Business

Midwest lures California dairies with lower costs, wide open spaces

Building a new dairy is lucrative for rural areas. Constructing a 2,000 cow dairy takes a $14 million to $15 million investment and adds around 20 full-time jobs.
Building a new dairy is lucrative for rural areas. Constructing a 2,000 cow dairy takes a $14 million to $15 million investment and adds around 20 full-time jobs. Harvest Public Media

Kansas, Nebraska and other Midwest states are pitching themselves as a dairy heaven, hoping to attract frustrated dairy owners and looking for a windfall of jobs and money in rural economies.

Ample land, a robust feed supply and ag-friendly towns across the prairie stand in contrast to the urban development and high prices challenging dairy owners in California, the nation’s No. 1 dairy state.

“Dairymen in California are being surrounded by population, the price of land or development is high, and so they’re really kind of landlocked,” said Willow Holoubek, executive director of the Alliance for the Future of Agriculture in Nebraska.

Holoubek is one of Nebraska’s primary dairy recruiters. Like agriculture officials from other Midwest states, Holoubek has traveled to big farm shows such as the World Ag Expo in Tulare, Calif., pitching Nebraska as a dairy destination.

“We have ample land,” Holoubek said she tells dairy farmers. “We have ample clean water because we live above an underground lake called the aquifer. That also means we have a very stable feed supply.”

Dairies, with their constant harvest, high startup cost and relatively large workforce, are ripe targets for agriculture development officials.

Each new dairy represents millions to the local economy. It takes an investment of $14 million to $15 million to build a 2,000-cow dairy, according to Jeff Keown, a retired dairy specialist with the University of Nebraska-Lincoln.

“Just in construction costs of building a new dairy, which would go right into the local community, we’re talking about $5,000 to $7,000 per cow,” Keown said.

And a dairy that size takes about 20 full-time workers, which often makes a dairy operation one of the larger employers in a town.

California is home to many frustrated dairy owners. Though it remains the top dairy state, dairymen there are being squeezed by encroaching urban development, high feed costs and persistent drought. A full quarter of California dairies have been shuttered since 2007, according to Michael Marsh, CEO of the California farm group Western United Dairymen.

“They’ve just closed their doors, and they’ve decided to make their investment in other states,” Marsh said.

Kansas is one of those, and the state Department of Agriculture would like to add to the 29 large-scale dairies and other smaller operations in the state. Kansas officials promote the state’s abundance of wide-open spaces, low land prices, the availability of water rights to the Ogallala Aquifer, and the availability of feed from farms raising corn, alfalfa, sorghum and distiller’s grains.

Kansas also has withholding-tax incentive programs for many companies bringing in jobs, and a five-year state income tax exemption for people moving from out of state to 73 rural opportunity zone counties.

Dairy farmer Marty DeHoog moved more than 1,400 miles from southern California to a 500-cow dairy in eastern Nebraska last summer. A third-generation dairy producer from the Chino Valley east of Los Angeles, DeHoog’s family built a dairy business over 70 years in what he says was once one of the most dairy-rich areas in the country.

“On our block in Southern California there were six dairies on 160 acres … 4,000 milk cows on 160 acres,” DeHoog said.

So why would he uproot his family to move halfway across the United States? A big reason is that the valley that used to be dairy country is quickly becoming part of the city.

“Now within a mile there’s brand new housing tracts, and they’re putting in seven or eight houses per acre,” DeHoog said. “It’s the only piece of open dirt available to build on between LA and Barstow, pretty much.”

Being crowded by urbanization creates challenges. Feed for the animals has to be shipped in, making it more expensive. Manure has to be trucked out, sometimes up to 70 miles, so it can be spread on farm fields as fertilizer.

DeHoog started shopping around for a new home. He looked at Idaho, Texas and Colorado but eventually settled in eastern Nebraska.

“I drive around here and see fields of corn, fields of soybean, alfalfa. Everything is here,” DeHoog said.

One drawback of moving is that he was surrounded by dairies in California. Now he feels a little isolated.

“One buddy went to Idaho. A couple other dairymen from northern California went to South Dakota, Iowa. They went a lot of places,” DeHoog said. “I came to Nebraska and I didn’t know nobody.”

The state is hoping that if its recruiting plans work, he won’t stay lonely for long.

Harvest Public Media, based at KCUR 89.3 FM in Kansas City, is a reporting collaboration of public media stations throughout the Midwest. This story was reported in partnership with Valley Public Radio in Fresno, Calif. Visit www.harvestpublicmedia.org to see this and other stories.

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