Dairy recruiters still see California as fertile ground
by Ching Lee

March 27, 2012 9:00pm
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•  But decline in state’s dairies may be due to Great Recession

•  ‘I wouldn't say that we have anybody who's confirmed yet’

The number of dairies in California dropped by 48 last year, but the head of a farmers’ organization says few dairies moved to other states. He cites hard economic times as the reason for the decline.

Hungry for milk — and all the jobs and economic activity that dairy businesses can bring — states across the U.S. have not been shy about their desire to lure California dairies to set up shop in their communities.

Their recruitment efforts were never more apparent than at the World Ag Expo in Tulare last month, when representatives from states such as South Dakota, North Dakota, Illinois, Kansas, Iowa and Texas made pitches about why dairy farmers should consider locating their facilities in their states.

Gary Hoffman, executive director of the North Dakota Dairy Coalition, said he has been coming to the trade show for seven or eight years "specifically to talk to dairy farmers from California and across the country to entice them to come to North Dakota."

He calls the upper Midwest, specifically the Dakotas, "the next frontier" for dairy growth, saying that cross-ventilated barns and other modern innovations have greatly improved cow comfort, allowing herds to thrive even in the harsh conditions of the region and taking the "climate issue out of the picture."

"We're a state that has wide open spaces and lots of feed," Mr. Hoffman said. "We have cheap land compared to most of the country. We have communities that want animal agriculture, so you don't have to go to battle if you come here and decide you want to milk cows or have an animal ag enterprise."

He also said his state has plenty of feedstock from processing facilities that make ethanol, sugar and pasta. It just makes more sense to raise the animals closer to the feed source, he added.

But Mr. Hoffman acknowledged he has not seen "a huge influx of California producers" coming to his state yet.

Nathan Sanderson, a policy advisor for South Dakota Gov. Dennis Daugaard, said there has been a "concerted effort" for about 10 years to develop the state's dairy sector, but it became an even bigger priority in 2010, when Mr. Daugaard, who grew up on a dairy, came into office. The governor was among those who staffed the South Dakota exhibit in the World Ag Expo Dairy Pavilion.

While at the expo, Mr. Sanderson said recruiters talked with more than 50 producers, lenders, accounting firms and others "who are looking to expand their operations, although not necessarily trying to relocate." He said candidates may be farmers who are experiencing zoning issues that prevent them from expanding, or there may be a lack of feed in their area, as more forage crops are converted to permanent crops.

"I wouldn't say that we have anybody who's confirmed yet, because we were just in California a month ago, but we've got really strong interest, and not just from California, frankly," Mr. Sanderson said, noting that people from Oregon and Idaho also had expressed interest in his state.

Meanwhile, California has been losing dairies. Between 2010 and 2011, the number of dairies in the state dropped by 48, according to the California Department of Food and Agriculture. Stanislaus County lost the most, with 16, followed by Fresno County, with eight.

California probably didn't lose those 48 dairies to other states but rather to hard economic times, said Michael Marsh, chief executive officer of Western United Dairymen.

It would be more difficult for some smaller farms that are already struggling financially to move or expand their operations because oftentimes they lack assets and resources, said Nic Anderson, a livestock business developer for Illinois Livestock Development Group who has been exhibiting at World Ag Expo for the last five years.

Mr. Marsh said until California dairies become more financially healthy, he doesn't think too many of them are considering moving to other states, but "once they get a couple of good years and some of those bills paid off, then folks will again start looking to escape the regulatory environment that they face in California."

Dairy recruiters often tout their states' business-friendly environment, pointing to available tax and business incentives, as well as the lighter regulatory load and quicker permitting process that are attractive to farmers.

Mr. Hoffman said even though dairies in the Midwest traditionally have housed smaller herds, North Dakota has been promoting California's style of dairying for a number of years and has welcomed bigger operations. He noted the state's largest dairy currently has 1,700 cows and another 2,000-cow operation has recently gotten its permit.

Mr. Anderson said Illinois is by no means without its environmental regulations but noted that larger operations have been able to succeed in the state. He referred to former Chino dairy farmer George Kasbergen, who moved to the Land of Lincoln in 2002 and built a new 3,600-cow dairy, the largest in the state.

Mr. Kasbergen, who now operates in both Illinois and Wisconsin, said no states were trying to recruit him back then, but he characterized his reasons for leaving California as "financial."

"It was a business decision," he said. "The feed is grown in the Midwest. It's just cheaper to feed your cows out here and you get a little more for your milk."

Mr. Anderson said while it may seem like his state and others are trying to "steal dairymen from California, I don't know that we see it that way."

"I think there are enough dairymen to go around," he said.

(Ching Lee is an assistant editor of Ag Alert, a publication of the California Farm Bureau Federation, where this article originally appeared.)

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