California dairy operators are wooed by other states

TULARE -- Faced with continued low milk prices and high feed costs, California dairy operators increasingly are being wooed by states offering cheaper costs and expanding markets.

Texas, Nevada, South Dakota, North Dakota, Illinois and Kansas were among states at the World Ag Expo in Tulare on Wednesday trying to entice California dairies — and anyone else interested in relocating.

California, like many other states, has been hit hard by a sagging dairy economy. Dozens of dairies have shut down in the San Joaquin Valley, the heart of the state's dairy industry.

Although the visiting states have been at the ag expo before, their pitch this year has taken on a new tone.

"We know it is going to be difficult for some people to move because they are in debt, but we want them to know that if they have a son or daughter interested in starting their own dairy, they should think about Nevada," said Lynn Hettrick, executive director of the Nevada Dairy Commission.

Hettrick said land prices in Nevada are cheaper, and it has a lower sales tax and no income tax.

Nevada is home to a new $84 million dry milk plant that is expected to open in late October. And it will need an additional 13,000 cows to meet its production needs.

State officials in North Dakota are trying to lure dairy operators with lower feed costs and lower land prices.

"If they want to expand, they can do it here. We have the room and the cheese plants," said John Mittleider, manager of Ag & Bioenergy Development for the Division of Economic Development & Finance in North Dakota.

At least one valley dairy operator was listening to the pitch. Paul Baxley of Visalia said he has grown weary of doing business in California. The state's dairy operators long have complained about the regulations, feed costs and low prices.

"It is getting harder and harder," Baxley said. "I have been in the dairy business for 25 years, but trying to run a dairy in this state is getting old."

Baxley has been thinking for six months about moving his 1,300-cow dairy to another state. "Until that decision is made, I will continue to grind it out," he said.

The contingent from South Dakota was playing up its expanding market for milk. The state has seven cheese plants, including a $125 million plant that is expected to open in the summer of 2014.

"What we see in California is that there are so many young dairymen out here," said David Skaggs, dairy development specialist for the South Dakota Department of Agriculture. "But the big question is, 'Will they be able to dairy in California?' "

To help sell its point, South Dakota Gov. Dennis Daugaard attended the expo Wednesday afternoon. Skaggs said it was evidence that the state is committed to growing its dairy industry.

Dairy experts say the outlook for all dairies is still cloudy. Vernon Crowder, agriculture economist for Rabobank, said that if the Midwest gets ample rain, feed supplies will rebound and prices will drop.

"And if that happens, we could see improved profitability," Crowder said. "But that assumes we see normal weather. And the jury is still out on that."