Hilmar Cheese Company
Located in California's fertile Central Valley in Hilmar, California, Hilmar Cheese Company has grown to be the largest single-site producer of natural American-style cheese and whey products in the world. They recently located a new facility in the Texas Panhandle in Dalhart, Texas. This processing facility will more efficiently utilize the milk from a growing dairy region. The steady, fresh milk supply at Hilmar Cheese Company ensures a steady and consistent, high quality cheese and whey products year round. Hilmar Cheese Company and its subsidiary, Hilmar Ingredients, process more than 12.5 million pounds of milk every day from 270 dairy farms into a variety of cheese and whey products.
A relatively new business, Hilmar Cheese was founded in 1984 and began production in 1985. Legend has it that the company began as a concept scribbled on a napkin at Smokey’s, a local restaurant. Twelve dairy families pooled their resources to start the company. Five of the original owners were brothers and sisters. From the beginning, core values drove the production: excellence, continual improvement and innovation and investment in the labor force. The milk suppliers were their friends and neighbors, and employees part of their community. The company policy is to establish long term mutually beneficial relationships with customers, employees, suppliers, the community, government and the environment.
Today, Hilmar Cheese employs more than 900 people and processes more than 12.5 million pounds (5.5 million liters) of milk each day received from more than 280 dairies and 160,000 cows. They use more than 20 percent Jersey milk in Hilmar, California, and more than 60 percent Jersey milk in Dalhart, Texas.
More than 1.3 million pounds (more than 591 metric tons) of cheese is produced each day, including Cheddar, Monterey Jack, Pepper Jack, Colby, Colby Jack, flavored Jacks, Mozzarella and Hispanic cheeses for use in food service, ingredients, retail and the restaurant/fast food trade.
Hilmar Ingredients, a division of Hilmar Cheese Company, manufactures a wide range of whey protein concentrates, whey protein hydrolysates and three grades of edible lactose: Natural, Fine Grind and Extra-Fine. The company is excited about the future of the Pharmaceutical Lactose division, which is a global market and specializes in crystalline grades. Pharmaceutical lactose has lots of possibilities, because each of the manufacturing steps has possibilities. The company has chosen not to go into the feed area, which is a low value market. Instead, they push it into the higher value markets. It takes a significantly greater amount of investment in research, in staffing and in oversight at every level. It is not a producer-grade product. Eighty percent of their whey now goes into these specialty products.
While planning to specialize into Pharmaceutical Lactose, subscriptions to the industry journals helped them understand the needs and opportunities in the industry. They work with some individuals at the University of California in the areas of functionality, flavor, biological activity when developing a new product.
The Value Added Agriculture Producer grant the firm received in 2002 was used for product development in the pharmaceutical arena.
Currently, milk is supplied by 270 dairy producers. The average herd is 600-700 head. The producers have annual contracts with Hilmar Cheese, who pays a double premium. They pay a quality bonus and a market basket premium. The market basket is a calculation of the value that the milk brings to the product that is being produced, so it varies with what is being manufactured.
Hilmar Cheese employs two producer coordinators who work closely with the producers. One of the coordinators has been in the business for more than 40 years. He goes out every day and talks to producers. The other coordinator goes out less often and handles more of the office work and administrative meetings. Between them, the company talks to the producers every day. The producers get their quality results and production results every week via mail, fax and e-mail. Their preferred method of communication is by cell phone. Producers call the coordinators with production questions and milk samples can be rushed for them if the components are off. Special samples are pulled if they are having a change in nutrition or a spike in bacteria.
They might also call to report problems with the milk hauler. Hilmar Cheese contracts with two contractors but the coordinators are the contact. The producer’s fee for hauling is taken out of the milk check. Some producers do their own hauling. The company is proactive in keeping the producers informed and educated on the industry, and up-to-date on what they should know as a Hilmar cheese milk producer. University of California Davis Extension staff also works with the company and their producers to provide training.
The company has an extensive web site with a producer section, so producers can access all their information over the web site. It can be tailored so their banker can see their payments, their nutritionist can see their components and their bacteria person can see their results. Less than half of the producers currently use it personally, but their nutritionist and bankers do use the information. Many of the producer families are coming into the second generation, and they tend to use the web site and e-mail more frequently.
An annual producer luncheon gives the CEO an opportunity to be in front of the group and talk about the previous year, and, plans for the coming year, as well as any industry issues that are coming up. Educational seminars may also be held throughout the year, such as one recently held on bio-security.
Producer orientation seminars are well attended with subjects like forward contracting, and general risk management. The annual luncheon is at the same time each year, but the others are scheduled as the need arises.
Industry trends and updates go out each month in the monthly newsletter. It also lets producers know about scholarships that are available and dates they should be aware of.
The producers use Hilmar Cheese signs on their farms, which has proven to be a good marketing tool. When driving through the countryside, the signs are very visible. Most of the producers deliver all of their milk to Hilmar Cheese. Some have two tanks and have a Holstein herd and a Jersey herd, and Jersey herds do better with Hilmar, so the Jersey milk goes to them and the Holstein milk to the co-op.
Commitment to the Environment
Hilmar Cheese Company is proud to be a member of the California Climate Action Registry and has been recognized by the Registry as a Climate Action Leader in working to reduce greenhouse gas emissions.
The company reduces, reuses and recycles a variety of resources, including water. Recycled water accounts for nearly 60 percent of the water used at the Hilmar facility. Processing water is treated to produce clean irrigation water daily.
They operate their own, on-site, state-of-the-art water reclamation facility at both the Hilmar and Dalhart facilities. The fully integrated four-stage system at Hilmar represents the single largest investment in water reclamation made by any food processor in California. This reclamation system removes nearly all of the organic components (sugar, protein and fats from milk) in the process water while achieving unprecedented reductions in salts and other natural minerals. The Dalhart facility uses a modern pond and digester system to produce clean irrigation water.
Commitment to Agricultural Education
Hilmar has an extensive visitors’ center that actively encourages the public to partake in the interactive displays. Since its inception, the company has been open for tours and community visits. In 1998, a Visitor Center was built to educate the public about the benefits of the California dairy industry and Hilmar Cheese Company. Group tours for the general public, school tours, scout tours and family tours are easy to schedule and have been a very effective way for the public to learn about the dairy industry. There is a model of a modern dairy farm, a full-size dairy cow that demonstrates the milking process, information about jobs in the dairy industry and an opportunity for groups to watch employees package large crates of cheese.
Since the Visitor Center opened in 1998, more than 250,000 visitors have increased their knowledge about the dairy industry. A large retail area features a wide variety of cheese and California products. The facility has an open area upstairs that is frequently used for community functions and celebrations.
Challenges for the Future
The availability and quality of water will continue to be a challenge for the dairy industry, as well as the cost of feed and production costs. Environmental regulations continue to tighten in California, and Hilmar Cheese Company is committed to meeting and exceeding those standards. In a global economy, they have built a reputation on excellence and quality. They will meet the challenges of the future as they’ve met them in the past – with a can-do attitude and team spirit.
About USDA VAPG
VAPG funding has been offered by the USDA periodically since the early 2000s. A new round of funding is anticipated to be announced in the coming months. To be considered value added, projects must show how products are differentiated in specific ways from commodity crops. Typically, projects must also show how they may deliver greater returns to producers.
Independent producers, farmer or rancher cooperatives, agricultural producer groups, and producer-owned business ventures, including non-profit organizations, may apply. In previous cycles, applicants were required to be producers of the raw commodity who will maintain ownership of that commodity through the process of creating a value-added product. Grants have been available for planning projects (such as marketing and business plans and feasibility studies) and working capital projects (which might include wages or packaging supplies). (http://www.rd.usda.gov/)