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CHAPTER 3

THE AGRICULTURAL ECONOMY IN GENESEE COUNTY

Genesee County is one of the most diverse and productive agricultural counties in New York

State. Currently, the County ranks 4th in farm gate sales across New York State, with annual

sales estimated at $234.3 million. This represents over 4% of all farm sales in New York State.

Its neighboring county, Wyoming County, ranks first, with $318.4 million in farm sales.

Top NYS Farming Counties – by Sales

Rank County Value of Farm Sales % of NYS

1 Wyoming $ 318,412,000 5.8%

2 Cayuga $ 289,235,000 5.3%

3 Suffolk $ 239,818,000 4.4%

4 Genesee $ 234,292,000 4.3%

5 St. Lawrence $ 186,431,000 3.4%

Subtotal: Top 5 Counties $ 1,268,188,000 23.2%

New York State $ 5,471,639,000 100.0%

Source: US Department of Agriculture, 2012 Census of Agriculture

As noted in the previous chapter, a large

proportion of land in Genesee County is

devoted to farmland, and the total available

farmland has been increasing in Genesee

County. In 2007, there was 183,539 total

acres in farmland, which increased to

187,317 acres in 2012, the most recent

available census year.

Major crops by acreage include corn for grain

and silage (30%), soybeans (7%), winter

wheat (6.5%) and dry alfalfa hay (5%).

These four crops comprise almost 50% of

total farmland in Genesee County. Land

devoted to these crops varies from year to year, but has remained remarkably steady over

the past decade or so.

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The remaining acreage devoted to

farmland in the County shows the

true diversity of Genesee County

agriculture. Genesee County is a

leading producer of cabbage, beets,

sweet corn, snap beans, onions,

green peas, winter squash, carrots,

collard greens, spinach, lima beans

and dry beans. NASS estimates that

20,500 acres of processing

vegetables are grown in the County,

representing 11% of the County’s

land base. The remaining 40% of

active farmland in Genesee County

is made up of pasture, fresh vegetables, small fruits including you-pick blueberries and

strawberries, and most substantially, corn for silage and hay ground for haylage to supply

the County’s 63,000 cattle and calves which make up the dairy industry of the County.

Source: US Department of Agriculture, 2012 Census of Agriculture

Corn

30%

Other

40%

Soybeans

7%

Dry Alfalfa

5%

Winter Wheat

7%

Vegetables

11%

Crops by Acreage, Genesee County 2012

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There are many reasons for this diversity, but principal among them is a unique combination

of highly productive soils, including muck soils, in combination with a well-established

vegetable processing industry. Local food

processing capacity remains important to the

continued success of local agriculture. The

locally based food processing industry,

grown out of the ingenuity and cooperative

spirit of Genesee County farmers, remains

strong, as evidenced by the 2013 investment

by Bonduelle, a French based firm, in buying

assets formerly owned by the Pro-Fac

Cooperative, Birdseye and more recently,

Allen Canning Company.

DAIRY/BEEF

Dairy is a major component of the agricultural economy in Genesee County. There are, on

average, 29,000 mature dairy cows in the County, and 1,100 beef animals. The remaining

33,000 calves and heifers weigh, on average 650 lbs. While it is not well captured by NASS

statistics, the acreage required to support the dairy herd is generally an acre of haylage and

an acre of corn silage per mature

head. This would likely mean that up

to 60,000 acres of farmland in the

County are dedicated to the

production of forages for our mature

dairy and beef herd, and an additional

30,000 acres are used to support the

heifer herd. Of these 90,000 acres,

19,700 are included in the corn

acreage number, so the remaining

70,000 acres (37%) supports our

cattle industry.

The dairy industry in Genesee County has grown steadily over the past several years, to the

point where Genesee County is the 4th largest County in the State for dairy cattle, and is

producing roughly 6,960,000 cwt of milk annually. Production per cow and the number of

cows in the County have grown. In 2009, there were 24,000 cows producing an average of

22,300 pounds of milk per cow. By 2014, there were 29,000 cows producing 24,000 pounds

of milk per cow.

Bonduelle Processing Plant

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Source: NYS Department of Agriculture & Markets

The value of milk output, as measured by the statistical uniform price received in the

Western New York order, is subject to significant price fluctuations. The price ranged from

an average of $17.40 per cwt. in 2010 to $25.40 per cwt in 2014. With monthly variations,

the price peaked as high as $26.87 in September of 2014. This variation in price affects

farmers’ receipts. Assuming constant levels of production, revenues grew by $55.68 million

between 2010 and 2014. However, more recently, the price of milk has dropped to levels

not seen since 2009. In 2015, the average price was $17.30 per cwt, and 2016’s average price

has been $15.12 per cwt through June of 2016. In other words, over the course of 24 months,

the farm gate value of milk in Genesee County dropped by $71 million at static production.

Source: NYS Department of Agriculture & Markets – WNY Market

Cows Avg. Milk Production

2009 24,000 22,300

2012 29,000 24,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Dairy Trends

0

5

10

15

20

25

30

2010 2011 2012 2013 2014 2015

Average Milk Price Received by Producers(price/hunderweight)

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Milk is still the single largest source of agricultural revenue for the County. County average

farm gate sales were $236,952,000 at the 2012 agricultural census. Livestock, milk and

poultry made up 63% of farm gate sales. Milk makes up 51.2% of total farm gate sales output,

cattle and calves make up 10.8% and other livestock, mainly poultry and eggs, make up less

than 1% of total farm gate sales. Wheat, corn for grain and soybeans comprise $41.3 million

in farm gate sales, or

17.4% of the total.

Processing vegetables,

fresh vegetables and

potatoes totaled $35.13

million, or 14.8% of the

total and other crops

and hay make up 3.0% of

the total farm gate sales.

Nursery, greenhouse,

floriculture and sod,

sheep goats and goat

milk, and other livestock

including hogs and pigs,

make up the remaining

1.8% of farm gate sales in the County.

AGRICULTURAL MARKETS: MILK

Genesee County is blessed with robust markets for its agricultural output. Processing in the

dairy industry, in particular, has grown substantially in the last decade. A healthy and robust

dairy industry depends upon effective markets to purchase milk not needed to service the

high-value fluid milk market, particularly when that market slackens during times off from

school, or during holiday periods. The most effective balancing system is one that allocates

milk to its highest and best use, and that identifies new and innovative ways to process milk

into value added products. Existing County resources that address the milk market include

the O-at-Ka Milk Products Cooperative, Alpina, Yancey’s Fancy Cheeses, and Upstate Niagara

Milk Cooperative.

O-at-Ka, located in Batavia, processes milk into butter, dry milk powders,

high value energy drinks (RTD beverages), nutritional products for

pediatric, diabetic, weight management, and other uses. O-At-Ka is the

largest producer of high protein drinks in the United States, and their

products include protein shakes, and drinks, muscle recovery beverages and weight gain

Milk

Cattle, calvesOther Livestock Wheat, corn,

soybeans

vegetables

Other crops/ hayOther

Farm Sales, Genesee County

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shakes. They also produce dairy based liqueurs and pet food milk

replacers. Alpina, also located in Batavia, is a Columbian based milk

processor that makes specialized Greek yogurts and other cultured

products, predominately for the Latino marketplace in the United States.

Yancey’s Fancy cheese, New York’s Artisan

Cheeses, is located in Pembroke and

produces specialty-flavored cheddar

cheeses. Upstate Niagara Milk Cooperative,

with fluid plants in Buffalo and Rochester,

and cultured product manufacturing in West Seneca in Erie County, is the

area’s largest processor of milk. Farmer-owned, it delivers significant

value back to Genesee County producers.

There are also several out of County resources, including Lactalis American Group,

manufacturers of Galbani brand mozzarella cheeses in Buffalo and other smaller processors

in the region. A joint venture between Mueller North America and PepsiCo, made a $240

million investment in new Greek-Style yogurt manufacturing in Batavia in 2013, however

the plant failed to generate the expected sales of product and has since closed. Dairy Farmers

of America has purchased the assets of the joint venture, and as of this writing have yet to

determine what will be manufactured at the shuttered facility in Batavia.

AGRICULTURAL MARKETS: VEGETABLES

As mentioned previously, in 2013 Bonduelle made a significant

investment in the processing vegetable industry in Western NY,

buying the assets previously owned by Allen Canning, and prior to

that, Pro-Fac Cooperative and Birdseye, among others. Genesee

County based manufacturing includes plants in Bergen and

Oakfield, and a major cold storage and repack facility in Brockport,

Monroe County. These plants process green peas, snap beans,

sweet corn, beets and carrots.

Other nearby processors of vegetables include: Seneca Foods, who

process beets, carrots and other root vegetables, squash, green beans,

sweet corn, peas, and leafy vegetables in plants located in Mt. Morris,

Livingston County, Marion, Wayne County and Geneva, Ontario County;

Love Beets, a manufacturer of organic and conventional

freshly cooked beets, located in Rochester, New York; and

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Pride Pak, a newly constructed leafy greens

packing facility located in Medina, Orleans

County.

Each of Genesee County’s many fresh vegetable

and cabbage producers maintain significant

investment in on-farm storage and processing

facilities which prepare their fresh vegetables for

the marketplace. These facilities employ a

significant amount of the farm labor utilized on farms in the county, both in the fields hand

harvesting product, and in the packing sheds and storage facilities. Cabbage, onions and

potatoes are harvested, cleaned, packed and stored in very capital intensive structures on

farms across the County. From there, these products are marketed directly to retail food

chains, nationwide restaurant chains like KFC for coleslaw, potato chip manufacturers

located in nearby Pennsylvania, and through brokers into more distant retail outlets.

GRAINS/FEED

Corn, wheat and soybeans have robust markets

both within the County and beyond. Most of the

major growers of grains in the County have

invested in significant storage facilities on farm,

which allows these farmers to dry and condition

grain at harvest, store grain efficiently, and market

grain at the best time to capture the best price.

Some of these growers have also invested in

processing capability, which allows them to grind

corn into meal to service the dairy feed

marketplace. Half of the dry matter consumed by dairy cows is concentrated feed processed

off-farm, and about half is corn meal. There are also feed processing facilities located in

Batavia, Alexander, Strykersville (Wyoming County) and Caledonia1 (Livingston County),

which offer markets for corn. The single biggest corn market is the Western New York

Energy ethanol plant, located in Medina, in Orleans County. This plant came on line late in

2007, and has changed the way corn is priced and marketed in Western New York. At 22

million bushels of annual processing capacity, it could process 4 times the total output of

grain corn produced in Genesee County. As such, it has created a new pricing basis for corn

marketed in Western New York, and is therefore used as the measuring stick for the value of

1 This facility is currently under reconstruction after a fire

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corn at any given point, as it can rail corn into the region as its source of last resort, setting

the price of corn in the region.

SOYBEANS

Soybeans are the fastest growing crop by acreage in New York State. However, soybean

processing is complex, and the markets are not convenient to Genesee County. The output

products of soybean processing are soybean meal, an animal and particularly dairy feed, and

soy oil. The soybean complex, the relative high cost investment for new processing facilities,

and barriers to entry due to competition with Midwestern legacy processing plants that can

still use hexane or other solvents in their extraction process, have meant that no significant

manufacturers have emerged to build soybean processing plants in New York State.

Soybeans therefore are shipped to Ohio and the Midwest, resulting in backhauling of soybean

meal, or to a major export port and processing facility in Hamilton, Ontario. There are a few

soy processing facilities in the region of Western New York that process soybeans through

an extrusion process or by heat treating, but these small processors are not significant

markets for the product. About 30% of soybeans produced in the County are exported. In

addition to the Hamilton, Ontario outlet, export opportunities may exist at the Port of

Oswego and South to ports at Norfolk, Virginia.

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WHEAT

Wheat is marketed in a fashion similar to soybeans, with the exception that there is a

somewhat major local market at Star of the West Milling in Churchville, Monroe County. The

remaining major markets for wheat (mainly soft red winter, and sort white winter varieties)

are in Port Colborne, Port Hope and Wellandport, Ontario.

ADDITIONAL MARKETS

The remaining existing markets

for fresh produce in the County

are by our local consumers. The

buy local movement is alive and

well in Genesee County, and the

best resource for finding local,

direct-to-market or you-pick

farms is the “Bounty of Genesee

County” brochure produced by

Cornell Cooperative Extension.

The brochure is included in the

appendix, and can be found at

this link:

https://s3.amazonaws.com/assets.cce.cornell.edu/attachments/16003/2016_Buy_Local__

Brochure.pdf?1465322266

OPPORTUNITIES FOR EXPANDED PRODUCTION OF CURRENT MARKETS

Mothballed Facilities

Probably the greatest opportunity that exists to increase processing capacity exists at

mothballed processing facilities, particularly the former Mueller Greek yogurt plant

purchased by Dairy Farmers of America (DFA). It is as yet unannounced what will come next

at this facility. The challenge for the dairy industry today is that demand in the US is flat, in

relative terms. Fluid milk consumption is dropping, which is being offset by increases in

cheese and soft product (yogurt) consumption.

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Dairy

Major opportunities will emerge

from new product introduction,

reinvigoration of export demand,

particularly in Asia, and emergence

of new market demand in Latin

America. Most of this opportunity

will displace milk from Western US

production, to be replaced

somewhat from new market

development of Eastern US

production. More importantly, there is an emergence of milk component (protein

fractionation, high value components and specialized nutraceuticals) manufacturing that

may impact dairy markets in Genesee County. Two groups of producers, one in Cayuga

County and the other in Livingston County, have made significant investments - over $100

million - to build this type of manufacturing capacity. This could be the direction considered

by DFA. Other opportunities for dairy are: continued growth in demand for the types for

products that O-At-Ka is producing, and emergence of interest in specialty, locally produced

cheeses, from the flavored cheddar type products produced at Yancey’s, to the goat and

Jersey cow’s milk products being produced, and warmly received in local retail outlets, by

First Light Creamery in East Bethany.

Local Markets for Local Products

Genesee County producers face a unique opportunity in the

coming years. By using their tremendous land base and

entrepreneurial skills, producers can address emerging demand

for locally produced vegetables. Consumers are demanding more

locally grown foods, and retailers are responding to the

emergence of location and producer based demand models that

are disrupting the consumer marketplace. Bagged greens and

fresh vegetables here-to-fore not produced in Genesee County are

beginning to be in demand by retailers. The question is simply, “can you grow this for us?”

and “what price do you need to do so?” This opportunity will likely emerge in a bifurcated

fashion. One aspect is intensive agriculture in high capital investment ventures that produce

greenhouse tomatoes, peppers, cucumbers, etc. and specialty items like mushrooms. Interest

in locally produced vegetables has spurred strong capital investment in Controlled Climate

Agriculture (intense greenhouse production) in the region.

Another opportunity is in the increased demand for medium to large-scale production of

locally grown leafy greens processed centrally at Pride-Pak in Medina and other facilities.

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The Pride-Pak facility allows for the production of bagged leafy greens from Western New

York fields, eliminating the need for individual on-farm packing facilities, and allowing for

the aggregation of product from multiple farms in the region. This facility, which opened in

the Fall of 2016, addresses significant interest on the part of regional retailers to find locally

produced products to replace those from drought stricken areas of the far west (Central

Valley and San Joaquin Valley in California, and Arizona) during the spring through fall

growing period in the Northeast. Ironically, Western New York also faced a drought in 2016,

although droughts of this intensity are rare (once every 60 years) and usually not long

lasting. Other potential markets include small scale flour production to meet locally grown

demand for the bakery industry, malting barley and hops production for the emerging craft

brewery and distillery industry, and potentially small fruits production for flavoring in

locally produced alcoholic beverages. These markets are dependent on additional capital

investment for down-the-line processing.

Corn

Corn markets will grow as feed demand

grows, and as Western New York Energy

continues to produce ethanol in the

region. Some capital investment has

occurred at the ethanol plant to increase

efficiency, although that will not

necessarily result in increased corn

purchases. However, the demand for

corn at this one location is four times the

output of Genesee County production,

and more corn produced would likely

find a home and displace railed in corn.

This, of course, is driven by the

breakeven production cost for Genesee County Farmers, and the alternatives for production

of other grains, processing vegetables and oilseeds.

Soybean Markets

Soybean processing represents a significant unmet opportunity for market growth.

However, the path forward is complicated. It is necessary to have the right combination of

process, market development of all by-products, and capital investment to produce a

reasonable return for owners. This situation has not yet emerged in Genesee County, and

Midwest domination remains.

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BARRIERS TO NEW MARKETS

Ironically, a key barrier to new market development in Genesee County has been the success

of the status quo. To expand into new markets requires risk taking and significant capital

investment on the part of agricultural entrepreneurs. When what the County’s farmers are

currently doing works, and they are at least marginally profitable, then the likelihood of them

being the source of new product and market development is low. Young people who are

returning to production agriculture have found easy sledding in the early part of this decade.

However, the market is changing, and farmers are seeing their returns from agricultural

production declining to the mean or below since 2014. This has not dampened their

enthusiasm, but has diminished the capital and investment interest necessary to get small

scale specialty processing ventures off the ground. Borrowed capital is available for projects

that have some means of providing equity, have produced business plans that project

rational growth in sales and returns on investment, and have clearly demonstrated market

research and potential. Locations for project development are numerous, particularly in

Genesee County where an industrial manufacturing park specifically developed for

agricultural processing exists in Batavia, and numerous other small shovel ready sites exist.

The barriers simply are the lack of the right person, idea and capital to emerge

simultaneously. This happens organically, but takes time and patience on the part of

developers, financiers and producers of agricultural inputs.