In South Dakota, dairy production continues to expand. While it’s only one percent of the total U. S. milk production, that number is increasing. Tucked along South Dakota’s I-29 corridor, you’ll find signs of the state’s expanding dairy herd.
“Last summer in 2014., we built our tunnel-ventilated barn south of the parlor. Now, we are now doing our third expansion,” said Stefan Temperli, a dairy producer in Elkton, S.D.
Temperli moved to South Dakota in 2003 from Ontario, Canada. He made the move not just because of available land, but because it was hard to expand his business in Canada under the country’s milk quota system.
“My parents were milking 60 cows on quota, and my brothers and myself wanted to get into the business. Due to the cost of expansion, because of the quota, it was not going to pencil out to stay in Canada," he said.
Hedging helped stabilize revenue, allowing him to move forward with expansion plans. That’s growth even in a year with much softer prices “Last year in 2014, we missed out on real high milk prices because of some of the milk contracts we had, but roughly twelve months ago there was some really good contract offers for all 2015, and we jumped on it,” said Temperli.
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Moss Jopson also relocated to South Dakota. He moved from England in 2007, also because there was no expansion room. European Union milk quotas hindered growth until just recently, when those limitations were removed.
“The quota does impact you. You are limited to what you can produce. As we were retailing our milk, we were getting a premium on top of what the guys getting selling direct to the creamery,” said Jopson, who has a dairy farm in Egan, S.D.
Even with premium prices, he couldn’t grow. But in South Dakota, he’s still expanding. “We are actually going to put in an expansion in the next couple of weeks to add on a couple hundred cows on. We are going to expand slowly if we can,” said Jopson.
Midwest Dairy Association’s Roger Scheibe said that, while overproduction and softer prices are a struggle, they have not slowed down dairy momentum within the state.
“I just may add on a barn on or 200 cows. We are seeing a lot of that in South Dakota as well as new operations that are looking here as well. So, we have 20,000 permitted cows on the books that have not been built for yet so we’re looking at that over the next year or two,” Scheibe said.
The state has now reached its goal of more than 100,000 head, but the work isn’t over. “We want to double that to 212,000. That’s going to meet pent-up capacity (for) our three to four plants that we have in this area to get to full capacity,” said Scheibe.
There are nine processors in South Dakota, and Scheibe says the state is looking at bringing in one more. "At the present time, we do not have enough production capacity because there is a surplus of milk and our plants are full," he explained.
“I can see that in the next couple of years, more processing capacity needs to come to South Dakota to handle the expansion,” Temperli agreed.
Those are growing pains that producers and the state of South Dakota are happy to endure. Since the majority of South Dakota’s milk production goes into cheese, the state is working on a market assessment to see if there’s a new product they can incorporate with production.