- “Many base it on costs, but F CMN showcases new companies, including some in business plan. ness and market strategy spe- it really should be based on equipment, supplies in the dairy industry, have had to • Doing your homework cialist with Wisconsin’s Dairy market and competitors’ pric- New Products Roundup. consolidate operations or face When looking to launch a Business Innovation Center ing, and other factors,” he says. For details, see pages 7-18. closure. But industry consul- new business venture, it’s essen- (DBIC), says that while some Johnson, who says he once tants note several strategies tial to write a business plan that failed businesses think the owned a cheese company he F Chobani yogurt maker that can help mitigate the risk includes a minimum of five years economy is to blame, more of- started from scratch with acquires Bead Foods. of closure for both new and of financial analysis, says Peter ten it is a result of the business little experience, says a new For details, see page 20. longtime operations, as well as Dixon, an artisan cheesemaker not being set up right. business owner needs to have options when it seems there’s — currently with Consider “One of the most important a thorough business plan that Bardwell Farm, West Pawlet, and overlooked things is to un- includes financial forecasting Vt. — and owner of Dairy Foods derstand your costs,” he says. over a multi-year period. Consulting, Westminster, Vt. “If you don’t understand how to “Too many people start with FTAs remain stalled after Dixon, who primarily works determine what your costs will be a fixed amount of money and with smaller-scale artisan — such as manufacturing, labor quickly burn through it, and Republicans oppose markup cheesemakers, says he believes and overhead — enlist the help then begin to burn through per- it is “relatively easy” to obtain of a consultant or other expert.” sonal assets,” he says. “It’s im- WASHINGTON — A mock markup on three pending free trade agree- a cheesemaking license in the It also is important to pro- portant when putting together ments (FTAs) was stalled Thursday after Senate Republicans said they United States. duce a product that you know pricing models to estimate on would not attend the sessions. “People who start out in will sell, Johnson says. the high end for your costs.” Senate Finance Committee Chair Max Baucus, D-Mont., this week the business do not always “The industry has changed He recommends new cheese- scheduled a series of informal or “mock” markups for three separate have good training; food safety over the years, and those who makers and dairy business own- implementing bills for the pending FTAs with South Korea, Colombia training is particularly lack- have not adapted are facing ers seek expert consultation. and Panama. ing,” he says. problems,” he says. “The costs of that are noth- Sen. Orrin Hatch, R-Utah, ranking member of the Senate Finance Dixon says new cheese- Johnson, who primarily ing compared to the cost of Committee, says he and Republican committee members are seeking makers who may lack years works with smaller cheese- your business going under,” alternative times for consideration of the trade agreements, saying the of knowledge or experience makers, notes it is more of an he notes. White House inserted an unrelated spending measure and that Senate should work with a mentor or artisan, specialty and kosher One factor in the dairy Democrats “abused long-adhered trade and committee rules in the get an internship with a veteran market right now. industry that makes pricing so process.” A markup requires a quorum, which requires the presence cheesemaker before starting “It’s almost a ‘cheese of the challenging — particularly on of at least one member of each party. their own business. month’ type of environment,” the producer end — is extreme Hatch also says the Democratic majority refused to accommodate com- “The development of the he says. “If cheesemakers can Turn to RISK, page 17 a mittee Republicans’ repeated requests to hold the markup with enough time to fully understand the agreements and review the 97 amendments that both Democrats and Republicans filed to the three agreements. “We tried everything in our power to work with the majority to find a resolution, to give senators enough time to consider these three CMN highlights innovations Winners unveiled agreements and the 97 amendments that had been filed,” Hatch says. in 2011 Wisconsin “We want these agreements to pass, but we want the committee to in New Products Roundup State Fair contest send them to the full Senate for consideration.” MADISON, Wis. — Each year suppliers to the dairy industry offer Baucus maintains that committee members were given 48 hours’ WEST ALLIS, Wis. — notice of the markup under the panel’s rules, following an agreement new equipment, packaging and other products and services to aid dairy manufacturers in developing new products as well as Dairy manufacturers from announced Tuesday between the White House and congressional throughout Wisconsin sub- negotiators to approve expanded Trade Adjustment Assistance (TAA) increase production and productivity. It is the support of these suppliers that helps U.S. cheesemakers and other dairy proces- mitted nearly 300 entries with the pending FTAs. for the 2011 Wisconsin “The bigger disappointment is that this boycott means that the sors continue to innovate. That is why each summer Cheese Market News highlights State Fair Cheese & Butter opportunity to pass important job creation legislation is now delayed,” Contest, held June 24 at Baucus says. some of the latest products and services being offered to dairy manufacturers. We surveyed a wide spectrum of suppliers across Wisconsin State Fair Park. The National Milk Producers Federation (NMPF) and the U.S. Twenty-two classes were Dairy Export Council (USDEC) earlier this week had praised efforts by the industry and came upon some innovative introductions. And of course these products and services are just a sampling of the evaluated in categories the Obama administration and members of Congress to quickly move such as flavor, appearance forward implementation of the three pending FTAs with South Korea, many new products that are available. To get a glimpse of just some of the innovations on the supplier and texture. Colombia and Panama. The 2011 Grand Master Turn to TRADE, page 20 a side of the industry, please read on … Turn to ROUNDUP, page 7 a Turn to RESULTS, page 6 a Reprinted with permission from the July 1, 2011, edition of CHEESE MARKET NEWS®© Copyright 2011 Quarne Publishing LLC; PH: (509) 962-4026; www.cheesemarketnews.com 2 CHEESE MARKET NEWS® — July 1, 2011 MARKET INDICATORS Chicago Mercantile Exchange CHEESE FUTURES* for the week ended June 30, 2011 Cash prices for the week ended July 1, 2011 (Listings for each day by month, settling price and open interest) Monday Tuesday Wednesday Thursday Friday Fri., June 24 Mon., June 27 Tues., June 28 Wed., June 29 Thurs., June 30 June 27 June 28 June 29 June 30 July 1 JUN11 1.906 392 1.906 392 1.906 393 1.906 393 1.906 393 Cheese Barrels JUL11 2.011 228 2.020 233 2.020 233 2.025 237 2.029 237 Price $2.0775 $2.0775 $2.0875 $2.0875 $2.0975 AUG11 1.894 235 1.900 243 1.922 244 1.912 245 1.899 292 SEP11 1.827 215 1.850 215 1.870 219 1.870 219 1.846 227 Change NC NC +1 NC +1 OCT11 1.779 279 1.783 279 1.810 283 1.813 283 1.804 283 NOV11 1.730 320 1.730 320 1.735 328 1.745 328 1.745 334 Cheese 40-lb. block DEC11 1.712 276 1.705 277 1.710 285 1.715 290 1.704 301 Price $2.1300 $2.1300 $2.1300 $2.1300 $2.1250 JAN12 1.708 53 1.708 53 1.708 53 1.708 53 1.692 55 Change NC NC NC NC -1/2 FEB12 1.692 77 1.692 87 1.692 87 1.692 91 1.692 101 MAR12 1.692 59 1.692 59 1.692 59 1.692 67 1.692 78 Weekly average (June 27-July 1): Barrels: $2.0855(+.0160); 40-lb. Blocks: $2.1290(-.0010). APR12 1.683 36 1.683 36 1.683 36 1.683 36 1.683 36 MAY12 1.693 36 1.693 36 1.693 36 1.693 36 1.693 36 Weekly ave. one year ago (June 28-July 2, 2010): Barrels: $1.3910; 40-lb. Blocks: $1.4210. JUN12 1.693 36 1.693 36 1.693 36 1.693 36 1.693 36 Extra Grade NDM Total Contracts Traded/ Open Interest 54/2,278 33/2,302 26/2,328 27/2,350 96/2,445 Price $1.6100 $1.6100 $1.6100 $1.6100 $1.6100 Daily market prices are available by visiting CME’s online statistics sites at http://www.cmegroup.com.