Free Enterprise Staff  | July 7, 2014

A New Yogurt State of Mind: How Buying the Cow is Boosting New York’s Economy

Across the globe, New York is synonymous with the Statue of Liberty, the Empire State Building, and Times Square. Over the past few years, however, the state has added another notch to its belt—it’s become the yogurt capital of the United States.

If this comes as a surprise to you, you’re not alone. Yet as its factories and dairy farmers continue to literally churn out more and more yogurt and milk, New York is working to both promote and cultivate the sector. Led by Governor Andrew Cuomo, state agencies have enacted tax credits and enticing incentives intended to aid farmers and lure additional companies to New York, effectively ensuring the industry’s future growth.

New York’s ascendancy as the nation’s yogurt and dairy leader results from a confluence of factors, explains Patrick Hooker, the director of agribusiness development at Empire State Development (ESD), an organization tasked with promoting the state’s economic development.

“The economic climate and conditions were just right,” he says. “The stars lined up. We’ve had a strong industry for a long time, but we’ve seen a major renaissance over the past six years.”

New York already had all of the ingredients required for a healthy yogurt industry, Hooker says. The state has a strong farming sector and an inordinate number of dairy producers, with more than 4,600 such facilities located throughout New York. The strength of its dairy farms has been among the most important drivers of yogurt production, experts say, as the production of Greek yogurt requires more milk than does regular yogurt.

With millions of Americans increasingly opting for Greek yogurt at the supermarket, such yogurt manufacturers have been on a tear. Benefiting mightily from this are Chobani and Fage, the best-known Greek yogurt producers in the U.S. New York serves as the base of manufacturing for both yogurt giants, which employ thousands of people and contribute millions of dollars in tax revenue. A number of smaller companies have also profited, stresses Hooker, as demand has spiked for their products amid double-digit growth in U.S. yogurt sales.

“I can count 12 new yogurt plants that have opened in the past five years,” he says.

Working directly with businesses has had a significant impact on the state’s yogurt and dairy sector, argues Cuomo, whose administration allocated $21 million at the beginning of this year to dairy farm initiatives. The facts are on his side: In 2013, New York produced 741 million pounds of yogurt—the most of any state. New York also ranked as the nation’s top producer in 2012, according to data from the U.S.D.A. National Agriculture Statistics Service, generating 695 million pounds of yogurt.

“For the second year in a row, New York State has earned the distinction of being the yogurt capital of the nation,” the governor said in a recent statement. “This is another example of how when government and the private sector work together, as we have done with New York’s dairy industry to eliminate barriers to growth, the result is positive economic activity that translates into jobs and new opportunities for New Yorkers. New York’s dairy farmers and yogurt producers are the cream of the crop in their industry.”

New York set another milestone in 2013, surpassing Idaho to become the third-largest producer of milk in the nation. Rising yogurt demand has had a positive impact on upstate New York’s economy, which was severely impacted by the recession. According to government estimates, New York’s dairy manufacturers employed nearly 9,500 people in 2013—up from approximately 7,700 in 2010. Industry wages also climbed over the same period, increasing from $400 million to $513 million.

Looking toward the future, Cuomo and other state officials are betting that the state’s dairy and yogurt industry will continue to expand. Greek yogurt sales, which clocked in at $7.3 billion in 2012, are projected to hit $9.3 billion in 2017. Sales of other kinds of yogurt are also expected to see growth over the coming decade as more consumers opt for the healthy dairy product.