Fallon milk plant key to DFA’s global strategy

Global food producers will be watching the new Dairy Farmers of America dry milk processing facility in Fallon very closely in coming months.

The state-of-the-art plant, the first of its kind for the DFA, came online on April 5 and can produce as much as 2 million pounds of powdered whole milk per day when running at full capacity. Thousands of 50-pound bags of powdered whole milk already are stockpiled 20- to 30-feet high on pallets in the facility’s warehouse, awaiting transport to the Port of Oakland before heading overseas to Chinese and Asian customers.

And those customers have always been the end-goal for the plant’s products, says Doug Glade, executive vice president of commercial operations for the DFA’s global dairy products group.

“The global market continues to increase its demand for high-quality dairy products,” Glade said last week during a media tour of the $85 million plant. “The United States will be relied upon to play a critical role to help satisfy that demand. Fallon really is the eyeglass from DFA to the world to demonstrate that the U.S. can produce high-quality, consistent dairy products to be used across the world.”

The success of the Fallon plant will dictate global operational strategy for the DFA for years to come, Glade adds. A key tenet of the plant’s end product is its two-year shelf life, a result of the many different processes employed at the plant to create powdered milk from raw milk. The plant can produce four different types of milk powders:

Whole

Instant

Nonfat

Skim

Powders can be used as a base for infant formula, reconstituted with water for fluid milk and as nutritional additives in bars and beverages, as well as in the bakery and confectionary industries.

Jay Waldvogel, the DFA’s senior vice president of strategy and international development, says the Fallon plant could sell out its entire annual production to any number of Asian food producers.

The DFA is shipping product samples to customers in many different countries to undergo rigorous qualification verifications, while some customers already are taking the product and entering it into their production processes, Glade notes. China, though, will be the plant’s largest customer base.

“With the growth of population and dairy demand in countries like China, their demand is outpacing their ability to produce that this facility will not satisfy in any measure by itself — but it’s a start to demonstrate that the U.S. is a viable source of supply. It’s been critically important to have a successful start and to have the product validated by the marketplace.”

Currently, the Unites States is fifth in global whole milk powder exports, supplying 3,776 metric tons in 2013, the U.S. Dairy Export Council says. New Zealand, in comparison, provided 175,199 metric tons of whole milk powder to global customers last year. China imported 84,142 metric tons of whole milk powder in 2013, up 94 percent from 2012. Venezuela and Algeria each imported roughly 10,000 metric tons of powdered milk in 2013.

The new DFA plant is running at about 92 percent capacity, says Facility Manager Wes Clark. Currently, there are 19 dairies in Fallon that are supplying about 40 percent of the raw milk entering the plant (the rest currently is coming from dairies in California’s Central and Sacramento valleys). Some dairies in Churchill County have expansion plans underway and are expected to eventually supply more than half the plant’s needs.

Alan Perazzo’s father started Perazzo Brothers Dairy in Fallon in 1972 with 80 cows. Though the dairy expanded to about 500 cows over the years, it had maxed out its operational capacity, Perazzo says. The addition of the new DFA plant creates a stable supply for local milk, and Perazzo expects to bring online in coming months a new dairy facility capable of running 1,600 milk cows.

Prior to the opening of the DFA plant in Fallon, Churchill County dairymen ran a good deal of their raw milk over the Sierra to Northern California processing plants.

“Before the plant came online, we haven’t really had the opportunity to increase,” Perazzo says.

Agriculture is the No 2 industry in Fallon behind Naval Air Station Fallon, mayor Ken Tedford adds.

The DFA plant also was built with expansion in mind to accommodate increased growing global demand for powdered whole milk, with rooms in the interior of the plant built oversized to accommodate an additional dryer and other key processing equipment.

Fallon was chosen to house the new plant because it has a stable water supply and adequate feed for existing dairies and new dairies locating to service the plant, says Tom Haren, chief executive officer of AGPROfessionals of Greeley, Colo., the firm tasked with attracting new dairies to Churchill County. However, bringing new dairies to Churchill County is a two- to four-year process before they are actually milking, he notes.

“We looked at the agronomic base here in Churchill and Lyon counties, and we are confident that this can be done,” Haren says.

Fallon also was a good fit because of its proximity to the Port of Oakland and to dairies in northern California that could provide the plant with raw milk, Glade adds.