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Make it easier to say ‘yes’ to livestock development

Two South Dakota milk buyers are floating an idea to encourage dairy and other livestock development in the I-29 Corridor.

Valley Queen Cheese, Milbank, and Lake Norden Cheese, Lake Norden, are proposing that the sales and excise taxes collected during the construction of new or expanding dairies or other livestock facilities go to the county and township where the projects are located rather than being sent to the state for distribution.

The money could be used by local officials to maintain rural roads.

Key Points

• Dairy processors propose targeting taxes to rural roads.

• They would send construction taxes to counties and townships.

• Funds would help counties and townships with added road costs.

The dairy processors estimate that construction sales and excise taxes for a new dairy would be about $207 per cow. A 3,500-cow dairy, like the one recently approved in Brookings County, would generate about $700,000. Once operating, it would generate approximately $89,000 in sales taxes annually, plus additional business activity. According to a South Dakota State University study, each cow adds $13,954 per year to the total economic activity in the state.

Jon Davis, Lake Norden Cheese CEO, and Mark Leddy, Valley Queen Cheese CEO, introduced their proposal during a bus tour their companies held for legislators in September. Twenty-five lawmakers attended, including Sen. Shantel Krebs, Renner; and Rep. Kim Vanneman, Ideal, both Republicans and chairwomen of the state Senate and House agriculture committees. The group toured the cheese factories, which employ 440 people between them, and Marshall County East and West dairies at Veblen where 180 employees milk and care for 8,000 cows.

Dairy processors in the I-29 Corridor could use the milk from 95,000 more cows, Leddy says. Demand from China and other Asian countries for U.S. dairy products is behind the growth.

“Dairy has a significant impact on the state now,” Leddy says. “It generates $1.5 billion. We’re talking about doubling the size of the industry.”

Targeting rural road funding to counties and townships might help local officials say “yes” to dairy and bring more outside dollars into South Dakota’s economy.

Where opportunity lies for dairy

The I-29 Corridor is a still a prime dairy development region for a lot of good reasons, according to an industry primer prepared for legislators who participated in the 2012 Dairy Drive tour organized by Valley Queen Cheese and Lake Norden Cheese.

There are large existing cheese plants in Milbank and Lake Norden, S.D., and Hull, Iowa; and a new one being built at Brookings, S.D.

There is plenty of water and feed available for cattle.

Land prices are lower in the I-29 Corridor than elsewhere in the Cornbelt.

Population density is lower in the corridor than elsewhere in the Midwest.

Fair and open-minded regulators ensure adequate environment protection while still treating dairy producers fairly, according to the guide.

Future growth is expected to come from expansion of existing dairies in the I-29 Corridor and California families moving their dairies to the I-29 Corridor. Milk prices are higher, land prices are lower, feed is cheaper and more abundant, and there’s less urban encroachment in the I-29 Corridor than in California.

Read the complete 2012 Dairy Drive guide at www.FarmProgress.com. Click on “Web Exclusives.”


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COW APPEAL: Sen. Shantel Krebs (back) and Rep. Kim Vanneman, chairwomen of the state Senate and House agriculture committees, check out the cows at Marshall East while on a recent tour of the dairy industry.


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GO DAIRY: Larry Gabriel (right, with hand raised), former South Dakota Secretary of Agriculture, is flanked by Mark Leddy, CEO of Valley Queen Cheese (left), and Jon Davis, CEO of Lake Norden Cheese (right) as he talks about dairy development.

This article published in the November, 2012 edition of DAKOTA FARMER.

All rights reserved. Copyright Farm Progress Cos. 2012.