Opportunities for more or expanded dairy farms in South Dakota and other states bordering Interstate 29 are tremendous, according to Tim Czmowski, general manager of Agropur in Hull, Iowa.
The 130-employee cheese processing plant runs 24 hours a day, seven days a week. It processes about 1 billion pounds of milk a year into 15 cheese varieties and value-added dry whey products and has started plans to double the current plant capacity with production hopefully starting in 2015.
However, it depends on the ability to attract more milk production in the four-state area, Czmowski told a crowd Dec. 3 at the Ag United annual luncheon in Sioux Falls.
Czmowski said the second plant at the facility, started by a family as Green Meadows Foods in 2008, will require milk from about 50,000 more cows, which is about half of the 92,000 cows currently milked in South Dakota. Hull is about 25 miles from the South Dakota border.
New dairies, relocations and dairy farm expansions are needed and welcomed, he said, but of course local zoning boards and counties have to approve any facility, as do state regulators.
He talked about a few bright spots with a few dairies in the works along the I-29 corridor that could help produce more of the milk needed.
• A new 3,500-cow dairy in Bruce, S.D., opened in May.
• An established dairy producer near Lake Norden is constructing a second dairy barn.
• A 5,500-cow dairy has gained approval in Turner County in southeastern South Dakota, although a procedural issue has delayed the final OK for the project.
• A hearing is planned in mid-December for a new dairy about 15 miles south of Sioux Falls in Lincoln County. Czmowski said a successful dairy family from Michigan is seeking the permit as the father wants to help members of his family expand more into the business.
Czmowski said not only does his plant want to expand, but two other existing cheese plants in South Dakota at Milbank and Lake Norden and the soon-to-open Bel Brands plant in Brookings also have expansion plans and eventually would like to have more milk to help meet the ever-increasing demand for cheese in the U.S. and the rest of the world.
“In South Dakota, there is really a lot of opportunity for growth,” he said.
A lot, however, depends on how counties and neighbors respond to requests for permits, Czmowski said.
He said the economic power of each dairy built has never been greater with the annual economic impact per cow per year estimated at $14,000 for South Dakota and $20,000 for Iowa.
Other benefits are the creation of one job for every 35 cows and 85 percent of revenue from his plant being returned to dairy farmers in the form of milk checks. Estimates indicate that a 3,500-cow dairy generates $437,500 in annual state and local tax revenue and $724,500 in state and excise taxes during construction. There also are the longer-term benefits of livestock, feed and rolling stock inventory and the use of nutrients or manure on fields that provides $9 in value for every $4 in cost.
“We are really adding value to our resources if we can expand our dairies here rather than ship it out of state,” Czmowski said. “If we don’t do it here, someone else will do it down the road, maybe in Texas.”
The opportunity in South Dakota has been here for some time, he said, and investors are waiting in the wings. Before taking over the Agropur plant in Hull, the Webster, S.D., native and SDSU graduate said he traveled around the country designing cheese plants and saw how states such as Idaho, California and New Mexico were seeing expansion of dairy herds and processing facilities through cooperative efforts.
“When I’d get on the plane in Sioux Falls, I always kept thinking, ‘Why can’t we do what they are doing and help feed the country and beyond with our products right here?’ ” he said.
Progress is being made, however. The dairy industry had been leaving the Upper Midwest for 25 years and going here and there, but the “good news is that it’s turned around and it’s coming back. But we have to figure out how to get more raw materials here to meet the demand.”
In 1960, he said there were 64,000 dairy cows in a multi-county area near Brookings and Sioux Falls, and it’s now down to 24,000.
“If we could just put back the cows that were once here 50 years ago, we could go a long ways,” Czmowski said.
In some counties, he said, residents say “we can’t have that many cows here.”
Czmowski’s reply is that California’s Tulare County – the No. 1 dairy-producing county in the United States – has 342,000 cows and 451,000 people in it.
“With the modern dairies, engineering and working with the EPA on the environmental issues and design, they made it work,” he said.
He also doesn’t see any cessation in the rising demand for cheese, which has climbed from consumption of 26.6 pounds of cheese per person per year 20 years ago in the U.S. to 33.5 pounds last year.
He listed some of the places where products go from his plant, which is the second largest of 30 Agropur plants in the U.S. and Canada. Agropur supplies most of the Hy-Vee store brand cheese, the cheese on all Pizza Ranch pizzas, the Monterey Jack found on McDonald’s McWrap sandwiches, the Target store brand cheese and Parmesan romano. The parmesan has seen incredible growth, he said, and it takes two days out of each week to fill that order. In comparison, the McDonald’s order requires one day a week at the plant.
The whey produced adds to the plant’s demand as it’s used for lactose milk sugar or protein in Ensure, Slim-fast bars, power bars, muscle milks and Nestle’s hot cocoa mix.
“Dairy is in demand,” Czmowski said.