An eager reader and dairy operator who gets her groceries in Freeman writes with concern about the economics of the new $86M, 12.5K-cow dairy that Riverview wants to build on land it will buy from the Arnolds of Hamlin County and the government subsidy it will finagle for the county from their sister’s Office of Economic Development.
My reader says her 2,400-cow Hutchinson County dairy sells its milk to Associated Milk Producers Incorporated—AMPI. She says AMPI’s quota system limits their production and effectively prevents them from adding any cows to their operation. She says her family dairy has tried to contract with other milk processing plants but that those plants have all said they are full and can’t take in any more milk. She says her operation has had to dump truckloads of milk this year—not just back in 2020 when the pandemic fouled our supply chains, but this year, when everything is supposed to be back to normal—because they can’t find buyers.
So if a South Dakota family dairy can’t expand and can’t sell the milk it’s already producing on a herd capped at 2,400, how can corporate dairy Riverview expect to turn a profit on a new dairy churning out five times as much milk? And how can the state justify giving a $4.5M tax break to stimulate production in a sector that can’t support existing producers?
My Hutchinson County correspondent also shares my doubts about Riverview’s professed intention to hire locals to milk its Hamlin County herd. She tells me her family dairy tried hiring all locals a few years ago and found that labor pool dry. Her dairy had to hire Hispanic immigrants, and even they can be tough to come by. She says the AMPI processing plant in Freeman has hired away four of the family dairy’s Hispanic employees in the last couple months.
Riverview’s expansion into Hamlin County with another mega-dairy seems to spell trouble for smaller South Dakota dairies. In the current market, another mega-dairy appears likely to crowd smaller competitors out of both processing-plant space and labor. Is that the effect the Governor’s Office of Economic Development wants to have with its incentives policy?