Banking & Finance, Food Service & Agriculture, and Real Estate

Room for one more dairy plant?

State announces second multimillion-dollar processing facility within 50 miles of the other.

August 17, 2018
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The state has announced two multimillion-dollar dairy processing facilities in the last seven months and just an hourlong drive separates them.

Spartan Michigan LLC was the most recent facility announced earlier this month. Glanbia plc, Select Milk Producers and Dairy Farmers of America invested $425 million into the 146-acre site that is expected to process 8 million pounds of milk daily into cheese and whey protein powder. It is expected to open by December 2020 at 1600 Technical Drive in St. Johns, creating up to 259 jobs.

The plant will be less than 50 miles away from where Foremost Farms, a Wisconsin-based dairy processing cooperative, announced back in February it has invested $57.9 million in a 55,000-square-foot milk condensing facility, at 6501 S. Fitzner Road in Greenville. Foremost Farms estimates it will be able to create 33 jobs.

In January 2017, Glanbia, Dairy Farmers of America, Michigan Milk Producers Association and Foremost Farms USA announced they would create a standalone joint venture to build and operate a new cheese and whey production facility in Michigan. 

Since then, however, John Dardis, senior vice president of Group Sustainability and U.S. Corporate Affairs with Glanbia, said Foremost Farms, along with MMPA, parted ways.

“In 2017, we said we’re going to build a plant in Michigan in a joint venture, and at that time, we were (focused) on Central Michigan,” Dardis said. “So, we knew the broad area we were going to (choose) based on where the cows were. Since then, we were honing in on different areas and its incentive packages. It all boiled down to picking a site in St. Johns.”

Dardis said they chose St. Johns because of the infrastructure, transportation, labor availability and the relationship they have forged with St. Johns’ community leaders. 

Ken Nobis, president of the Michigan Milk Producers Association, said while dairy is produced in abundance throughout the state, there are limited industrial areas where dairy plants can be built.

“It couldn’t be built next to an ethanol plant, for instance, because of the odor or a petroleum refinery,” he said. “There are just a lot of standards you have to meet. They can’t just go anywhere, and anyone who is building a plant is looking for a good major highway or expressway if possible.”

Nobis said there are a few dairy plants in the state that are located close to each other. In fact, the Ovid Plant, 431 W. Williams St., which is operated by MMPA, is about 15 miles away from where the Spartan Michigan plant is going to be built. The Ovid plant processes 5 million pounds of milk per day.

“There is a lot of milk in Michigan, and we expect the production base to continue to grow,” Nobis said. “So, there is room for both of them.”

There are more than 1,700 dairy farms in Michigan and the state is ranked fifth in the country in dairy production.

According to the Michigan Department of Agriculture and Rural Development, milk producers lost more than $164 million in 2017 because there was an oversupply of milk, so milk prices are depressed and the cost to transport the raw milk to processing plants is high.

That is the reason why Proliant Dairy, a separate business from Spartan Michigan, invested $85 million in an adjoining facility that will create between 30 to 38 jobs.

Mark Peterson, vice president of business development at Proliant Dairy Ingredients, said Proliant will be 250 feet away from Spartan Michigan. He said it will use the byproduct of cheese and whey to create permeate powder that will be shipped to companies that can use the ingredient for animal feed, baking food and dry beverage mix.

Although the unemployment rate is low in Michigan, Peterson said he is not worried because they will have good employment benefits that will lure qualified individuals.

Construction on the Spartan Michigan and Foremost Farms facilities is expected to begin in the fall.

The Business Journal reached out to Foremost Farms, but it did not return phone calls.

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