From labor to rising input costs to tight margins, the list of challenges producers face is endless. However, when it comes to their biggest challenge, regulatory pressure is likely at the top of the list.
Out west, in states such as California, the dairy industry has been impacted by overtime labor rules, rigorous permitting processes and the shortage of water. As a result, cows are migrating toward the center of the country.
“That’s where the dairy processing capacity expansion is primarily happening, and that’s where the cows are heading,” says Roland Fumasi, head of RaboResearch Food & Agribusiness for North America. “It’s being driven partially by all the water challenges in the west.”
But where are the cows going? According to the latest March USDA Milk Production report, South Dakota continues to show impressive growth in terms of dairy cattle. The state added another 13,000 cows and 24 million pounds of milk year-over-year.
The processing growth has led to opportunities not available in other regions, says Evan Grong, sales manager for Valley Queen. Learning Curve A big adjustment for Lemstra and his family has been getting used to milking cows in South Dakota’s varying temperatures.
“From severe heat to severe cold to everything in between, this is a new learning curve for us,” he says. “We relied on people who were here already to copy dairy facility designs.”
Plans for Growth It’s hard to believe not many years ago, South Dakota wasn’t included in the top 20 dairy states in the country. Today, the I-29 corridor is bustling with cows and a supportive infrastructure that embraces growth.
“We’ve been building up to it to this point, but it comes down to the business-friendly climate that South Dakota has extended to the dairy industry and to all of ag,” says Deb Wehde, a field representative with Agropur. “This has allowed the industry in our state to grow and thrive.”
In 2019, Agropur tripled the size of its Lake Norden, S.D., plant, going from 3 million pounds to 9 million pounds. Wehde says Agropur conducts growth objective analysis to help meet their customer needs and understand their market needs in the future.
“We want dairy producers who are willing to partner with us,” she says. “We have environment, social and governance [ESG] principles, so we need good partners to help us achieve those goals.”
Another factor vital to growth is ensuring a good labor base, which Wehde says spells a win for everybody involved.
In South Dakota, she adds, the dairy industry works alongside the government to find solutions for sustainability goals rather than forcing burdensome regulations with negative impacts.
“We have a great relationship with our producers because we are working toward a common goal,” she says.
Like others, Wehde is optimistic about South Dakota’s dairy future but says economic factors, such as inflation, will impact future management decisions.
“What is inflation, and all these other pressures, going to do to us?” she asks. “Something bigger than the dairy industry itself can impact the industry.”
Source:agweb.com
Photo Credit: gettyimages-digitalvision
Categories: South Dakota, Livestock, Dairy Cattle