That leaves farmers with a need to convert that milk into products that are stable and can be stored — and, more importantly, can be sold.
Agri-Mark plans to solve that problem by expanding its West Springfield plant with more drying capacity so it can make more powdered skim milk.
The Andover-based farmer-owned cooperative invited farmers from all over New England to the plant Monday for a ceremonial groundbreaking on the $17 million expansion.
“Butter is back,” said Mark Duffy, a dairy farmer milking 70 to 80 cows in Carlisle, Massachusetts. “Demand for butter is very strong.”
Separating cream to make enough butter to meet the demand leaves behind more skim milk, which also needs a market. And the expansion will allow the 958 Riverdale St. facility to accept more milk to make more butter, said plant manager Drew V. Moyes.
Currently, farmers are being paid an average of $17.50 per 100 pounds of milk. That price, up from last year but down from recent highs above $20 per 100 pounds of milk, is barely keeping up with the cost of production.
And if the supply of milk is even 2 percent greater than demand, the price paid to farmers can fall 20 percent, said Steven Barstow II of Barstow’s Longview Farm in Hadley.
“We can’t take that big a price shock,” he said.
The Barstow family is milking 250 cows now with the help of five robots. This fall, the number of milking cows will swell to 300.
“We have a lot of pregnant heifers,” Barstow said.
The Agri-Mark plant, which opened in 1943, takes in 15 million pounds of milk — about 2.3 million gallons — each week. The plant processes the milk into butter sold under the Cabot brand name and as store brands in supermarkets such Big Y, Stop & Shop and Hannaford, Moyes said.
The plant also makes condensed blends of milk and cream for ice cream customers, and dry lowfat milk from the West Springfield plant is sold to food companies. Baby-food factories are big customers as are bakeries and yogurt makers.
About 70 percent of the plant’s powdered milk production is sold domestically and about 30 percent goes overseas, Moyes said. International customers are in the Far East, Asia-Pacific regions and the Middle East.
In area supermarkets, Agri-Mark is known for its Cabot and McCadam brands.
Agri-mark makes cheese at plants in Chateaugay, New York, and in Cabot and Middlebury, Vermont.
The new expansion is adjacent to the existing plant, on the site of what was once an Abdow’s restaurant.
The Agri-Mark board approved $20.7 million for the project to account for unexpected construction costs. The project is expected to be completed in about a year.
In 2015 Agri-Mark reported $917 million in sales. The company markets more than 336 million gallons of farm fresh milk each year for 1,100 dairy farm families in New England and New York.
Massachusetts Commissioner of Agriculture John Lebeaux said about half of Massachusetts’ 147 dairy farms are Agri-Mark members. Total milk sales in Massachusetts topped $44.2 million in 2012, according to state statistics.
“We want to preserve agriculture in this state,” Lebeaux said. “And key to that is preserving agricultural processing industries.”
The Dennis Group of Springfield, a planning, architecture, engineering and construction management firm, is managing the project.
The city of West Springfield provided Agri-Mark with a five-year property tax abatement on the new construction.
Over the lifespan of the deal, the city will see tax gains of around $561,000, while Agri-Mark will see tax savings of around $240,000.
West Springfield Mayor William Reichelt said the abatement is a good deal for the city because it preserves jobs and will also result in increased employment. The plant has 112 production employees and 14 managers and will grow by a dozen workers once the expansion is completed.
Moyes said West Springfield is an ideal location because its close to Interstates 90 and 91 and is halfway between dairy farms and major markets for products.