Fri August 1, 2014
VTC Hopes Dairy Processing Will Improve College Farm Cash Flow
A new dairy processing plant at Vermont Technical College is slated go online in the near future. The plant will provide educational opportunities for students, but administrators also hope it will help the college balance its budget.
VTC’s ongoing deficit problems, which have required millions of dollars in loans from the state college system to the Randolph Center school have been largely attributed to a drop in student enrollment.
In an interview earlier this year, State College Chancellor Tim Donovan, said VTC has some unique financial challenges that contributed to the college’s problems.
Among them is running the only teaching dairy farm in the state college system.
“A farm is an expensive thing to run,” said Donovan. “ We didn’t know as thoroughly as I wished I had known how expensive that farm was to run and what the infrastructure investments that needed to be made were. Suddenly you say, ‘ok the farm is not producing what we need to produce to help balance that out.' ”
It’s hoped revenue from a new dairy processing plant at VTC will help to balance out the cost of operating the farm.
Currently the farm operates at an annual deficit of $150,000. By processing some of the milk it produces instead of selling it all to another processor, the college can essentially eliminate the middleman.
Under an agreement with Sodexo, the company that provides food service to the state college system, VTC will pasteurize and package the milk delivered to all of the state colleges.
Chris Dutton is director for the Institute for Applied Agriculture and Food Systems at VTC.
Dutton says the plant will serve as an important teaching laboratory, reflecting a movement in the dairy industry away from selling milk as a commodity. Instead, some farmers are exploring how to make value added products.
Dutton says based on the initial numbers, providing milk to the state colleges will cut the school’s farm deficit by half.
“If we just take that market, that will increase our revenue, assuming we can run this plant within 30 percent of the efficiency that other people run plants, we think we can make about $75,000 a year,” he said.
Dutton said the business model for the processing plant works because some of the labor will be done by VTC students and there is a guaranteed market for the milk it produces.
He hopes that the plant can also produce yogurt, which will bring in added revenue.
Another key factor for the bottom line is that most of the cost of building the plant is coming from grant money, including a $500,000 federal grant and a recent $75,000 Vermont Working Land Enterprise grant.
But VTC Interim President Dan Smith says it will take another $250,000 to build the plant.
Smith says ideally the college will find a government or private industry partner to help with that cost, but if it can’t it will find a way to complete the project.
He says despite the college’s deficit, the plant is important to making sure VTC’s ag students have an up-to-date learning experience.
“At the same time as we’re in a down environment, I do think in some situations we need to be looking forward,” Smith says.
VTC’s dairy processing plant will be housed in a new structure on the college farm. Construction hasn’t begun yet. Officials say they hope to have the plant up and running by next spring.
Editor's note: An earlier version of this story referred to the VTC farm as the Vermont's only teaching dairy farm. The University of Vermont also has a small herd.