Cheese plant expansion signals South Dakota dairy poised for growth

South Dakota officials have been working for decades to rebuild the state’s dairy industry, and now they’re seeing results.

One of the state’s biggest cheese plants is expanding, tripling its production capacity to make it not only the largest plant in South Dakota, but one of the biggest in the U.S.

Government officials and company leaders were in Lake Norden late last month for an official ground breaking celebration at the Agropur cheese and whey plant where construction is already started to make the plant capable of processing more than 9 million pounds of milk per day.

“This is such a big deal for South Dakota,” Gov. Dennis Daugaard told the crowd in the spacious shell of the future processing facility.

The $250 million Agropur expansion will have a $1 billion economic impact on the state, he said. The project will create 125 more jobs at the Lake Norden plant, and it also brings a demand for 85,000 more dairy cows, growing more forage and feed, and putting more trucks on the road to haul milk and supplies.

“It’s going to have a huge impact on the long term future,” said David Skaggs, a dairy development specialist for the South Dakota Department of Agriculture.

He predicts that a bigger cheese plant will help the state recruit more dairies to South Dakota and the surrounding region. It’s an area they’ve held back on in recent years, he said, because there was no place for farmers to go with their milk.

Producing more milk products also opens opportunities for post-production facilities. Skaggs said it could lead to opening more cold storage facilities or a cut and wrap operation.

“It’s going to open a whole new realm of opportunities,” he said.

Dairy has a larger impact on the economy than other types of animal livestock, including raising beef, poultry or hogs, the governor said. It provides a market for forage and dried distiller’s grains. Dairy requires truckers to haul milk daily, labor to milk the cows around the clock, veterinary services and processing plants like Agropur’s.

In recent years, Agropur was making plans to expand its plant in Hull, Iowa. The focus shifted instead to its South Dakota plant because that’s where the cows are, said Doug Simon, president of the company’s U.S. operations, based in Appleton, Wisconsin. The Lake Norden plant was easy to expand and to staff, he said, and the state was behind the project.

Water and labor was an issue when it came to expanding the plant in Hull, according to Evan Metzger, president of the Western Iowa Dairy Alliance and dairy farmer in Rock Rapids.

He would like Iowa to be more aggressive when it comes to growing the dairy industry, but there are fewer dairy farmers and fewer processing plants to push for change.

“It seems like expansion is on hold in this area for now,” he said.

South Dakota agriculture and economic development officials have made it a priority to expand dairy processing. Bel Brands opened its snack cheese manufacturing plant in Brookings in 2014. A group of business owners near Parker are making preparations to woo a large dairy processor to southeastern South Dakota. Valley Queen Cheese – currently the state’s biggest dairy processor – is also putting $50 million into an expansion of its Milbank plant. Construction has started to increase processing by 25 percent to handle up to 5 million pounds of milk per day. Work should be done early next year.

State agricultural development employees have gone to California and aboard to convince dairy producers that South Dakota is a better place to milk their cows. They pitch the state on its abundance of forage and water, regulations that aren’t as strict as other places, loan programs and tax incentives.

Agropur was offered a break on sales tax for the equipment it puts in the new facility, amounting to a rebate of more than $7 million. It’s also getting a property tax break through tax increment financing in a deal with Hamlin County.

Already, a new dairy known as Riverview Farms is going through the permitting process to start a farm in Bryant, 13 miles west of Lake Norden.

The dairy industry has changed from the day when almost every family farm had a few milk cows. During the 1960s and 70s, the state had more than 200,000 dairy cows. That number dropped to a low of about 80,000. Now the herd is rebuilding. There are about 110,000 cows milked in South Dakota.

For a while, there weren’t enough dairy processing plants to handle all of the milk produced in South Dakota. Now the issue has flipped and more cows are needed, thanks to plants like Agropur and Valley Queen producing more cheese. “This is a dramatic demonstration that there will be a market,” Daugaard said.

U.S. cheese consumption has been growing, and dairy companies like Agropur have long been plotting their growth and expansion.

South Dakota is a good place to do it, according to Tim Czmowski, Agropur’s regional vice president based in South Dakota. The feed, water and land is here, he said.

“It’s a tremendous place to dairy,” he said.

Construction on the Lake Norden plant started last fall and is expected to be complete in early 2019. It won’t run at full capacity right away. Agropur will grow into it based on milk supply and demand for its products, said Simon, Agropur’s U.S. president.

Once complete, the Lake Norden plant will be the largest of Agropur’s 39 processing plants.

“This facility will be incredibly important to our business,” Simon said.

The plant will be capable of processing more than 9 million pounds of milk daily, making 1 million pounds of cheese and 540,000 pounds of whey powder. Currently, the plant makes mozzarella, provolone, parmesan and cheddar cheese. It supplies all of the mozzarella to the Papa Murphy’s take and bake pizza chain east of the Rocky Mountains.

The cheese plant opened in 2003 as an addition to Lake Norden’s whey processing plant. It employs 225 and will be adding another 125 jobs.

“We’re pleased to be in this growth mode,” Czmowski said.

Written by Janelle Atyeo who is editor of the Tri-State Neighbor, covering South Dakota, southwestern Minnesota, northwestern Iowa and northeastern Nebraska.

Link: https://www.agupdate.com/tristateneighbor/news/dairy-revival-cheese-plant-expansion-signals-south-dakota-dairy-poised/article_4717ff64-23bc-11e8-a22e-5fa36874c90f.html

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