UNIVERSITY PARK, Pa. -- It may sound a bit cheesy, but a dairy economist in Penn State's College of Agricultural Sciences says some dairy farmers in Pennsylvania may have to think outside the milk carton to survive in today's tough market.

With milk prices extremely low and feed prices high due to the drought that parched crops last summer, operators of small dairy farms across the state are being squeezed. Some are looking frantically for new sources of revenue to keep their businesses afloat, and Ken Bailey, associate professor of agricultural economics, has an idea -- make cheese.

Not the bland, mass-produced American and mozzarella churned out in places like Wisconsin, but perhaps an earthy gouda, a tangy feta or an extra-sharp cheddar with a taste specific and peculiar to the region of Pennsylvania where it is made. Before you scoff at this suggestion, Bailey says, consider the micro-brewery craze that swept across the country and revolutionized the beer-making business in the last 20 years or so. He believes the same thing could happen with cheese.

Not long ago, Bailey explains, dominant beer brands such as Budweiser and Miller had the market cornered and there weren't many alternatives. Then small breweries started cropping up all over, making distinctive-tasting fermented beverages in small batches. To be sure, the microbrews will never displace beer giants such as Anheuser Busch -- but many brands have earned uncommon customer loyalty, and through niche marketing they sell thousands of gallons of beer annually.

Bailey believes "artisanal" or "designer" cheeses could have the same sort of market impact, and he says Pennsylvania -- being the fourth largest dairy-producing state in the nation with many small herds and dairies -- is in an ideal position to be on the cutting edge of the trend. The term "artisanal" comes from the word artisan, or craftsman, and relates to the skill needed to make exceptional cheese.

"I'm not suggesting that we try to compete with Kraft in the cheese business - we couldn't," Bailey says. "But if you look at the cheese industry, it is all moving out West -- immense factories use huge volumes of milk and make low-cost cheese. Only two cheeses in this country are made in great volume -- American and mozzarella -- with most of the latter going on pizza. Most of the cheese made in the United States is bland and boring. There is a tremendous opportunity for Pennsylvania dairy farmers to make distinctive, aged cheeses."

Dairy producers in other states are investigating this concept, too, according to Bailey, who notes that dairy farmers in Vermont have banded together to create a cheese association, and cheese from several different farms can be purchased on its Web site. "I think there is a market out there for really good farmstead cheese -- artisanal cheese made in small batches," he says. "In Eastern Europe, farmers have three or four cows and make cheese at home. They take it to nearby markets to sell and the locals prefer it because the imported brands of cheese are too expensive."

Bailey believes Americans will consume more cheese now that scientists and doctors have realized that eating cheese is healthy. "Americans are unsophisticated about cheese as compared to the French and other Europeans," he says. "Europeans eat much more cheese and they eat many more varieties. The European consumer is much more discriminating when it comes to cheese. But when the economy improves in this country and Americans' taste for cheese matures, the market will take off."

The question is, Bailey points out, how can small dairy farmers get into the farmstead cheese business? "Farmers must craft cheese in a low-cost way and keep marketing costs low," he says. "Cheese cooperatives and farmers' markets might be the answer."

Bailey cautions farmers that it won't be easy to begin producing cheese and that it will take innovative entrepreneurs to get into the niche market. "Artisanal cheese production does hold potential for smaller dairies in Pennsylvania, but they will have to deal with the high fixed cost of cheese-producing equipment. That would be where a state association would come in.

"And expectations must be realistic -- I don't want to give the owner of a small, 50-Jersey cow farm that is just barely staying in business the impression they can switch to cheese and make millions.

"But as another revenue stream for small dairies, it holds promise."

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EDITORS: Contact Ken Bailey at 814-863-8649 or e-mail baileyk@psu.edu.

Contact:

Jeff Mulhollem jjm29@psu.edu 814-863-2719 814-863-9877 fax #127