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Dairy development focus of industry and IDFA fly-out

MILBANK, S.D. — The push for dairy development in the Interstate 29 corridor has had a huge economic impact in South Dakota. Dairy products annually contribute more than $2.7 billion to the economy, support more than 11,000 jobs, and put more than $555 million in wages into the pockets of South Dakotans each year.

However, to continue to grow, the industry is looking for assistance with issues such as immigration, the labor crisis and trade agreements. That was the focus of the International Dairy Foods Association's Strategic Fly-Out to South Dakota, which included an industry and government roundtable discussion.

U.S. Sen. John Thune, R-S.D., participated in the April 24 discussion and says leaders welcome growth in the dairy industry in the state and pledge to help with trade deals and the new price support programs for dairy in the 2018 Farm Bill.

"We're excited about what's happening in dairy in South Dakota both on the producer side, on the processing side. A lot of jobs being created here in our state and that's a good thing. So, we want to encourage it," he says.

Valley Queen Cheese CEO Doug Wilke says the plant in Milbank generates about $1.6 billion through processing and that will increase with the current expansion.

"We've just invested $53 million in plant processing capacity and we'll process about a million more pounds of milk a day. We'll be going from processing 4.2 million pounds of milk a day to 5.3 million pounds," he says.

That will take another 75,000 to 80,000 cows and 90% will come from South Dakota. "We feel really good about having all of our milk come from South Dakota in the next three to five years to fill up the plant," Wilke says.

However, he says they're carefully matching supply with demand so they don't depress prices. "Now I think we're at the point where milk production and processing are growing at about the same rate," he says.

For growth to continue, both processors and producers say the current labor crisis must be fixed. Thune said he agrees that workforce is a huge issue.

"I mean just having enough people to fill the jobs and that kind of bears on the issue of immigration," he says.

Immigration reform has been a political hot potato, but he is hopeful that the current Congress and the urging of President Donald Trump will lead to some sort of solution.

Another key to further dairy development is expanding trade. That's why the International Dairy Foods Association is hosting fly-outs in Milbank and around the U.S., to urge movement on trade agreements. IDFA President and CEO Michael Dykes says exports are important to the industry.

"Today we export about 15% of the dairy products that we make or, I like to say, one days milking per week," Dykes says. "In the future as we have more milk, we're going to be exporting in excess of 20% of our production, so we need access to markets, we need trade agreements."

Dykes says congressional passage of the U.S.-Mexico-Canada Agreement and dropping the steel and aluminum tariffs is critical as Mexico is the top export customer for U.S. cheese. "They retaliated and they put a 25% tariff on our cheese going to Mexico; 25% of our exports go to Mexico," he says. "We need the Section 232 tariffs lifted and we must get the USMCA ratified."

Dykes says they are waiting for the U.S. trade representative to send implementing legislation to the House. They are more worried about passage in the House versus the Senate, but are still optimistic it can get done by the August recess.

The state largely encouraged dairy expansion during Gov. Dennis Daugaard's administration and South Dakota Secretary of Agriculture Kim Vanneman says that will continue. "Gov. Noem is also very supportive of ag development and livestock development, including the dairy industry," Vanneman says. "You know we'll be collaborating with the Governor's Office of Economic Development in doing whatever we can to help promote and grow the dairy industry." She says the investment the processing industry is making in the state is also extremely positive. "With the expansion at Valley Queen and Agropur increasing their production, I mean it's phenomenal the amount of milk that's going to be going through those plants on a daily basis," Vanneman says.

Vanneman says livestock and dairy production are key to the future of rural communities like Milbank.

"That economic impact from, you know, the workers here and how many times those wages get recycled and the impact that it has on main street — it's huge," she says. "It's going to help build rural America again."

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