Built for Export

Written by Catherine Merlo, Dairy Today (April 2013)
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New high-end powder plant will supply world markets by year’s end

The four silver silos that tower above the Fallon, Nev., construction site are visible from miles away.

Beneath them, dozens of workers in neon yellow vests and hard hats are moving trucks, cranes and hydraulic lifts over cement slabs and tire-treaded dirt. Another building just a stone’s throw away is inching upward almost as tall as the silos, its walls still a framework of rebar and concrete. Nearby, a massive cone-shaped structure, resembling a space capsule, waits to be lifted and lowered into the building where it will, by year’s end, go to work as the plant’s drying unit.

This is the $85 million dry ingredients plant being built by Dairy Farmers of America, the first processing facility the Cooperative has built from the ground up. It’s only the fourth dairy processing plant in Nevada, and perhaps the only U.S. dairy facility built exclusively to supply quality whole milk powder to the export market.

Scheduled to go into operation late this year, DFA’s Fallon plant marks a big step for the nationwide co-op. It’s a strategic investment in the future of DFA and its 13,000 members, a venture designed specifically to meet the growing global demand for safe, high-quality dairy products, say DFA leaders.

“Today, the U.S. exports about 14 percent of its milk production,” says Gary Stueve, vice president of operations for DFA’s Western Area. “Twenty years ago, that number was only 3 to 4 percent. There’s an opportunity there.”

The facility — the only dry ingredients plant in Nevada — joins DFA’s 30 wholly owned plants located across the United States. Once it starts up this November, the Fallon plant will need 24 months to reach full steam, when it will process 2 million pounds of milk per day and produce some 225,000 pounds of dried dairy ingredients daily. That translates to nearly 90 million pounds of high-quality milk powders and other dried ingredients yearly.

That output won’t be big by the industry standards of the Leprinos and the Krafts. (Leprino’s new cheese plant in Greeley, Colo., for example, is ramping up to take in 7 million pounds of milk a day.)
“Our Fallon plant is sized right for the area,” Stueve says.

What makes DFA’s new operation unique is its ability to produce to demand.

“This will not be a balancing plant,” Stueve says. “We won’t fluctuate the volume. It will have customers behind the products.”

DFA expects its high-quality milk powder to head to emerging, protein-hungry markets like China, where competitors such as New Zealand and Australia sell their dairy products. DFA says its member pay price in Fallon will be based on Class I and Class IV drivers.

The Fallon plant will truck its finished powder via intermodal containers to California’s Port of Oakland, some 275 miles to the west. “It’s a straight shot into the Port of Oakland on Highway 80,” Stueve says. “The distance is not much farther than from Visalia [Calif.] to Oakland.”

When DFA looked for a site for its export-supplying venture, it bypassed costly, regulation-ridden California and chose instead the big-sky country of northwest Nevada. Fallon, the county seat of Churchill County, is predominantly agricultural with a population of about 8,600 people.

With 22 local dairies and 15,000 milk cows, Fallon had an already entrenched milk supply, says Al Trace, DFA’s director of member services.