Leprino’s mozzarella plant fosters dairy growth

Dairy farming is something of an oddity on the U.S. farm scene because it’s the only segment in agriculture in which fewer and fewer dairy farms are producing more and more milk, even to the point of creating a surplus.That peculiarity makes dairy farming an “anomaly that is hard for many people to understand,´ said Chris Kraft, a dairyman who, with his wife, Mary, has owned and operated a dairy farm in Morgan County since 1988.
Among the many factors that are driving milk production up are huge improvements in genetics and nutrition and more-efficient dairy management.
"These factors alone boost milk production at least 2 percent to 3 percent per cow per year," explained Greg Yando, chief executive officer for Western Dairymen Cooperative Inc., the Thornton-based co-op that markets raw milk for members in nine states, including all of the dairies in Morgan County and two in Logan County.
Kraft said breeding and feed improvements account for a 19 percent increase in production at his dairy over a three-year period. Production went from 22,970 pounds per cow in 1992 to 27,338 pounds in 1995.
But milk consumption nationwide is not growing as fast as milk production, Yando said, and that contributes to the surplus, too.
Furthermore, as price-support programs phase out and all agriculture falls into the free-market environment, milk prices fall under the laws of supply and demand, Yando said.
"The way dairy farmers try to offset (lower milk prices) is to produce more milk, which drives the price down further and you have a vicious circle," Yando said.
To solve these problems, the Western Dairymen Cooperative and three other large dairy cooperatives in Missouri, Texas and Ohio recently began steps toward consolidating their resources, Yando said.
In a mid-October vote, Western Co-op members approved the consolidation. If the other three co-ops follow suit, the plan is to create a new company in January 1998 with enough resources and clout to compete with national and international large-scale processors, Yando said.
Final votes by all the cooperatives should be completed in late November, he said.
It was Morgan County˜s abundant milk supply that led Leprino Foods to build a new cheese factory in Fort Morgan, said Larry Jensen, senior vice president of business development for the mozzarella cheese manufacturer.
Since the plant opened in 1994, the Western Dairymen Cooperative has been its sole milk supplier through a long-term agreement between the co-op and Leprino, Jensen said, which means that all the milk used by the factory comes from dairy farms located within a 100-mile radius of Fort Morgan.
Currently, Leprino uses 1.4 million pounds of milk every day. That figure is expected to rise by 40 percent in April 1998, when Leprino completes an expansion that was begun a year ago, Jensen said.
The Western Dairymen Cooperative will have no problem meeting Leprino˜s future needs. In fact, "we can hardly wait for it to be finished. The milk is there right now. We˜re shipping it out of the state every day," Kraft said.
In addition to all the dynamics of milk production, people in the dairy industry also talk about herd size, which ultimately plays a role in the production equation, too.
Using simple mathematics, the average size of a herd in Morgan County is 347 cows. That˜s based on figures supplied by the Morgan County Economic Development Corp. that the county has 20 dairies and 5,900 milking cows, which represent 85 percent of a production herd.
But 347 cows, or even 600 cows, aren˜t what people are talking about when they mention "large-herd operations" and "optimum" herd size, words used by some in the industry to describe how to be a profitable operation in the future.
The economics of the large-herd theory was explained by Lisa Noble, who first encountered it when she worked with an economic-development office in New Mexico before becoming executive director of Morgan County˜s economic-development agency last April.
"They found that a dairy that milks 1,500 to 2,000 cows has a greater economy of scale than one that milks 50 head," she said.
"If the smaller dairy buys a used feed truck for $15,000, the cost per cow is $300. But a 1,500-herd dairy can spend $72,000 for a new feed truck and the cost per cow will drop to $48," Noble said.
The Chapin dairy near Weldona probably exemplifies a successful dairy operation in Morgan County. It started out small, with 25 cows. Forty years later, the dairy is milking 600 cows.
It is family-owned and operated by Don and Gertie Chapin, their son Foy, and his wife, Cindy.
Gertie Chapin said their herd grew gradually over the years, mostly from within. They did purchase "some" additional cows three years ago when the family built a new barn, added two new 7,000-gallon bulk tanks, increased the milking units from 12 to 24 and "left room to grow in size and efficiency," Chapin said.
"I guess there could be a push toward larger herd farms," Chapin said. "You do need to be efficient," like buying supplies in bulk."
The county˜s dairy industry directly impacts its economy $20 million each year and indirectly impacts it about $80 million, Noble said.
One agribusiness that has felt the impact is WTC Feeds in Fort Morgan.
Howard Wickham, owner of WTC and its parent company, Wickham Tractor Co., said the number of dairy animals he is feeding now is almost double what it was before Leprino came to Fort Morgan.
His dairy business has gone from $200,000 to $400,000 a year, but "that doesn˜t mean I have increased my overall sales," he said, because the bulk of his business has shifted from cattle feed to dairy feed.
Wickham is satisfied, however, because unlike cattle sales, dairy sales are not cyclical or seasonal, so the ups and downs in cash flow and people requirements have leveled out, he said.
Bruce Mohrlang, owner of Mohrlang Manufacturing in Brush, also attributes an increase in sales in Morgan County (2 percent to 3 percent), to the growth or enlargement of existing dairies,
"New Mexico is basically done with their recruitment of dairies. Texas and Kansas have taken runs at recruiting them, and, as we speak, Nebraska is very aggressively going after the large herd dairy," Mohrlang said.
"We need to encourage our local dairies to grow and expand. It would be good for the tax base and the local farm economy," he said.Mohrlang˜s international company sells half of the mixer-feeders and manure spreaders it manufactures to the dairy industry.