New mill augments Fallon dairies

A year after the Dairy Farmers of America’s plant that turns liquid milk into powdered products opened in Fallon, dairies in the area are growing along with it.

Alan Perazzo, of Perazzo Brother’s Dairy, constructed a new milking barn and increased his herd from 500 to 1,050. His goal is 1,600 to 1,700.

“We’ve more than doubled our (milk production),” said Perazzo, whose father started the dairy farm with 80 cows in 1972.

“It’s all related to the plant,” Perazzo said. “We would not have been able to borrow money to expand if it hadn’t been for the plant opening. The plant’s a blessing to the whole community. It’s an opportunity to grow that we didn’t have before.”

Perazzo’s dairy farm is part of the DFA co-op, which has been selling milk to Model Dairy for years. Before plans to open the plant, Fallon dairy farmers had been asked by the dairy to cut back on the number of producing cows because of a surplus of milk in California.

Everything changed with the $85 million DFA dry milk plant, which received its first tanker of milk on April 5, 2014.

The 89,822-square-foot plant sits on 32 acres. Eight silos — constructed in Fernley — hold milk and process water.

An average of 25 tankers a day deliver milk seven-days a week to the plant. Two-million pounds of raw milk daily is turned into 250,000 pounds of dry milk. Transported to the Port of Oakland (California) in 50-pound bags, most is shipped to China.

Fallon-area dairies deliver most of their milk to the DFA plant, which also imports about 20 percent from California. With the plant currently operating at 65 percent capacity, there is more room to grow the industry.

“We continue to work with existing member producers in the Fallon area to expand their operations, and are speaking with other producers about relocating to the Fallon area to achieve our goal of 100 percent local supply to the plant,” Wes Clark, plant manager, said in an email.

Pete Olsen, whose family owns the century-old Hillside Dairy, remodeled his barn to increase the number of cows that could be milked and added 150 cows to bring his herd to 2,100.

Olsen plans to add more cows, possibly this year. But dairy economics may delay that plan. The price of dairy products worldwide has dropped, the cost of purchasing dairy cows has increased, plus the drought has increased the cost of feed.

But those are cyclical issues that will turn around, Olsen said. The positive influence of the dairy plant is more significant.

Olsen has a broad view of the effect the milk plant has had on the community. Besides his viewpoint as a dairy farmer, he also serves on the board of directors of both the national and western DFA councils and on the Churchill County Board of Commissioners.

“The plant is operating as designed,” he said. “We have a top-quality product that is exceeding the competition.”

“If we hadn’t seen the price volatility, we’d see (growth) quicker,” Olsen said.

“The fundamentals haven’t changed. We’ve still got a hungry world out there. We’re in a cycle when the market is against us, but the market will cycle back up.

“We have customers that are committed to us around the world. It’s not hard to find customers, but it’s hard to find the right customers — people that can appreciate quality. We’ve got quality to sell. We have a good customer in China who wants quality.”

Olsen has also seen a visible, if still small, improvement in the general economy.

The plant now employs 45 people in its operations.

At the height of construction when 250 people were working on the plant, the local economy saw an increase in sales tax revenue, especially from restaurants and hotels, Olsen said.

Since it opened, the consolidated tax has increased a little, but it’s hard to pinpoint how much came from what source, he said.

What’s easier to identify is an influx of new businesses and dairy operations.

Not only have existing dairies expanded, but Smith Valley now has a new “from the ground up” dairy, Olsen said. In Fallon, a dairy that had been out of business for five years began milking again this month. Another DFA member will break ground this summer on a new facility.

Two new animal care businesses have opened in Fallon, Olsen said, as well as a dairy equipment manufacturer.

“We’re very thankful to have the (powdered milk plant) here,” Olsen said. “The plant’s been exactly what we needed at exactly the right time.”