Cream of the Crop

The transition would take four years and more than $500,000 in expenses and losses, but the enormity of the undertaking didn't deter Straus. When the SBA and the Federal Land Bank refused to finance the conversion without being given everything the family owned as collateral, Straus began to drum up financial backing from friends and family members. "I said, `I don't care if I'm underfunded,' " recalls Straus. " `I'm just going to go for it.' "

Straus leased a nearby building that had been a commercial kitchen and financed the equipment he needed through leases. "I was still undercapitalized, but I went forward and built it from there," says Straus.

It wasn't easy; state and federal requirements for certified organic dairy farms are stringent. "You can't use any antibiotics, hormones or parasiticides," says Straus. "I kept looking into it and figuring out what the regulations meant and how to treat the cows without antibiotics and how to find feed that was certified organic."

Straus was blazing a trail. As the first organic dairy in California, there were few local resources to call on. In his research, Straus discovered veterinary homeopathy, an emerging treatment that has effects similar to those of a vaccine. "But there were only two [homeopathic] veterinarians in the nation working on dairy cows, one in Pennsylvania and one in Wisconsin," he says.

Straus scoured books on the topic, but it wasn't until the Pennsylvania-based veterinarian conducted a homeopathy workshop in California that Straus was able to put it all together. "[As a result of attending the workshop,] it finally clicked," says Straus. "I began experimenting to see which homeopathic medications worked [on which] diseases."

Implementing homeopathic treatment for the dairy's 250 cows meant passing on his newfound knowledge. "I had to train our veterinarian to set aside the conventional methods and look at things differently," says Straus. "It was a hard year because we had to learn things as we went along."

The most difficult part of the transition process still lay ahead: finding organic feed. "It's very difficult to keep a steady supply of different feed," explains Straus. "We were buying close to 60 percent of our feed from others, and the availability of organic feed has never been very good." Feed costs were also a problem, often ranging from 50 to 100 percent more than conventional feed prices.

When organic operations officially began in 1994, a logistical problem arose from the products' supply-and-demand ratio. "Seven days a week, the cows produce a certain amount of milk, and to match it up with actual sales is a difficult thing," says Straus. "We've tried to grow into it, to have our market grow at the same rate as our production." At times, when production exceeded the market demand, Straus had to sell the extra milk as non-organic at a much lower price. "It's a difficult balancing act," he says.

Next, the Straus family had to get the word out about its new business. As the only organic creamery in the area, educating the public about the benefits of drinking organic milk was a priority. Straus' brother, Michael, 31, took a hands-on role, formulating a statewide marketing plan heavy on customer interaction.

"We had a very low budget for marketing and sales," says Straus. "Essentially, our main advertising vehicle has been getting people to try [our product] during store demos." Customers who take part in the taste tests can easily tell the difference in the organic milk, says Straus. They're also drawn to the milk's old-fashioned reusable bottle and the product's positive environmental impact.

This article was originally published in the November 1998 print edition of Entrepreneur with the headline: Cream of the Crop.