$510M dairy processing facility planned for Michigan
Private investors said Thursday they have committed to invest $510 million in mid-Michigan to create the second-largest dairy processing site in the country.
The Michigan Economic Development Corporation's Michigan Strategic Fund board voted to support Thursday a $26.1 million, 15-year tax abatement for a dairy joint-venture called Michigan Spartan LLC in St. Johns for the development of a 146-acre site that would create up to nearly 300 jobs. If it passes final regulatory approval, construction would begin in September and be complete in December 2020.
"We really try to grow the value of the agriculture industry so that most of the commodities stay here in the state, have them processed here, keep the farmers here," MEDC CEO Jeff Mason said on a conference call with reporters prior to the vote. "Today’s project does exactly that."
About 200 dairy farms have closed within the past year in Michigan, as an oversupply of milk keeps prices low for the fourth consecutive year. Since 2000, according to the Michigan Milk Producers Association, milk production in Michigan has risen 96 percent with 40 percent more cows from advances in technology and cattle care. In 2017, Michigan milk producers lost $164 million and many farmers in the Midwest and Northeast have had to dump the nutrient-rich liquid.
"We've had unprecedented growth unlike anything we've ever seen before," Nobis said. "A couple years down the road, this is going to have a positive impact on milk prices in Michigan."
The new site would reduce shipping costs and provide a place for milk in the state. Ken Nobis, president of the Michigan Milk Producers Association, said it could perhaps raise dairy processing to an adequate level that Michigan has not seen since the turn of the century.
Peter Anastor, director of the Michigan Department of Agriculture and Rural Development's agriculture development division, agreed: "There's stress on a lot of our dairy farmers... It'll be a benefit to those farmers knowing they have a home to take their product to."
Glanbia PLC, an Irish nutrition group, partnered with Dairy Farmers of America and Select Milk Producers, two dairy cooperatives, to form Spartan Michigan LLC. The company said it hopes to build a $425 million, 360,000-square-foot facility, which is expected to create up to 259 new jobs and process more than 8 million pounds of milk per day from the two cooperatives as well as the Michigan Milk Producers Association. It would produce whey products and 800,000 pounds of cheese per day.
Select Milk Producers Assistant Controller Rick Barr said the project mimics a joint-venture cheese plant between Glanbia and the two cooperatives in Clovis, New Mexico, the largest dairy processing plant in the country. He said the companies saw Michigan, with its strong cheese market and milk supply, as a good opportunity.
"It’s been very successful down here," he said of the 13-year-old facility. "It's had two expansions and continues to do well and produce a good quality supply of milk."
Proliant Dairy Michigan also is investing up to $85 million in a 85,000-square-foot adjoining plant that will employ up to 38 workers. It would manufacture 400,000 pounds of whey permeate powder, an alternative to lactose, per day from byproducts of the milk processing facility, which, according to the MEDC, would make it the world's largest permeate drying facility.
Dairy Farmers of America has more than 14,500 members, 428 of those are in Michigan representing 292 diary farms. Select Milk Producers has 99 dairy farmers in its cooperative, and 14 are large farms in Michigan. Michigan Milk Producers Association has 1,100 member farms.
The Michigan Strategic Fund supported an Agricultural Processing Renaissance Zone for the site, one of a few in the state. It would excuse the companies from paying the 6-mill state education tax and personal and real property taxes for 15 years. The proposal now goes to Michigan's agriculture department and then to the State Administrative Board for final approval.
The Michigan agriculture department's food and agriculture investment fund is evaluating a $750,000 grant for Glanbia and a $250,000 grant for Proliant. A $550,000 Michigan Department of Transportation grant also would help fund roads for the transportation of milk to the site.
The company's staff is preparing an application for a federal Community Development Block Grant that the Michigan Strategic Fund would review in the coming months.
Michigan has 1,747 dairy farms, 98 percent are family-owned and they average 176 cows each. Michigan ranks fifth in the nation for total milk production. Dairy farmers contributing $15.7 billion to the state’s economy.
"Dairy farmers are having a rough time right now with the dairy economy and the uncertainty of exports due to trade policy issues that are going on," said John Wilson, Dairy Farmers of America senior vice president and chief fluid marketing officer. "Dairy farmers need some hope, and this plant will provide some hope for them."