New Powder Plant Opened in Southwest Kansas by DFA

Western Kansas finally has dairy processing after nearly three decades of dairy development in the region thanks to Dairy Farmers of America’s (DFA) new powder plant.

The dairy ingredients plant was built in Garden City through a partnership with DFA and 12 member farms from Southwest Kansas. The plant will primarily be focused on powder production for export, but will produce products for domestic consumption, too.

A grand opening ceremony was held on Nov. 9 with local and state politicians in attendance along with DFA members.

Kansas Gov. Sam Brownback says the plant could have an impact for Southwest Kansas similar to when the first major beef packing was built in the area around 40 years ago. Following the construction of the IBP plant (now owned by Tyson Foods) in Holcomb there was major growth seen in cattle feeding and more packing plants were built.

“It transformed the region. It transformed the beef industry,” Brownback says.

He can remember 30 years ago when serving as the state’s Secretary of Agriculture efforts started to attract dairy producers to Kansas. Those efforts have finally culminated in a processing plant after many years of milk being shipped across state lines to be processed.

Kyle Averhoff, partner and manager for Royal Farms Dairy, is elated the plant is online as it will provide a nearby destination for milk produced by the 6,800 cows on his farm. A second site at Noble Dairy adds 2,500 head, meaning the two dairies could provide 14 trailer loads of milk per day and both have less than a 15 mile haul.

Having a secure home for the milk supply is exciting, says Will Basham, manager of Noble Dairy and partner in Royal Farms Dairy.

Locating manufacturing near production in Southwest Kansas will provide DFA member investors like Averhoff and Basham with significant savings for trucking. The plant will require about 84 truckloads of milk per day at peak production.

“Prior to the plant opening we were moving a lot of fluid milk into deficit areas of Oklahoma, Arkansas, Kansas, along with pushing milk south into Texas and New Mexico for cheese and powder,” Averhoff says. Milk has also been sent into northern Colorado for further processing.

The plant in Garden City was originally proposed as partnership with Chinese company Inner Mongolia Yili Industrial Group in November 2014. However, the global export market shifted when Chinese demand for powder went down the following year and Yili would "pause" their financial involvement. No mention of Yili was made during the grand opening.

Despite the changing dynamics, DFA and members in the area remained committed to the project and broke ground on the 267,000 square foot facility in October 2015.

“From a longer term perspective we know that we are competing in a commodity market and we have to be as efficient as possible. We also realize that commodity pricing tends to come in cycles.  We have confidence that our industry will be profitable in the future and this plant is going to serve the dairy industry very well for years to come,” Basham says.

The first load of milk was delivered in September 2017 and for the first six weeks the 66 employees at the plant trained and worked to get the plant fully operational. The morning of the grand opening a 36 hour trial run had just been completed, a turning point towards running at full capacity, says DFA Garden City program manager Alan McEntee.

The plant can process up to 4 million lb. of raw milk dairy and is expected to produce approximately 180 million lb. of dried dairy ingredients annually. The plant produces whole milk powder, skim milk powder, non-fat dry milk and cream.

“This investment not only fills an important need for the region by providing a local home for DFA members’ milk, which was previously being transported to other areas of the country, but it also supports and enhances our global ingredients strategy, which benefits all our farmer members,” says Rick Smith, president and chief executive officer at DFA.

Twenty-one member dairies in the region will supply the plant with milk. Kansas has 152,000 head of milk cows in September 2017 according to the latest USDA Milk Report data. That is almost double the 79,000 head reported in 1994 from July-September, a time when few dairies were in Western Kansas.

Jay Houtsma, owns and operates Syracuse Dairy, which has five locations in four counties milking around 25,000 head. He has been a cooperative member with DFA since moving to the area in 1994. The emergence of the plant means at least a portion of his milk won’t have to be shipped up to 300-500 miles away for processing.

“Eventually this was going to happen and now is the time for a local plant,” Houtsma says.

Export markets are needed and Houtsma says the plant will be an important piece in the U.S. dairy export strategy. “All our markets are world driven and we have to be able to compete internationally or we are going to get left behind.”

 

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