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Dairy industry in the Dakotas looks to grow, stay competitive

Editor’s note: As part of our series, “From Cow to Curd: A Look Across the Nation,” Cheese Market News takes a look at the cheese and dairy industry across the United States. Each month we examine a different state or region, looking at key facts and evaluating areas of growth, challenges and recent innovations. This month we are pleased to introduce our latest states — North Dakota and South Dakota.

By Rena Archwamety

MADISON, Wis. — With ample land for dairies and crops, low land prices, supportive policies and some large processors in the region, South Dakota and North Dakota hold a number of opportunities for the dairy industry.

According to the International Dairy Foods Association (IDFA), South Dakota’s dairy industry is responsible for 3,218 direct jobs and a total economic impact of $2.71 billion in dairy products produced and sold in the state. The South Dakota Department of Agriculture notes that the state is home to 173 licensed Grade A dairy farms and nine dairy processors.

Last month, top leadership from IDFA traveled to Milbank, South Dakota, to meet with dairy industry leaders and state officials on legislative and regulatory issues, including pending trade agreements and negotiations, impacting the dairy industry. IDFA notes that South Dakota has experienced tremendous resurgence in dairy and related industries over the past few years due to expanding production by companies such as Valley Queen, Agropur, Land O’Lakes, Saputo and Bel Brands.

“I’m proud of the growth we’ve seen in the dairy industry here in South Dakota and appreciative of the strong partnership between local producers and processors in making quality dairy products for local markets, as well as those across the world,” says North Dakota Secretary of Agriculture Kim Vanneman.

During the meeting, Vanneman met with IDFA President and CEO Michael Dykes, Sen. John Thune and professional staff for Sen. Mike Rounds at the newly-expanded Valley Queen Cheese Co. in Milbank, South Dakota. They toured the facility and then participated in a roundtable discussion.

“Valley Queen appreciates the willingness of these government leaders to engage with our industry at a grassroots level. We can’t expect policymakers to understand our needs if we’re not explaining to them how these policies impact our businesses and our ability to stay competitive,” says Doug Wilke, CEO, Valley Queen.

• Expansion mode

Valley Queen this year is celebrating its 90th anniversary. The company was founded in 1929 by Swiss immigrants Alfred Nef and Alfred Gozenbach, who were looking for a new home for their small Wisconsin cheese plant. En route to Montana to inspect a promising new site, Gozenbach stopped in Milbank, South Dakota, for gas, where he met some area businessmen. who persuaded him to stay the night, visit some local dairies and ultimately locate the new cheese factory there.

Today Valley Queen employs 265 people and processes 4.3 million pounds of milk daily into cheese, as well as whey protein concentrate, lactose and anhydrous milkfat. It is in the midst of a $53 million expansion project, expected to be complete in July, which will increase milk processing capacity by 25 percent and boost cheese production capacity to 200 million pounds per year. Valley Queen’s products are sold to customers across the United States, and much of its ingredients are exported to other countries. Milk is collected from 42 farms within an 80-mile radius of Milbank, and 90 percent of this milk comes from South Dakota.

“Milk production continues to grow in South Dakota. This has tied beautifully into our strategic goals to grow our dairy processing capabilities,” Wilke says, adding that the state also is very supportive of the dairy industry.

South Dakota, Wilke says, has put a big focus on leading dairy development along the I-29 corridor that runs along the state’s border with Minnesota and Iowa, up through North Dakota and down through Nebraska.

“There’s strong support for business here, and the cost of doing business is lower than other regions, which makes us a competitive player,” he says.

Agropur’s cheese plant in Lake Norden, South Dakota, also is expanding as part of a project that will triple the plant’s capacity and add 100 new jobs. The expansion will enable the plant to produce nearly 1 million pounds of cheese and 540,000 pounds of whey powder per day.

“We started to produce cheese on the new lines in April 2019 and continue to ramp up operations,” says Tim Czmowski, vice president regional operations, Agropur. “Once complete, the Lake Norden plant will be the largest of Agropur’s 39 processing plants. This increase will demand milk from approximately 85,000 additional dairy cows in order to supply the plant’s needs.”

Dairy is the No. 1 driver of economic activity in South Dakota’s agriculture sector, and the I-29 corridor is the fastest-growing dairy region in the United States, he adds.

“The expansion of Agropur’s cheese and whey plant in Lake Norden, South Dakota, exemplifies a successful collaborative effort with the State of South Dakota, Hamlin County and the City of Lake Norden,” Czmowski says.

“The South Dakota Economic Development Group worked hard to recruit dairy farmers from other states and countries to relocate to South Dakota and have been encouraging current dairy farmers to expand.”

In addition to strong support from state government agencies, South Dakota’s dairy industry benefits from research programs and testing facilities at South Dakota State University (SDSU). Along with universities in surrounding states, SDSU is part of the Midwest Dairy Foods Research Center, funded by dairy farmers through the checkoff program. In addition to participating in research projects on cheese quality, food safety, filtration applications and other areas, SDSU also has pilot facilities where companies can use equipment to run trials.
Lloyd Metzger, director of Midwest Dairy Foods Research Center and SDSU’s Alfred Chair in Dairy Education — endowed by and named after the founders of Valley Queen — notes that the university also helps to generate an educated workforce to contribute to the state’s dairy processing success.

“There is a readily available workforce, a readily available feed supply, and it’s a great place for dairies,” Metzger says. “The state did a good job of making it easy to get permitted to build dairies and facilitate growth. The big thing is, it has to make economic sense. We are in an area where dairying really does make sense.”

• North Dakota

North Dakota’s dairy industry is considerably smaller than that of its neighboring state. There are 58 Grade A dairy farms and eight Grade B dairy farms in North Dakota. The state offers many advantages for dairy producers, including affordable land, ag-friendly communities, easy-to-obtain permits, and readily-available, affordable feed, according to the North Dakota Department of Agriculture.

North Dakota has had its own milk marketing board that regulates fluid milk prices since 1967, when legislation was passed to prevent out-of-state plants from using the state as a dumping ground for surplus milk.

IDFA reports that North Dakota’s dairy industry provides 2,889 direct jobs and a total economic impact of $1.56 billion.

Among the state’s dairy processors are a Dean Foods fluid milk plant in Bismarck, North Dakota; Cass-Clay Creamery operated by Dairy Farmers of America in Fargo, North Dakota; and Pride Dairy in Bottineau, North Dakota, which manufactures mainly ice cream and butter for regional distribution.

Pride Dairy started manufacturing butter in 1930 and added ice cream in 1940. Today the business markets itself as the “Last Small Town Creamery in North Dakota,” and its ice cream parlor and dairy store, Dairy Dipper II, attracts visitors from across the United States. Pride Dairy also sells a small amount of cheese that it processes from bulk.

Kriss and Tonya Allard, who have a background in dairy distribution and own Sunrise Delivery, purchased Pride Dairy in October 2018 and are overseeing new expansion. Pride Dairy has gone from producing its ice cream once a week to four days a week, and it recently partnered with Sysco to expand its ice cream distribution.

“From April of last year to this year, we have quadrupled our business,” Kriss Allard says. “We like to say we are still small-batch, made with extra attention to detail, so we plan to ease into growth.”

In addition to its standard distribution channels, Pride Dairy makes a special flavor that is served at Mount Rushmore — Thomas Jefferson Vintage Vanilla — that is a replica of an original ice cream recipe served by the president. The company also created a s’mores ice cream flavor for state parks to serve during the summer.

Pride Dairy is slowly expanding sales of its butter, which is available in 1-pound packages and 40-pound blocks, and is distributed regionally through a contract with Dean Foods.

The number of dairy farms in North Dakota have dwindled over the decades, and Pride Dairy discontinued processing fluid milk in the 1980s due to the shortage of supply from Grade A dairies. Allard says the higher prices set by the milk marketing board help protect the state’s remaining dairies.

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