More cows coming: Northern Colorado’s needed dairy growth on track to meet demand
June 19, 2013
Northern Colorado natives and transplants from across the country are so far answering the call for the region’s dairy industry to drastically increase milk production in a relatively short amount of time.
There’s still a long way to go, however, with challenges ahead.
Leprino Foods, the world’s largest mozzarella cheese producer, agreed to build its second-biggest processing facility in Greeley, Colo., believing that Weld County — already a top-20 milk producer in the U.S. — and the surrounding area would bring in 60,000-plus more dairy cows during the next several years to meet its demands.
While the task seems tall, it’s so far, so good, according to local dairy experts and officials with Leprino.
Compared to 2010, when construction of the Leprino plant began, the number of milk cows in northern Colorado could be up as much 25,000 to 30,000 by end of this year, pending the completion of construction projects currently in the works.
The ongoing dairy growth isn’t only needed by the cheese-processing plant, but is a major factor in Leprino’s anticipated economic impact, which, over the next 20 years, is expected to amount to about $15 billion — a $325 million impact in Greeley, $4.8 billion for Weld County and $10.1 billion for the rest of the state.
Ag Professionals in Longmont has served as the developer for eight of the 10 large-scale dairy projects now taking place in the region.
Half of them are brand-new facilities, while the other half are dairies going up on former feedlots or former turkey farms that went out of operation when Butterball began exiting Longmont.
Building those new facilities are dairy families from California, Michigan and New York, and milk producers already with operations locally, said Tom Haren, the owner of Ag Professionals, who has about 20 years of experience as an agriculture consultant.
After producing non-fat dry milk since starting in October 2011, the Leprino plant in Greeley began processing cheese just a few weeks ago and is expected to be operating at full capacity of its existing facility this fall.
At that time, Leprino will be taking in nearly 5 million pounds of milk per day — up sharply from the 1.5 million pounds of milk it was hauling in about a year-and-a-half ago, according to Mike Reidy, senior vice president of corporate affairs with Leprino.
Once its current facility is maxed out, Leprino will then look at doing more construction in Greeley, and plans to eventually take in 7 million pounds of milk daily.
As Leprino’s demands have increased so far, the milk supply has come solely from dairymen in the nearby area.
“We’re definitely keeping up,” said Wade Meek, with Dairy Farmers of America, the cooperative that hauls nearly all milk in Colorado from the farms to processing facilities.
No easy task
Haren and those who have taken on the endeavor describe building a new dairy as a daunting one.
The planning takes years, buying the needed water can cost millions of dollars in Colorado and getting electricity to some of the remote facilities can add up to as much as $250,000 per mile of infrastructure, as Haren explained.
When all is said in done, the development and construction alone can be about $3,000 per head, he added, noting that those costs can vary considerably, depending on a number of factors.
For a dairymen wanting to milk 2,000 cows, that’s a $6 million investment before figuring in other needed costs to operate.
And in the end, those new milking facilities are attempting to turn a profit in an industry that bottomed out just four years ago and more recently has seen record-high feed costs and low milk prices.
Haren said about nine out of every 10 dairymen with whom he’s spoken and who’ve expressed interest about coming to northern Colorado have opted out, because of the vast scale of the undertaking and the capital investment it takes.
Dairymen have been particularly cautious in recent years, he added, with the dairy industry coming off the heels of what some label as the “Great Dairy Recession” in 2009 — when milk prices collapsed with demand in a weakened economy and a healthy export market turned sour while the cost of feed increased.
Milk prices — set by federal government formulas, not the market — have rebounded some, but not enough recently to fully combat how high feed prices have climbed due to the 2011 and 2012 droughts, dairymen say.
Coming to fruition
Undeterred are milk producers like A.J. De Jager, a California native, who last month watched his new dairy west of Ault, Colo., go into operation.
There he plans to eventually milk about 2,800 cows.
Milking at his new location follows about six years of researching, traveling to just about every corner of the U.S., looking for the right location — and then seeing his Weld County dairy finally come to fruition.
De Jager — a fourth-generation dairyman from Chowchilla, Calif., where his family operates a 3,200-head dairy — and other local milk producers say that, if there’s any opportunity in the dairy industry today, it’s in northern Colorado.
“The dairy industry has been challenging across the board recently, but long-term, we see this area as the place to be,” De Jager said. “That’s why we’re here.”
Milk prices are out of their control, but Leprino’s presence in Greeley at least gives local dairy farmers a closer buyer of their product, allowing them to send their milk just a few miles down the road instead of to out-of-state processors — saving dairymen heavily on their fuel prices.
De Jager further noted that Colorado has fewer regulations on the industry than his native California — another selling point.
Still a long way to go
Haren has watched the region’s dairy industry gradually work to meet Leprino’s demands for a few years, and he expects to be doing so for a few more.
Aside from the projects currently under way, Haren said, Ag Professionals is doing business planning and consulting with other interested dairymen.
However, he admits that the calls have slowed down in the last six months or so.
“I think it reflects some concerns guys have regarding the drought and the milk market,” Haren said. “There’s still certainly interest, but this isn’t going to happen quickly.”
Haren added that, while much of the new growth has happened in Weld County so far, he believes ideal dairy sites in Weld will become fewer and far between, and the future growth will likely take place further to the east, near Fort Morgan and Sterling.
In addition to fewer ideal sites, there will still be the challenges already in place — feed availability and the increasing local demand for it, and the price of water.
According to Colorado State University Extension specialists, dairy cows can eat as much as 55 pounds of dry matter per day and can consume anywhere from 30 to 50 gallons of water per day, after factoring in their drinking and also the amount of water it takes to clean and flush dairy equipment, among other operations.
Haren says he believes there’s enough water in Colorado to meet the demands of the needed dairy growth, but said there’s concerns of how expensive the resource is going to be.
“Like everything else in agriculture, this won’t be easy,” he said. “And it’s going to take a lot of time, and a lot of planning.
“And a lot of money.” ❖