An oil boom has created a new fluid milk market for producer Jerry Messer but has also increased costs for his family’s dairy near Richardton, N.D.
The state’s oil rush holds pros, cons for its dairies
The oil boom that’s transforming North Dakota with thousands of newly arrived workers, high-paying jobs and expanded business opportunities has created a two-edged sword for local dairies.
On one hand, the black-gold bonanza has opened up a thriving new market for Jerry Messer, whose dairy milks 260 cows near Richardton, N.D., 75 miles west of Bismarck. The family’s Messer Beaver Creek Ranch also manages 23,000 acres of crops and pastureland.
"I’ve been very fortunate in the last six months because the oil industry has set up a lot of ‘man camps’ in western North Dakota," Messer says.
As a result, 100% of the dairy’s output is processed into fluid milk to help feed the manpower that’s pulling oil from the Bakken Formation. A huge geological formation that spans parts of Canada and the U.S., it covers 15,000 square miles in western North Dakota alone. The Bakken is estimated to hold 4 billion to 24 billion barrels of oil.
Through an arrangement between Dairy Farmers of America and Bridgeman Creamery in Bismarck, milk from Messer’s dairy is packaged into 2½-gal. bags and supplied to the camps. "I’ve been a beneficiary of the oil boom as far as my pay price because now my milk, which was going to a cheese plant, all goes 100% fluid into the man camps," Messer says. That’s boosted his milk checks by 10%.
On the other hand, the oil boom has made it harder for Messer to secure the services that once catered to the area’s rural businesses.
"I had trouble with my bulk tank last week," Messer says. "The guy who services us said, ‘I’m behind on 70 air conditioning units in Dickinson [25 miles away] and I’ve got every crew member there.’" Messer was forced to reach out to Bismarck to service his equipment, adding higher freight expenses to his bill.
"Right now, if you go to western North Dakota, you can jump on an oil field and make $70,000 to $80,000 a year," Messer says. "Good milk truck drivers are leaving and going to the west. Milk haulers are trying to replace them with someone who has experience driving a truck, and it’s pretty difficult."
Another concern is the heavy oil-boom traffic that’s taking a toll on North Dakota’s transportation infrastructure.
Messer believes some of the state’s western dairies could be phased out as their older owners accrue wealth from mineral rights or oil-producing wells on their farms. But he’s optimistic about North Dakota’s over-all dairy prospects.
"There’s a huge opportunity to expand dairy in the eastern part of the state along the I-29 corridor," he says. "There are multitudes of very aggressive cheese plants in the upper part of South Dakota that would be serviced very well by any of our eastern, southeastern or central dairies."
- October 2012