Plains states look for dairy industry growth opportunity

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 — Kansas, Nebraska and Oklahoma.

By Rena Archwamety

MADISON, Wis. — The Great Plains states of Nebraska, Kansas and Oklahoma are what some might describe as “flyover country,” but others who work on developing the states’ agricultural industries call it a “great opportunity” for dairy business.

The number of licensed dairy herds in these three states is relatively small — 280 in Kansas, 155 in Nebraska and 150 in Oklahoma, according to 2018 USDA averages — though there are major dairy processors in all three states, and room for farmers and processors to support mutual growth.

Photo courtesy of Dairy Farmers of America

CENTRAL OFFICE — Dairy Farmers of America opened a new headquarters building in Kansas City, Kansas, in 2017. The cooperative, which was founded in 1998, has more than 13,000 dairy farmer members and 45 plants nationwide.

• Expanding capacity

Dairy Farmers of America (DFA), the largest dairy cooperative in the country with more than 13,000 dairy farmer members and 45 plants nationwide, is headquartered in Kansas City, Kansas.

DFA was founded in 1998 through the merging of four of the largest U.S. dairy cooperatives at the time. Its primary focus was to provide value to its farmer members through marketing their milk, with a strategic vision to invest in many areas across the U.S. dairy supply chain as well as the global marketplace.

“Today, that vision is truly becoming a reality with our 45 processing plants across the country and growing portfolio of branded dairy products as well as a growing global investment strategy and satellite office in Singapore,” DFA says. “Yet, even as DFA grows and becomes more complex with a variety of investments across the entire dairy supply chain, the reality is that our business still starts and ends on the farm by delivering value to our DFA farm families.”

In 2017, DFA unveiled a new headquarters building, which features many sustainable design elements and a modern, flexible work environment.

“As a cooperative with farms across the U.S., Kansas City offers a centralized location, which is key since our farmers and board members are located all over the country and it’s important that our headquarters is easily accessible,” DFA says.

Also in 2017, DFA opened a major ingredients plant in Garden City, Kansas, which is near many dairies in the southwest side of the state. The plant, which produces whole and skim milk powder, nonfat dry milk powder and cream, receives approximately 4 million pounds of milk a day from regional farms.

Kansas has a total 18 licensed dairy processing plants, including the new DFA Garden City plant as well as a Hiland Dairy plant in Wichita, Kansas, which is a joint venture between Prairie Farms and DFA.

Third-generation dairy farmer Steve Strickler, who milks about 400 Holsteins in Iola, Kansas, notes that there are several big dairies — 2,000 cows and larger — in western Kansas, where the weather is dry and groundwater is available. His dairy in Iola is one of only a few left in the eastern part of the state, which has more rain and humidity.

“There were 32 dairies in 1978 in my county. We’re the only one now. They all moved pretty much west, and the guys that moved in from California all moved to western Kansas,” Strickler says.

“Cow numbers are going up in the state, and it’s all in western Kansas,” he adds, noting that the DFA Garden City plant took a lot of pressure off the volumes of milk produced in that area of the state. “I think there’s a real future out there for those guys.”

Oklahoma and Nebraska each have a smaller number of dairies and dairy processors, though there are small and large dairy operations in both these states. Oklahoma has 20 and Nebraska is home to 13 licensed dairy processing facilities. Hiland Dairy, which is marketed by Prairie Farms and receives milk from DFA producers, has dairy product manufacturing plants in Chandler and Norman, Oklahoma, and Norfolk and Omaha, Nebraska, with several distribution facilities throughout this region.

Hiland’s Chandler, Oklahoma, plant, which produces cottage cheese, sour cream, yogurt, fluid milk, juice and ice cream mix, was recognized last year at ProFood World with an award for the plant’s whey recycling and wastewater treatment facility. The facility sits on 280 acres, and Hiland uses the surplus acreage to grow high-yield feed crops, irrigated with the treated wastewater and fertilized with recycled whey. These crops provide area farmers with an affordable, local feed source.

Oklahoma also is home to a longtime regional favorite, Braum’s Dairy, which owns nearly 300 stores throughout Oklahoma, Kansas, Texas, Missouri and Arkansas, selling ice cream, dairy products, bakery and other grocery items and gifts.

Braum’s last year celebrated its 50th anniversary. The company operates a 260,000-square-foot dairy processing plant in Tuttle, Oklahoma. It also operates its own private dairy herd of more than 10,000 cows on family farms in Tuttle and Shattuck, Oklahoma.

• Open for business

In Nebraska, all of the major dairy processing plants are in the eastern part of the state, including Hiland Dairy’s two Nebraska plants, LALA U.S. in Omaha and Milk Specialties Global in Norfolk. Initiatives are underway to recruit processors to build closer to the state’s dairy operations in the western part of the state.

“We’re a commodity-rich environment, and production agriculture does extraordinarily well — corn, soybeans and other important inputs for animal agriculture,” says Ron Tillery, executive director, Phelps County Development Corp. “Nebraska never achieved a status as a dairy manufacturing center for a variety of reasons. I think one of the major missing links is that production ag occurs in the central to western parts of the state, where there is less population, and currently manufacturing is further east, along the I-29 Corridor. Consequently, we haven’t seen the growth of milk production like other states have.”

This presents a catch-22 situation, Tillery says, where more processing facilities are needed to draw more farms, but companies are hesitant to invest in a location unless there are enough surrounding livestock operations to support it.

He points to a recent situation where a 10,000-head dairy operation in north central Nebraska wanted to expand but ended up moving to Wisconsin because there were more processing opportunities. He believes if a processing facility were to move into central Nebraska, the dairies in that area would likely expand.

“We’re looking for creative ways to solve that riddle and encourage the construction of dairy processing facilities in areas where the climate is right, production environment is right, attitude is right, and there is a welcoming population to this kind of manufacturing,” Tillery says. “I think all the factors necessary to be successful are there, we just need the first dairy processing facility.”

Doug Nuttelman, chairman of DFA’s 11-state Central Area Council and dairy farmer with 250 cows in Stromsburg, Nebraska, notes that about a third of the milk produced in Nebraska leaves the state, and many dairies and processors have left over the years as well.

“Nebraska should be a great place to dairy,” he says. “We’ve got a fine price for farm ground. We have abundant water and feed supply, weather is manageable, there’s a good supply of corn, ethanol products, hay — anything you need for feed is abundant in Nebraska.”

Tillery says to help reach the goal of moving Nebraska to a more vertically-integrated dairy industry, agriculture and economic development organizations have teamed up with the Nebraska Public Power District and others to attend trade shows, prepare marketing materials and present funds and other incentives available for manufacturers.

“We have a number of potential site layouts that would accommodate a dairy processing facility, and we can be very aggressive in discounting land,” Tillery says. “We can be very creative in how we assist a company. If there is a cheese plant on the horizon, central Nebraska makes a lot of sense ... we’re open for business!”

CMN

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