News / Blog

Aurora Organic Dairy to open Production plant in Missouri
February 24, 2017

When David Drennan took over as executive director of the Missouri Dairy Association in 1995, Missouri ranked 14th nationally for dairy production.

Even then, though, there were ominous signs of trouble ahead as aging dairy producers began leaving the industry without handing off their operations to younger farmers. Or instead of investing in new technology to compete with other producers, dairy farms transitioned to other forms of agriculture, Drennan said.

Missouri now has 1,073 dairy operations – down 400 from just five years ago – and the state ranks No. 25 in the nation for milk production. The Show-Me State is experiencing a “milk deficit,” meaning it consumes more dairy products than it produces.

As recently as 1990, Boone County had eight commercial dairies. Now there are none, other than the University of Missouri’s Foremost Dairy Research Center at Midway.

Drennan and others who watch the agricultural economy are hopeful that Aurora Organic Dairy’s plan for an 80,000-square-foot, $91 million milk and butter production facility might be the shot in the arm that the state’s dairy industry needs.

“This is huge news, not only for the state, but for Columbia and potentially for our dairy industry,” he said.

BRINGING BACK DAIRY

The Columbia plant would be Aurora Organic Dairy’s second site. The company operates a similar-size plant in Platteville, Colo., and owns 80 percent of the dairies in Texas and Colorado that provide the facility’s milk. The company also owns many of the farms that produce the forage for its cows.

But there’s a sense of anticipation over additional private-farm and dairy activity that might be needed to support the massive dairy.

“This to me is a possible opportunity to maybe revive dairy a little bit in the state,” especially considering that organic milk is a higher-price item, said Bob Garino, state statistician for the National Agricultural Statistics Service in Columbia.

Garino said he was surprised to hear that Aurora was buying property for a Columbia plant.

“There’s really not much milk produced around here,” he said. “I expect it has a lot to do with transportation” of milk to the plant and on to grocers’ shelves.

Aurora officials have said as much, noting that the central location will open East Coast markets for the organic products.

Whether there’s a boost for the dairy industry remains to be seen, but Garino said the real benefit initially and in the long-term will be for the local economy.

“I think it’s going to be great for the community,” he said, pointing to the projected job numbers – up to 150 expected in two phases of development – and a $4 million annual payroll.

Aurora executives said the plant could be operational by the end of 2018, but it’s too early to pinpoint where the milk will come from.

“I hope, too, that long-term there might be some opportunities for dairymen in our state to supply that plant,” Drennan said. “We just don’t know. You’ve got to get the steel in the ground, get the plant built, get it going. These folks have done it before, they’re a well-known name.”

‘A COMPETITIVE BUSINESS’

Before submitting building plans, Aurora first had to purchase the 101-acre, city-owned Sutter Industrial site in the industrial area off Paris and Waco roads, just east of 3M and the Kraft hot dog plant. The purchase agreement – $2.1 million for property the city paid $3 million for two years ago – has raised a few eyebrows among critics who question Aurora’s practices while also pointing to concerns about water and sewer capacity for the site.

The purchase negotiations were conducted between City Manager Mike Matthes and Aurora officials, with the aid of their legal teams, and the process of courting Aurora to Columbia was veiled under the name Project Cadre, a common practice for economic development officials who say they are competing with other cities and states for the influx of capital and jobs. Critics cited the lack of transparency as reasons to question whether the new addition to the city’s economic landscape will be beneficial.

In addition to state tax incentives, Aurora has applied for 75 percent abatement over 10 years on real and personal property taxes under Boone County’s Chapter 100 policy. Officials from the five taxing agencies affected — the city of Columbia, Boone County, Boone County Library District, Columbia Public Schools and Boone County Family Resources — have offered support for the tax abatement, which they are expected to formally endorse Tuesday.

The land sale and plant construction – with a second phase already proposed for a $141 million investment – are contingent upon the bonds being issued, AOD CEO Marc Peperzak told taxing district representatives at the initial Chapter 100 bond meeting last week.

Columbia Mayor Brian Treece said Aurora’s investment and creation of jobs that will pay an average of $42,000 a year “merits the extraordinary abatement.”

Although tax incentive packages have been a frequent topic of debate locally, economic development officials say that without the perks on the table, businesses looking to move or expand will go elsewhere. It’s a reality that Drennan also concedes.

“In states that are willing” to offer incentives “it’s a competitive business,” he said. “If Missouri doesn’t do it, Kansas is ready to do it. Iowa’s ready to do it.”

Aurora officials have spelled out some of the economic benefits for the community, but they have not promised a boost for the state’s dairy industry. Sixth Ward Councilwoman Betsy Peters and Treece asked Aurora officials on Feb. 6 where the Columbia plant will get its milk and what the effect might be on the state’s dairy industry.

“It’s a little too soon to tell where the supplies will come from,” Aurora President Scott McGinty said. He noted the company has an integrated milk business, meaning Aurora owns 80 percent of the dairies that supply milk to its Platteville, Colo., plant as well as many of the farms where grain and grasses are grown to feed the dairy herds. The cow-to-carton business approach is less costly and allows better quality control, he said.

McGinty said Aurora plans to replicate that model for its Columbia site.

“We have plans for additional farm locations that would be more suited to this geography,” McGinty said. That also could mean purchasing organic milk and feed from more local sources – “select partners,” he said.

“I would hope it has opportunities for dairy producers here who have an interest in going organic,” he added. “That is a distinct possibility down the road.”

FARM CONCERNS

Scott Dye, field representative for the Socially Responsible Agriculture Project, said the dairy company’s cattle farms were nothing more than “huge factory farms” – concentrated animal feeding operations, or CAFOs – that would hurt rural agriculture and existing dairy producers.

“The dairy industry is just being extremely naïve if they think there’s anything positive that’s going to come out of this for the state,” Dye said. He questioned why Regional Economic Development Inc., the city and Aurora officials were “on a mad bull rush to get to ‘yes’ ” on the land sale and Chapter 100 incentives.

He believes Aurora will put dairy farms in surrounding counties that lack the protection of zoning codes.

“Folks that live in rural areas outside of Boone County are not going to be happy – thanks to the Columbia City Council,” Dye said.

Dye, along with environmental advocate Ken Midkiff, also objected to what they called the secrecy behind the land deal and recruitment of Aurora. Neither Dye nor Midkiff were asked questions by city council members after the two men spoke against the project at the Feb. 6 meeting.

“This was supposed to be a happy, coming out party for a new business,” Dye said. “We were nothing more than a turd in their punch bowl.”

Matthes defended the sale price, nearly $1 million under what the city paid, saying the city would get $1 million annually in revenue from sewer payments. Fourth Ward Councilman Ian Thomas cautioned against that rationale, however, noting that utility payments and local taxes are expected to help meet growth demands and additional needs for a variety of services, including public safety.

MU Extension agricultural economist Ryan Milhollin has authored an analysis that determined the Aurora plant would support 481 other jobs annually. His report, which he shared with Chapter 100 taxing district representatives, said the plant could generate some $3.6 million in state and local taxes and $6.2 million in federal taxes per year in its first five years of operation.

READY FOR REVITALIZATION

A 2015 study led by the MU dairy team and Extension agriculture economist Joe Horner concluded that Missouri was “primed for dairy revitalization,” noting the decades-long decline in dairy production and number of cows.

The study found that in 2014, manufacturers of cheese, ice cream, yogurt and other milk products employed more than 5,000 workers and paid nearly $275 million in wages annually. Overall, the dairy industry employed around 24,000 people and contributed $2 billion to the economy.

Horner said milk created an abundance of off-farm jobs that included milk tankers, processing, distribution, milking equipment and refrigeration dealers, and feed suppliers.

The Missouri General Assembly passed the Dairy Revitalization Act in May 2014 as a way to help farmers meet their costs when bad weather ruins crops and as a way to bring new farmers into the dairy business.

Chris Hackman, general manager of Central Dairy in Jefferson City, said his company follows changing consumer habits to meet product demands. Getting customers to start drinking more milk “would be great,” he said.

He’s unsure how Aurora Organic Dairy might affect the state dairy industry without knowing where the Colorado company will get its milk.

“There’s plenty of supply,” he said. “Even though Missouri is a deficit state, there is an excess of milk nationwide.”

WAIT AND SEE

While organic might be the “growing segment of dairy,” Hackman said, “there’s very little difference between organic and your traditional milk – other than cost.”

Drennan said as many as 30 Missouri dairy farms are already in transition to organic production, which means their feed must be certified organic and the crop and grazing land must be pesticide-free for a period of years. Forage production is already a challenge for dairy, he said.

“Dairy has to have good quality forage, better than you would feed beef cows,” he said.

Missouri hay and other forage crops are typically not “dairy-quality” in Missouri, which is why much of the forage for Missouri dairy comes from irrigated fields in Nebraska and Kansas, he said.

A major drought in 2012 “burned up” the pastures and hay from Kansas and Nebraska had already been moved to Oklahoma because of drought there.

“If you can’t feed dairy cows, you exit the business,” Drennan said, noting that 100 Missouri dairies went belly-up that year.

He said “cow comfort” is paramount for good milk production.

“She needs to eat well, she needs to feel well, she needs plenty of good clean water,” he said. “You just need to baby her. The better she feels the more milk she’s going to produce.”

Drennan and the rest of his industry now waits to see if dairy gets that much-needed shot in the arm.

“Sometimes the stars have to line up for things to happen,” he said. “Maybe this is one of those stars.”

Source: Columbia Daily Tribune



CURRENT ISSUE

Summer 2018