Allen Sanchez puts little stock in superstition. So he didn't hesitate five years ago to buy a small dairy farm near Casa Colorado, N.M., even though the former owner said the land was cursed and would never turn a profit.

Sanchez is the fourth to try to make the dairy profitable. But he's optimistic that renovations, niche marketing and Jersey cows will make the difference for Jersey Gold Dairy.

Sanchez believes breed selection will be critical, especially with a small dairy, 200 cows. “The farm had raised Holsteins before, and three producers went bankrupt,” Sanchez says.

He hopes to end the curse. “This is the only 100 percent registered Jersey herd in the state,” he says, “but the Jersey is the fastest growing dairy breed in the country. It's becoming very popular.”

He sees a lot of benefits, primarily the premium he gets for increased butterfat and protein content. “I wanted to find a breed that would provide a premium product,” Sanchez says. “Even Jersey milk that's 2 percent butterfat has 30 percent more protein than milk from other breeds.”

He says Holstein cows will produce more milk per day than Jerseys but the smaller cows are more efficient. “The Jersey gives more milk per pound of alfalfa,” he says. “Production efficiency includes more than the amount of milk an animal produces; feed conversion also plays a role. We have to look at how much it costs to produce the milk.”

He says quality with the Jerseys is paramount, “but quantity also is important.”

He cites other advantages. “Smaller animals (800 pounds versus 1600-pound Holsteins) have fewer hoof problems. And Jerseys live longer, so we have to replace them less often. Replacement heifers are a tremendous expense.”

The small brown cows also allowed Sanchez to renovate the milking parlor to improve efficiency. “It was a double-four set up,” he says, “but with smaller cows, we converted it to a double-six.”

Jerseys, Sanchez says, are more fertile. “We get a calf every year. And Jerseys will calve at 21 months and will produce milk four to six months earlier than other breeds. We expect a second calf around 30 months.”

Sanchez uses the high quality Jersey milk as a marketing strategy. He sells directly to stores, capitalizing on the sweet taste of the milk and the increased protein to attract customers.

“We don't sell anything through a cooperative,” he says. “We have our own bottling facility here, and we go directly to 47 retail outlets.”

He says the first year was extremely hard. “We had to sell milk below cost, just to get shelf space,” he says. “Direct marketing is extremely competitive, and we have to give stores a reason to buy our milk. Low price gets us the shelf space and then we hope taste brings customers back.”

He started selling milk for $1.50 a gallon and gradually increased the price to $2.25 and $3 in some locations as demand grew.

“Customers first bought our milk because it was inexpensive,” he says. “Now they buy it because it's the best.”

He has found other ways to add value to an already premium product. He's marketing flavored milk, six options including chocolate, cappuccino, banana, orange cream, strawberry and vanilla, in half-pint containers.

Smaller containers mean more profit, Sanchez says. “I sell milk by the gallon for $24 per hundredweight, by the half-gallon for $28 per hundredweight, by the pint for $69, and by the half-pint and flavored for $89.”

He has just contracted to provide flavored milk to the Santa Fe school district.

“And we're just starting to make ice cream as another value-added product.” He's also looking into limited home delivery in urban areas.

Sanchez says selling milk as an all-natural product creates a market niche. “We don't use any hormones, so we can sell all-natural,” he says.

He also releases parasitic wasps every week to help control flies. “We spray as little as possible.”

In addition to the milking parlor, Sanchez has made other renovations that help keep the animals healthy.

“We added free stalls,” he says, “and we have the area covered so we can keep the cows under shade during the day. We have sandy beds to keep them comfortable.”

Animals get alfalfa hay free choice. “Long-stem alfalfa is good for digestion and improves butterfat content,” Sanchez says. “We also mix grain and silage.”

He contracts feed from local farmers. “We get grain through another dairy that buys in bulk,” he says.

Sanchez currently milks 200 cows, twice a day. “We don't have the labor to milk three times,” he says, “and the cows get tired and will not eat as much with a third milking.”

He says if he had 1,000 cows, he would milk three times a day. “Production improves by 5 to 10 percent with three milkings,” he says.

He hopes to double the herd, “but prices for Jersey cows are too high now.”

Sanchez like to give tours of his dairy and adds a message on milk container labels to invite customers to visit the facility.

He even gives free samples to visitors. The cappuccino is a treat.

rsmith@primediabusiness.com