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State of the Industry

Nevada, Utah hope for dairy growth in production, plants

Editor’s note: As part of our “State of the Industry” series we take 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 — Nevada and Utah.

By Rena Archwamety

MADISON, Wis. — The landscapes of Nevada and Utah range from expansive deserts to tall mountain ranges. The states may not be known for pasture land, but the dry climate, plentiful alfalfa, and business and ag-friendly environment help sustain a dairy industry with growth potential, given the right conditions.

Though smaller in scale than dairy powerhouses Idaho to the north and California to the west, the dairy industries in Nevada and Utah have maintained steady production growth over the past decade. Utah milk production has grown from 1.62 billion pounds in 1999 to 1.76 billion pounds in 2009, according to USDA’s National Agricultural Statistics Service (NASS). Nevada, which has far fewer dairy farms (25 compared to Utah’s 240 in 2009), grew from 456 million pounds of milk production in 1999 to 611 million pounds in 2009, according to NASS.

• Utah’s Cache Valley

Dairy processing has a strong and growing presence in Utah.

“We have a lot of dairy manufacturing in the state. For the size of our dairy industry, we have a very high manufacturing part,” says Allen Young, extension dairy specialist, Utah State University.

In the north, Logan, Utah, is home to Gossner Foods’ headquarters, its first cheese plant and its UHT milk plant. Dairy Farmers of America (DFA) and Schreiber Foods also have facilities in and around Logan. Dannon has a yogurt processing facility in the Salt Lake City area, Grassland has a butter plant in Hyrum and Wells’ Dairy has a Blue Bunny ice cream plant in St. George. In addition to these large-scale processors, a few smaller artisan cheese companies also have started in the past several years, including Beehive Cheese in Uintah, Utah.

Utah’s cheese processing industry started in the 1940s when the founder of Gossner Foods, Ed Gossner Sr., moved to the Cache Valley, which reminded him of his native Switzerland. He opened what at the time was the world’s largest Swiss cheese factory, producing 120 wheels of Swiss, 200 pounds each, a day.

“At this time in the state of Utah, the Cache Valley was a major dairy area,” says Don McMahon, professor of dairy processing, Utah State University. “The establishment of the cheesemaking plant brought more dairy farm production. So they’ve kind of gone together, and now there’s others.”

Gossner’s daughter Dolores Wheeler, president and CEO of Gossner Foods, notes the diverse mix of dairy products coming out of the Cache Valley area, where many residents are employed by the dairy industry. Approximately 500 people are employed at Gossner Foods’ facilities in Logan.

“The dairy industry certainly contributes to the economy, and we’re part of that,” Wheeler says. “Between us, Schreiber and DFA, a lot of milk comes out of this area into different types of products.”

While the Cache Valley traditionally has been a major dairy production area, recent urban sprawl has driven dairy farms toward other, less populated areas of the state.

“The population is in the northern part of the sate, and it picks up more dairies in the central to south,” Young says.

Gossner Foods contracts directly with dairy farmers for its milk supply, and many of its farmers are within a short distance from its Logan plants. However, Wheeler says urban growth has made it tough for many farmers to stay in the area as people move out from the cities and buy up land in the country for residential development.

“We’re faced with a lot of people thinking the Cache Valley is a great place to live,” Wheeler says. “Farms are leaving because of encroachment. That’s one reason we branched off and went to Idaho — there’s more opportunity to coexist with the people, and not the congestion we see in our valley.”

• Nevada: space to grow

Unlike Utah, Nevada has almost no dairy processing facilities outside of fluid milk. The state has three fluid milk plants: Model Dairy (Dean Foods) in Reno, Nev., and Anderson Dairy and Meadow Gold (Dean Foods) in Las Vegas. There also are two ice cream manufacturing facilities in Nevada: Unilever in Henderson, Nev., which primarily packages the Breyers label, and the Anderson Dairy in Las Vegas.

“There are no cheese plants, no butter manufacturing plants and no powder plants,” says Mark French, executive director of the industry-funded Nevada State Dairy Commission, which regulates milk in the state. “Most of the major supermarkets own processing plants outside of Nevada and bring in the majority of their own milk.”

Most of the dairy farms in Nevada are members of DFA, and the Nevada dairy plants buy their milk from associations and cooperatives.

Dairy farms in Nevada are located in rural areas, equally divided between the Fallon and Yerington region in the northwestern part of the state, and Amargosa Valley in southern Nevada.

The state’s dairy producers don’t have the encroachment issues that their neighbors in Utah face. However, being a distance from dairy plants both in and out of the state, Nevada’s dairy farmers can find transportation and the ability to dispose of surplus milk a challenge.

“Being a small dairy state, surplus milk has to be shipped out of state,” French says. “Milk shipped out of state is becoming more and more expensive when you consider the nearest receiving facility is more than 200 miles away and much of the travel is over the Sierra Nevada Mountains.”

French says some county and state agencies are looking to increase opportunities for dairy in the state, such as bringing a manufacturing plant to northern Nevada.

“There’s room for the dairy industry to grow in Nevada, but it’s a challenge because of the transportation situation,” French says. “It would be an ideal climate for a specialty cheese or yogurt plant.”

• Challenges, future growth

Both Utah and Nevada have dry, desert climates and plentiful alfalfa supplies, though temperature extremes and water supply can be a challenge.

“We have pretty extreme changes,” Wheeler says. “In Cache Valley it can be very cold in the winter and hot in the summer. Crops in the high mountain valley can get late frost in the spring or early frost in the fall. It really is what you call ‘high desert’ here.”

Young says the dryness of the upland desert climate makes the temperature extremes less devastating, though he says both Nevada and Utah may be facing big water challenges in the near future.

“Las Vegas now is coming up to Utah trying to pick up water rights. If they can buy up a sizable amount, there will be no water for agriculture,” Young says. “We haven’t seen it yet, but I’m pretty sure in the next few years, water will be at a premium.”

With low unemployment in the state, Wheeler and Young also list labor shortage as a challenge to dairy growth in Utah.

“We never have any unemployment to speak of here — it’s much lower than the national average,” Wheeler says.

Allen adds that if immigration laws similar to those recently passed in Arizona make their way up to Utah and surrounding, the dairy industries in this region could be greatly affected.

“The thing that’s going to be a huge issue for us is labor — 95 to 99 percent of our dairies use Hispanic labor,” Young says. “It’s getting tougher and tougher to get someone who will work on a dairy.”

Despite these challenges, dairy insiders say Nevada and Utah have room for the industry to grow, given the right opportunities.

Utah’s growing dairy manufacturers will provide continued opportunity for production growth, but farms may tend to consolidate, grow and move to less populated areas.

“I think what we’re going to see is fewer but bigger dairies,” Young says. “I think dairies are going to be pushed to less urban, less desirable areas. Those that survive are going to have to add cows.”

McMahon predicts more growth around central Utah.

“I think there is still some potential for some of the farms to grow, but not so much in Cache Valley,” McMahon says. “There is a lot of potential for production in the central and western Utah area. It’s an area where there are not any large processing facilities, but a lot of hay, alfalfa is grown in that central Utah area that has potential for larger-scale dairy operations.”

Nevada production has declined over the last year as the low milk prices in 2009 prompted some farmers to leave the dairy business and others to reduce their herds. But some counties are investigating the feasibility of bringing in a manufacturing facility, which French says could help revive growth.

“I think you would see growth if we could get a manufacturing facility in Northern Nevada,” French says. “Without a manufacturing facility, I think it will stay flat, pretty level.”

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