New Leprino plant in Greeley begs the question: Where will the dairy cows come from?
October 4, 2011
There’s no doubt a facility expecting to process 700,000 pounds of cheese each day – once fully operational in a few years – will need a few more dairy cows in the region to its support operations.
Estimates range anywhere from 50,000 to 80,000 additional cows will be required in the next five years to meet the demands of a fully up-and-running Leprino Foods cheese plant, expected to open this November in Greeley.
But that need for growth comes at an interesting time for the dairy industry.
Wade Meek with the Dairy Farmers of America says those cows are coming.
Dairy experts – ranging from Colorado State University professor Bill Wailes to Weld County dairy farmer Les Hardesty, who serves as a Western Dairy Association director and is a chairman for the U.S. Dairy Export Council and National Dairy Council – understand why dairymen might be hesitant to expand their operations now, coming off the heels of what some label the “Great Dairy Recession” a couple years ago.
Milk prices had collapsed with demand in a weakened economy and a healthy export market turned sour while the cost of feed skyrocketed, driven in part by the diversion of corn for ethanol production.
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Things have improved, with milk prices having rebounded during the past couple of years.
“But prices don’t look to get a lot better any time soon,” Wailes said. “And inputs certainly don’t look to get any cheaper.”
And, as Wailes and Hardesty noted, expanding dairy operations or starting a new dairy can costs hundreds of thousands of dollars, if not millions, depending on the size of the endeavor.
“There’s just an awful lot of uncertainty,” Wailes said.
After Leprino announced in 2008 it would be opening its new plant in Greeley – and would need more cows to produce more milk – the number of dairy cows in the state actually decreased, from 130,000 in 2009 down to 123,000 this year, according to the Colorado office of the National Agricultural Statistics Service. In Weld County – which has about half of the state’s dairy cows – numbers dropped from 71,000 to 66,000 during that time span.
Also, from 2008 to 2009, cash receipts for dairy products in Colorado fell from $534 million down to $359 million – although they rebounded to $457 million last year.
“I think dairy farmers are now just trying to get back up to their previous numbers,” Hardesty noted. “It’s been a pretty rough time for them recently.”
However, Hardesty noted that studies show the amount of dairy cows in the region now will be able to handle Leprino’s first phase of operations, which begins in November.
While current conditions make the future a mystery for the dairy industry, Meek said the Dairy Farmers of America – a dairy marketing cooperative – has been in communication with dairy farmers in the region looking to expand operations and new dairies coming to the area. But because those new or expanding operations are still in the works, he said he did not want to release the names of those dairies.
Meek further explained that the DFA expects about half the additional cows over the next few years to come from existing dairies expanding and the other half to come from new dairies coming to the area. He said some new dairies should be operating by next year, and once Leprino is fully running, there should be anywhere from 12 to 15 new dairies in the region – not just Weld County.
As Meek and others have noted recently, there are some positive signs in the dairy industry, aside from improving milk prices. The export market is improving and the price of cheese is staying strong, while legislators debate ending ethanol subsidies, which some experts predict could bring down corn prices, and therefore lower costs all around for dairy farmers feeding their cattle.
“Some dairy farmers are very optimistic for the future, others aren’t,” Meek said. “It just depends on who you talk to.
“It’s been an interesting time.”
The future of milk prices and input costs leave uncertainty for the industry’s future, but Leprino coming to Greeley at least gives dairy farmers in the region a closer buyer of their products. It allows them to send their milk just a few miles down the road instead of to out-of-state processors, saving heavily on fuel prices. It also gives local dairies more favorable circumstances to expand their operations.
Weld County commissioners are trying to help spur dairy growth in the county. Code changes believed to speed up bringing in more dairy cattle were unanimously approved by the Weld County Commission last month and went into effect Monday.
Those ordinances are highlighted by the implementation of a new agriculture land zoning classification that would give more marketability and flexibility to rural property owners – a zoning called “A-1” – and a change to the county’s “use by right” ordinance, which would allow property owners with larger sections of land to keep more animals on their ground.
Those ordinance changes could speed up the process of bringing more dairy cattle and supporting operations to the area by six to nine months, county and agriculture officials said.
The county’s proposed “A-1” zoning ordinance is geared toward property owners looking to attract incoming dairies to their land. Currently, most unincorporated land in Weld County is classified as “agricultural,” where changes to more intense ag uses often require county approval that may include a lengthy process, such as a public hearing.
Property owners seeking the new “A-1” land status will also have to go through the traditional public hearing process to do so, but the farmer who buys that land afterward would only need the county’s administrative approval to make a change in operations on that land. By taking away the public hearing process for incoming dairy farmers, the “A-1” land designation would help property owners market their land, commissioners said.
The modification to the county code that allows an increased number of “use by right” animals would replace the county’s former code that allowed four animal units per acre on agriculture land, and put in place a sliding scale.
Efforts are being made to help the region’s needed dairy growth, but the shaky past of the dairy industry is too close in the rear-view mirror for some farmers.
Ron Shelton, owner of Shelton Dairy near La Salle that has about 2,500 dairy cows, said he made “modest” expansion efforts in recent times in anticipation of Leprino’s arrival, but said he’s stopping there, at least for now.
“2009 was a tough time for most of us, and that wasn’t very long ago,” said Shelton, who said he’s been in the business 40 years. “Until the past becomes more pleasant, I’ll approach the present and future with caution.”