SD cheese plant expansions to go online in '19
MILBANK, S.D. — Cheese plants in northeast South Dakota are booming, and that is providing economic opportunity for some farmers and communities in the Interstate 29 corridor, according to industry leaders in the region.
Doug Wilke, chief executive officer of Valley Queen Cheese Factory Inc., of Milbank, was one of the officials who met with a half-dozen journalists as part of a value-added dairy tour sponsored by the South Dakota Governor's Office of Economic Development. The tour was coordinated by Development Counsellors International of Denver.
Wilke explained that Valley Queen is owned 50-50 by the Nef and Gonzenbach families of Milbank, both of whom have been producing cheese in the community since 1929. The company makes American-style cheeses — cheddar, colby, Monterey Jack and pepper jack. The company delivers cheese to other companies that market under the customers' retail brands — often seen as slices, 8-ounce chunks or shredded. Some of the cheese is used in a popular quick-serve restaurants, subway-style sandwiches in salads.
Dairy manufacturing is "very dynamic" with exports accounting for 15 percent of U.S. dairy manufacture, Wilke said. Moving forward, he said the industry needs a reasonable regulatory environment, as well as workforce development for everything from scientists to salespeople and truck drivers.
$50M build here ...
Valley Queen has 250 employees in its one plant. It is in the process of investing about $50 million in an expansion that will add about 1 million pounds of milk per day of capacity. The investments will be made in equipment and infrastructure, cooling systems and boilers — without adding buildings.
The Milbank company will grow from 4 million pounds per day capacity to just more than 5 million pounds.
According to its displays in a brand new heritage center museum and store, the company gets milk from about 65,000 cows on 42 farms, some of which have more than one farm location, mostly from within an 80-mile radius. Some of the farm entities have more than 10,000 cows. Anticipating its expansion, the company is working on adding production rather than trying to bring in newly constructed producers. The natural growth within those dairies will have the company full again within five years, Wilke said. In the meantime, the company will acquire milk from surplus areas of the country.
Wilke explained that the plant "takes apart" milk to add value, making cheese and separating the whey byproduct into value-added ingredients.
Some of those whey ingredients actually are shipped to dairy-rich New Zealand. Fractionated whey is made into whey protein concentrate, but about half of the lactose is shipped to a customer that uses it as an ingredient it to make skim milk powder.
... $250M there
Also on the tour was Agropur Inc., and its $250 million expansion underway at Lake Norden, S.D. Tim Czmowski of Sioux Falls, S.D., is regional vice president-Midwest for Agropur, of Appleton, Wis. He described the investment as the largest in the company's history and one of the largest private investments in South Dakota's history.
The U.S. company is a subsidiary of Agropur Cooperative, the largest dairy-processing cooperative in North America, and based in Quebec, Canada. Agropur has 28 dairy plants in Canada and 11 in the United States, including seven cheese plants.
Czmowski manages the Agropur plants at Lake Norden, S.D., and Hull, Iowa. Agropur prepared for a cheese expansion and regional milk development starting in 2010. Agropur purchased the Lake Norden plant from Davisco in 2014.
"We now have great confidence that the milk is coming, and we've already contracted with a number of the producers that are planning on building and growing in the region," he said.
The Lake Norden expansion is expected to be up-and-running in March 2019, with a two-year ramp up to full production. The plant makes 15 cheeses, geared mostly toward soft-style versions of Italian cheeses, such as mozzarellas and provolones. They also make American cheeses in 40-pound blocks.
The Agropur Lake Norden cheese plant currently operates at about 3.3 million pounds of milk per day and will expand to 9.3 million pounds a day — 220 semi-trailer loads coming and going daily.
Agropur at Lake Norden contributes about $500 million to the local economy in a year and is in a project that will triple capacity, going to a $1.5 billion impact on the economy.
The company employs 250 and will add 125 employees at Lake Norden, employing automation especially in the packaging area. The company manufactures the cheese and vacuum-seals and boxes it for shipment to other locations for packaging.
About 85 percent of the company's revenues go out to dairy producers in the form of milk checks, mostly within an 80-mile radius. They will purchase milk both from individual producers and cooperatives.
A Webster, S.D., native and a South Dakota State University dairy graduate, Czmowski is full of enthusiasm and cheesy humor. Asked how the company was producing a smoked flavor without a smoker or salt, Czmowski joked, dead-pan: "In the cheese industry, I could tell you but then I'd have to shred you," and paused, before adding, "That wouldn't be grate."