Rob Sabo
Northern Nevada Business Weekly

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September 30, 2012
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Churchill County prepares for growth with milk plant

A major new dry-milk plant could cause big waves in the Churchill County economy.

Among the likely beneficiaries are truckers who would haul dry milk to the Port of Oakland as well as fuel stations and repair facilities. Large-animal veterinarians could see an increase in business, as would as ranch and veterinary supply companies.

The plant, a development of Dairy Farmers of America and the DFA's Western Area Council, is scheduled to begin production in September 2013.

Other service providers that could reap a windfall include restaurants, parts companies to supply the steel tubing and silos used in the plant's construction, companies specializing in waste removal, and potentially the use of bio-digesters to derive power from methane gas released in manure.

The plant is expected to employ 46 full-time workers at full capacity and generate hundreds of indirect jobs.

"There is the carry-on effect of this economic engine that is this huge facility," says Eric Grimes, executive director of the Churchill Economic Development Authority. "When you see how it is going to affect the economy of the state it really is an amazing project." For Pete Olsen's family, the plant is likely to bring some of the most dramatic change they've faced in their 97 years in the dairy industry near Fallon.

The opening of the dry-milk processing plant in Fallon next year brings with it a host of questions for Olsen Brothers Hillside Dairy and other Churchill County agricultural producers. Foremost among them: their ability to supply enough milk to the plant, and their ability to grow enough feed for expanded and new dairies expected to start up in Churchill and nearby counties.

Olsen, whose dairy is the single largest in Churchill County with more than 2,000 milking cows, hasn't yet invested in expansion of his herd or dairy facilities. Instead, like most regional dairymen, he'll begin ramping things up only in the final months before to the milk plant's opening.

"We would like to stage that production in as needed," he says. "We don't want to have people make milk for a year that we have to haul to California. We have a plan put in place that gives people the green light to start shipping milk here (to the new facility)."

Most of the milk produced in northern Nevada currently is processed in California, but that would likely change as the DFA facility ratchets up production. Dairymen selling to the DFA plant wouldn't receive quite as much for their product as they would for sales of liquid milk, but they would save significantly on shipping costs.

Powdered milk produced at the facility is destined for the export market. Countries such as China use reconstituted high-quality powdered whole milk as their main supply of fresh milk.

Olsen says dairymen from California and Washington already have been scouting possible locations in Churchill County to move their operations. Several thousand new additional milk cows are needed to give the facility enough milk to reach its production target of 2 million pounds per day.

Olsen, who also represents the DFA's 350-member Western Region with members in Nevada and California, says if the milk processing plant were open today that customers in China would take all the powdered milk it could produce.

"We have Chinese customers who want to be partners and put up some of the money to build the plant," Olsen says.

The facility is co-funded by the Western Dairy Association and the DFA. At full capacity the plant would account for 2 percent of the global supply of powdered whole milk, Olsen notes.

Many dairymen are poised to increase their production of milk in the middle of next year.

Newell Mills, owner of Mills Jersey Dairy LLC, has about 400 head of cattle, and he's got plenty of heifers on hand that will be moved into milking production over the next year.

Through a selective breeding program that uses sex-sorted bull semen, Mills says he's getting about two heifers for every bull bred on his ranch, and as a result he could put an additional 120 cows into production by next September.

Perhaps the biggest benefit to Fallon dairymen would be a hedge against the cyclical swings of fluid milk prices due to the constant demand and stable price offered for powered whole milk. Mills, for instance, says he lost $500,000 just in 2009 when fluid milk prices fell well below production costs.

"All forms of agriculture is cyclical," he says. "If you are smart in agriculture, when you hit a good period you stockpile some money so that you can ride out a bad period."

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The Nevada Appeal Updated Sep 30, 2012 01:27AM Published Sep 30, 2012 01:26AM Copyright 2012 The Nevada Appeal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.