All New “Gravy Train” May Include Some Dairy

Dave Forgey, Indiana Dairy Producer

Dave Forgey, Indiana Dairy Producer

November 8, 2013 — Indiana dairy producers may be “taking the train” to expand their market outreach. A yet to be launched nonstop rail service called the “Green Express,” operated by the CSX Rail Company, will link Tampa, Florida to LaPorte, Indiana and bring fresh fruits and vegetables from the Southeast and the Caribbean to Chicago, the second largest market area in the U.S. The train may also bring some “green” to Indiana dairy producers.

The Indiana Dairy Producers Organization (IDP) recently heard details from the Green Express’ Chris McGrath and IDP’s Dave Forgey talked with me about it in Friday’s DairyLine and said they’ve been looking at this since 2011 and believe the first run will take place in March 2014..

“Those cars that come up, have to go back,” Forgey said, so IDP is looking for cooperatives or independent processors who will take advantage of this opportunity to reach consumers in the southeastern states, Caribbean, or beyond. He said the improvements made in the Panama Canal could mean product going to China and the Asian markets, South Korea and Japan and possibly compete with Western ports.

Plants exist within a five or six hour drive of the LaPorte location, according to Forgey, who sees “tremendous opportunity if we can get them (processors) interested and step out of the norm into some new ideas.”

Forgey reports that the trip takes about 56 hours, slightly longer than by truck, “but 100 car units could arrive with far less personnel needed to get it there.” Trucks can then transport the containers to the end market, he said.

McGrath stated that nearly 50 percent of the cost of a product at the final market is invested in transportation and he explained that the reason train transportation has not been used for fresh foods in the past was due to product loss from delays. “Today’s container freight with dedicated non-stop delivery has eliminated that problem,” he said, and “The use of both refrigerated and non-refrigerated containers will be available depending on the needs of the products being shipped. There could also be cryogenic containers as part of the system.”

National Milk’s October 2013 Dairy Data Highlights shows that, in 2012, nearly 35 percent of U.S. exports of Yogurt moved into the Caribbean areas, 44 percent of US exports of nonfat dry milk and 25 percent of the whole milk powder moved into Mexico.

Mexico was also the destination for 38 percent of U.S. exported fresh milk and cream and 25 percent of exported cheese. These could all move thru Tampa in containers via ships, he said.

Forgey also points out that “the world price for dairy components has been higher in all other dairy areas of the world than it has in the US for much of the last 7 years. This summer’s rapid growth of dairy exports gives a glimpse of potential for the future,” he said. “Our lower component price and our soft US Dollar has the potential to take the US to a much higher percentage of exports. For the same reasons mentioned above our imports of foreign products has reduced dramatically. Putting pressure on our domestic sales with shorter supply because of exports should help increase our domestic pricing to producers, he concluded. “The Indiana Dairy Producers Organization sees the Green Express and a potential win–win for the dairy industry.”

by Lee Mielke, DairyBusiness Update associate editor

 
Dave Forgey,
Indiana Dairy Producer

 

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