Drive To Build More Dairies in South Dakota

Inside Dakota Ag

Milk buyers say they could use 100,000 more cows in the I-29 corridor and they think they have come up with an idea that could jumpstart the growth.

Published on: October 1, 2012

Two South Dakota milk processors are floating an interesting idea to encourage dairy and other livestock development in the state.

Valley Queen Cheese and Lake Norden Cheese are proposing that the sales and excise taxes collected during the construction of a dairy go to county and township where the project is being built being sent to the state. The money could be used by local officials to maintain rural roads.

It would amount to about $207 per cow. A 3,500-cow dairy, like the one recently approved in Brookings County, would generate $700,000 in taxes during the construction phase for local units of government.

State House and Senate ag committee leaders Rep Kim Vanneman (front) and Sen. Santel Krebs check out the cows at Marshall County East dairy.
State House and Senate ag committee leaders Rep Kim Vanneman (front) and Sen. Santel Krebs check out the cows at Marshall County East dairy.

Township officers and county commissioners often oppose permits for new facilities because they don’t have the money to pay to maintain the roads and are limited by state law in the amount they increase property taxes to cover the added costs, says Jon Davis, president and CEO of Davisco Foods International, owner of Lake Norden Cheese Company.

Diverting sales and excise taxes to townships and counties due from the construction of a new dairy makes sense, he says, because a new dairy  won’t be built unless the local officers approve the permit.

Lake Norden Cheese and Valley Queen introduced the idea of funneling construction phase sales and excise taxes to local units of government during a bus tour they held for legislators last week. The group toured Lake Norden Cheese and Valley Queen Cheese plants, and Marshall County East and West dairies at Veblen.

Dairy processors in the I-29 corridor of eastern South Dakota and western Minnesota and northwest Iowa say they could use the milk from at least 100,000 more cows.

“The demand is there,” Davis says.