A glut in raw milk production throughout the state is driving substantial agribusiness growth in West Michigan as area processing companies struggle to keep up.1
While the oversupply of raw milk creates a burden for the producers who need to spend more on transportation costs to move the product outside the state, it’s also created opportunities for Michigan’s nascent dairy industry as a whole.
Continental Dairy Facilities LLC is one such company capitalizing on the ever-growing demand for milk-processing facilities. The Coopersville-based maker of powdered milk and cream recently announced a joint $173 million expansion project in collaboration with sister company Fairlife LLC.
Fairlife manufactures nutrient-enhanced milk-based beverages from a facility adjacent to Continental Dairy, situated on the 100-acre former GM Delphi campus.
Both companies have a common ownership in Select Milk Producers Inc., a Dallas-based milk production cooperative. The co-op owns a 50-percent stake in Fairlife with The Coca-Cola Co. and wholly owns Continental Dairy.
For its part, Continental Dairy has invested roughly $53 million in a new butter production facility, which COO and General Manager Steve Cooper hopes will expand the company’s reach into the growing dairy market.
“The last couple of years, we’ve seen an increase in demand for milk, especially whole milk,” Cooper said. “There have been several studies published lately that say fat is not very bad for you, especially dairy fat.”
Cooper also believes consumers are choosing milk instead of sugary beverages such as soda and energy drinks.
“When you look at the Fairlife products, they’re lower in sugar and higher in calcium and protein,” he said. “They are a healthy alternative to energy drinks and things like that.”
Per capita consumption of dairy products reached 627 pounds in 2015, a 4-percent increase from the 603 pounds of dairy consumed per capita in 2010, according to the most recent data available from the U.S. Department of Agriculture.
Meanwhile, Fairlife plans to invest $120 million in a high-tech bottling line for its new line of coffee drinks for Dunkin’ Donuts. The equipment is capable of filling and sealing 300 bottles per minute, Cooper said.
Together, both projects are expected to create 52 jobs.
Continental Dairy plans to conclude the expansion of its butter facility within six months, according to Cooper.
For Jennifer Owens, president of Lakeshore Advantage, a Zeeland-based economic development organization, the decision of Continental Dairy and Fairlife to expand in Coopersville is evidence of the growth opportunity for the dairy industry in West Michigan.
“The opportunities are endless with the milk producing industry in our region,” Owens said. “I think the Continental Dairy and Fairlife growth is a great sign of more growth in that industry to come in the near future.”
GROWING PROCESSING CAPACITY
Increasing milk-processing capacity is critical for the numerous dairy farmers in West Michigan who have struggled to find a market for their products in recent years, sources said.
While production of dairy products as a whole has been increasing, sales of liquid milk have steadily declined since the 1970s, giving producers a smaller market for their raw products, according to reports. Moreover, dairy producers have increased productivity in recent years, producing more milk per cow than before, said Ken Nobis, president of Michigan Milk Producers Association, a trade group and cooperative headquartered in Novi.
When dairy producers have an oversupply of raw product, they’re forced to pay more to transport it outside the state for processing — or, in the worse case scenario, they have to dump the product.
“We’re seeing dairy processing (grow) because dairy production is rising rapidly and it’s really outstripping the processing capacity that’s currently available in the state,” Nobis said. “That necessitates more processing. Because it’s a peninsula, transportation costs get pretty steep to move that raw milk from the production area to processing plants.”
Since 2000, dairy producers have increased raw milk production by 90 percent with only 40 percent more cows, Nobis said.
Out-of-state companies have started to take note of Michigan’s abundance of raw milk supply. Earlier this year, Glanbia plc, a global food processor based in Ireland, said it wanted to locate a cheese-processing plant somewhere in Michigan, in conjunction with Michigan Milk Producers, Dairy Farmers of America and Foremost Farms.
Details on the project, which has been in the works for around a year, remain scant. However, Nobis said the project would process 8 million pounds of raw milk per day. In comparison, Continental Dairy and Fair Life process roughly 6 million pounds of raw milk per day combined.
Stakeholders in the Glanbia project also are considering how to handle the whey, a byproduct of the cheese-making process at the facility, Nobis said.
“The negotiations are moving forward and there haven’t been any hitches in the discussion. It just takes time to get everything in place when you’re talking about a plant the size we’re talking about,” Nobis said.
Glanbia did not respond to requests for comment for this report. Dairy Farmers of America and Foremost Farms also declined to comment.
As Michigan’s food-processing sector continues to grow, it’s highlighted the importance of wastewater infrastructure as an essential element of economic development.
Case in point: The $173 million joint expansion project from Continental Dairy Facilities LLC and Fairlife LLC was predicated on expanding Coopersville’s municipal wastewater capacity, according to Continental Dairy COO Steve Cooper.
To expand the facility, the city plans to invest $1.1 million in new pumps to handle the increased load. Meanwhile, Continental Dairy and Fairlife plan to use a $2.4 million performance-based grant from the Michigan Economic Development Corp. (MEDC) to install an on-site pre-treatment facility.
For Cooper, having the wastewater capacity available in Coopersville is essential for the companies to continue expanding in the region.
“If we can’t get those capacities, we’d have to look outside (Coopersville),” Cooper said. “We’ve been working on this for a couple years with the city and the state, and we knew that these expansions were coming.”
Moreover, Lakeshore Advantage President Jennifer Owens believes excess wastewater capacity in cities such as Muskegon — which could accommodate an extra 30 million pounds per day — could attract large food-processing projects to West Michigan.
Specifically, Owens points to the cheese-processing facility proposed by Glanbia plc, Michigan Milk Producers, Dairy Farmers of America and Foremost Farms as a project that could be attracted to communities with excess wastewater capacity.
As it stands, the Glanbia project has not chosen a site in Michigan.
“Muskegon having a system with that much additional capacity: That is a huge attraction opportunity for that community as well,” Owens said.