Dairy project equity drive reaches goal

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South Dakota is taking an active approach to lure dairies to the state to produce milk for a new cheese plant being constructed. They are raising equity — the much needed lifeblood to build a new dairy.

South Dakota Ag Producer Ventures' dairy development affiliate, SDAPV Ag Development, LLC, has achieved success in its equity drive with the sale of nearly 220 shares to more than 140 individual investors.

“With the completion of this phase of the operation, we can now focus on the real business of finding optimum sites in South Dakota for application of our model and start getting the sites permitted for construction,” said Joel Dykstra, CEO of SDAPV. “We have already seen tremendous response from several counties and rural communities seeking to make dairy production a major element of their economic development programs.”

Davisco is building a cheese plant in Lake Norden in Hamlin County. When completed, it will double South Dakota's milk processing capacity.

One of those locations where a dairy operation could be located is Beadle County.

Greater Huron Development Corporation, an associate member of South Dakota Ag Producer Ventures, has been working with Dykstra to promote dairy development, said Shawn Lyons, GHDC executive director.

He said SDAPV's success with its equity drive could help pave the way for bringing dairy farms to Beadle County, but there's still a lot of work to be done in achieving that goal, including finding a suitable site.

In February, Lyons and Dykstra met with the Beadle County commissioners about the effort to find sites in eastern South Dakota to build dairy operations. The commissioners will play a big role in the development of dairy operations because they will deal with zoning issues and economic development benefits such as new jobs and increased revenue from property taxes.

The SDAPV Ag Development business plan calls for SDAPV to coordinate the development of a model for a 2,500-cow, state-of-the-art dairy; establish economically attractive sites around the state with contracts from local producers to supply silage and alfalfa to the dairy; and utilize manure from the dairy as natural fertilizer for their operations.

SDAPV will then secure zoning and environmental permits from the appropriate state and local authorities and facilitate financing through dairy operators, investors and other sources to construct the facilities and operate the dairies.

Dairy producers who are already interested have been in contact with SDAPV, according to Dykstra, who anticipates no shortage of prospects once the sites begin to be identified and permits acquired.

"The key to the whole concept," said Dykstra, "is identifying areas in South Dakota that are appropriate for livestock operations like these dairies, with local leadership that sees the economic benefits an enterprise of this type can bring to a rural area."

Lyons said having the dairies in Beadle County would create new jobs and help develop value-added ag opportunities.

Along with job creation, a large dairy operation would provide a local market for commodities raised by farmers in the area, such as hay and corn, and provide a source to market the distiller's grain manufactured at the Heartland Grain Fuels ethanol plant in Huron.

SDAPV's studies show that each 2,500-cow operation will employ around 28 people at salaries between $28,000 and $80,000 per year, for a total annual payroll of $1.25 million.

"In addition to raising the tax and employment base in areas that desperately need new businesses," Dykstra said, "there are dramatic spin-off benefits from $3 million in feed purchases, $1.7 million in services, such as veterinarians, nutritionists, trucking and feeding replacement heifers and Holstein steers."

Based on the conclusions in a report released in August of 2001 by the South Dakota Corn Utilization Council, a 2,500-cow dairy such as the SDAPV model should create a total of 75 direct and indirect jobs.

In addition, the nearby communities and rural economy should experience a significant boost from the multiplier effect from purchases made by the dairy and revenues generated from the sales of milk produced.

The Plainsman



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