Creating New, Sustainable Jobs? Rural Communities Are Eating It Up

dairyBy Leah B. Thibault

For a time in 2011, an enormous, 327.58-gallon smoothie, flavored with maple syrup and apples from local Vermont farms and mixed with about 200 gallons of Greek-style yogurt from Ehrmann Commonwealth Dairy in Brattleboro, Vt. held the Guinness World Record for Largest Yogurt Smoothie. It’s still a point of pride for the farming community.

Ehrmann Commonwealth Dairy holds another important distinction – it is cornerstone to a fast-growth, job-creating and sustainable food enterprise.

Greek-style, or strained yogurt, has a long global history, but only recently became popular in the U.S. Regardless of its relative newcomer status on American supermarket shelves, Greek-style yogurt now accounts for more than $2 billion of the $6 billion yogurt market. In 2010 New England-based entrepreneurs Thomas Moffit and Benjamin Johnson saw an opportunity to capture a share of this growing market and founded Commonwealth Dairy.

While the pair explored options to set up a manufacturing plant in New York, Connecticut and Massachusetts, it ultimately selected the southern Vermont community of Brattleboro because of the region’s strong background in the dairy industry and its proximity to grocery distributors. The project had the potential to be a boon to the region’s dairy industry, which had been struggling economically due to volatility in milk pricing for small family farmers. Indeed in the two decades between 1990 and 2009, more than 2,100 dairy farms were shuttered.

This clear potential for the project to provide important benefits to an economically distressed community allowed Commonwealth Dairy to receive state and federal tax incentives, including funding via the federal New Markets Tax Credit program by locating in the area. The New Markets Tax Credit program was established by Congress in 2000 with the goal of spurring new or increased private investments into businesses located in low-income communities, by offering private investors a credit off their federal tax liability worth 39 percent of an investment made in a low-income community. As a result, the borrowing businesses typically receive financing that involves more favorable terms and conditions than those the market typically offers.

Commonwealth Dairy found a partner in Ehrmann AG, a $1 billion family-run company, with more than 1,500 employees in four countries, including its home base in Germany. Ehrmann provided Commonwealth Dairy with capital, as well their yogurt-making expertise, and together they created Ehrmann Commonwealth Dairy.

The Brattleboro plant was designed for an annual yogurt production capacity of 32,000 tons and quickly reached this production target, creating 108 new full-time production jobs to date, and increasing demand for high-quality local milk by 100 million pounds per year. These results are well beyond the company’s and the community’s original expectations, which estimated 24 full-time employees in the first three years, with an expansion to 50 within five.

Due to the growth in the U.S. yogurt market and the success of the Brattleboro facility, further investment was warranted and Ehrmann USA and Commonwealth Dairy expanded the Vermont facility and broke ground on a second U.S. dairy plant in Casa Grande, Ariz. in August 2012. The second plant is expected to employ about 110 workers in its first year and 250 by 2015.

Yogurt is not the only dairy category to utilize the New Markets Tax Credit program to build capacity and create jobs.

World Cheese Award Medal-winning Roth Grand CruOriginal and Roth Grand Cru Reserve are the latest entrants to a highly competitive arena, that would not have been possible but for a Wisconsin-based manufacturing plant financed through New Markets Tax Credits.

Emmi of Switzerland, its home country’s largest milk processor, already counts the U.S. as the largest foreign market for its cheese and fondue products. However, U.S. sales were largely driven by exports of their Swiss-produced cheeses. Through their Emmi Roth USA subsidiary, the company made a $44 million investment in a new 77,000-square-foot manufacturing facility in Platteville, Wis. – the company’s largest single investment to date.

During its first phase, the company is expected to produce about 6 million pounds of cheese per year. When the plant is expanded, the production is expected to increase to about 20 million pounds annually. This should result in 30 jobs in the first year of production, with a possible expansion to as many as 60 full-time positions. The addition of federal New Markets Tax Credits to the financing package allowed Emmi Roth USA to double the project scale from original plans — meaning 50 percent greater production capability and a third more jobs than would have otherwise been available.

As with Ehrmann Commonwealth Dairy, the Emmi Roth facility not only benefits those directly employed at the plant, but also improves the long-term economic outlook for local dairy farmers, who will supply 80 percent of the milk needed for processing. The demand from the Emmi Roth facility is also expected to increase the base price for that local milk by 2.7 percent, which is a significant change in pricing paid to farmers in the commodity-based milk market.

In addition to new jobs and profitable business plans, the Emmi and Ehrmann Commonwealth Dairy plants were each built to the latest sustainability standards, adding the third tenet in a triple bottom line pursuit in projects that would not have gone ahead but for attracting outside capital.

Leah B. Thibault is Director of Operations at CEI Capital Management LLC.

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