Good Eats with Alton Brown is pretty much the best cooking show to ever be on TV and not surprisingly has a pretty good episode dedicated exclusively to homemade yogurt and its applications.
This video provides a pretty awesome background on one version of the yogurt making process. It is however, slightly different from the way we have done it in the past at my house. Instead of using store bought yogurt, we typically order freeze dried yogurt cultures from Dairy Connection, a commercial source that is surprisingly friendly to noncommercial yogurt and cheese makers. The cultures that we have used in the past are the ABY653 and ABY-2C yogurt cultures. The contents of the ABY653 and ABY-2C cultures are: Streptococcus thermophilus, Lactobacillus delbrueckii subsp. bulgaricus, Lactobacillus acidophilus, and Bifidobacterium lactis. Streptococcus thermophilus and Lactobacillus delbrueckii subsp. bulgaricus are the two most common bacteria seen at work during the fermentation process. All of the above bacteria are at least partially responsible for the production of lactic acid. Typically we use the ABY-2C culture as it tends to produce thicker yogurt in a shorter amount of time without the use of powdered milk. In addition to using commercial yogurt cultures as opposed to store bought yogurt, we typically try to keep the temperature during the incubation period about 10 degrees lower than the 115 degrees that Alton recommends. We also leave it at that temperature for about 8 hours as opposed to 6 just prior to refrigeration and we sweeten the yogurt with sugar and vanilla as opposed to honey (our few attempts at experimenting with flavoring did not end well). I have never had any issues regarding the opacity of the container either.
So that's pretty much the gist of yogurt making. It involves a bunch of bacteria, and milk. The milk that we typically use at our house is the 2% milk that we buy from DeJong's Dairy in Lake Elsinore. It's about 15 miles from my house but yea... try their milk (particularly the chocolate milk) and you will understand.
The dairy produces all of its own dairy products (naturally) and has been in business for more than 50 years according to the current owner, Herman.
This guy
There are some environmental impacts that come with the consumption of yogurt. When we make yogurt at home, it does require that we buy milk that comes in a plastic container, and store bought yogurt typically comes in a thick plastic cup with an aluminum seal.
From what I hear, yogurt is also fantastically healthy for you. Yogurt provides a boatload of calcium, whey protein and depending on the fermentation process is usually a really good source of vitamins B2 and B12 as well. Additionally, the consumption of milk based products has been shown to be correlated (at least in some way) with a person's tendency to meet their daily vitamin A needs (McKinley).
Sources
McKinley, Michelle C. "The Nutrition And Health Benefits Of Yoghurt." International Journal Of Dairy
Technology 58.1 (2005): 1-12. Academic Search Premier. Web. 27 Mar. 2013.



