The Peak

A Blog from Black Hills Corporation

Oct 06, 2015
gschlick's picture

In the land of milk and...natural gas

by Gabe

The next time you pour milk over your cereal, think about Kansas. After all, Kansas is one of the fastest growing states for milk production in the nation.

Over the past 20 years, milk production in Kansas has more than doubled. This growth has led to an exciting economic development opportunity for Garden City, a community served by Black Hills Energy in the southwest corner of the state.

City officials in Garden City recently announced a development agreement with Dairy Farmers of America to build a $235 million dairy processing facility, which is expected to open by June of 2017. The DFA is the nation’s largest farmer-owned milk marketing cooperative, with more than 15,000 member farms.

The DFA project, like most economic development successes, didn’t happen overnight. In fact, the genesis of this opportunity occurred more than 20 years ago, when members of the Western Kansas Rural Economic Development Alliance began recruiting large-scale dairy farms to western Kansas. Black Hills Energy was a founding member of this group, and we were directly involved in the initial movement to begin building this new industry in the region.

Fast-forward to 2011. The Kansas dairy industry had grown significantly but was reaching a crossroads. Logistics and shipping costs were limiting growth, but the region had nearly enough dairy cows to justify a dedicated milk processing plant. The familiar mantra, “If you build it, they will come,” now applied here, in that a major milk processing facility would change the economics in such a way that many more dairy farms would begin locating in the area.

It was at that time almost five years ago that Black Hills Energy joined the Finney County Economic Development Coalition to discuss milk processing opportunities with Dairy Farmers of America executives at their Kansas City headquarters. Two years later, DFA actively began developing a plan for milk processing in Kansas, with Garden City as their primary focus. The project faced many ups and downs and became quite competitive, with other locations and energy service providers in southwest Kansas appealing for consideration.

An excellent ongoing effort by our Kansas large-volume customer relations group, in partnership with our local operations, helped to ensure that the plant would not only land in Garden City, but also be built on property we have the right and ability to serve with natural gas.

The addition of this industrial customer is significant, and our relationship with the new dairy processing facility will benefit the processor, the community and Black Hills Energy for many years:

  • Projected fuel consumption will be equivalent to adding thousands of new residential customers to our system.
  • The addition of 55 jobs at the facility will offer residential and commercial growth prospects for the community and Black Hills Energy.
  • Having large-scale milk processing available nearby will reduce shipping costs for milk in the region, so growth in the region’s dairy industry is expected to quickly expand.
  • Regional dairy growth will yield more great news for Black Hills Energy’s irrigation business, as our natural gas fuels much of the irrigation for dairy feed production.
     

You can read more about the DFA announcement in the Garden City Telegram. It’s another example of Black Hills Energy’s operations, community relations and economic development teams joining forces and Improving life – and our company – with energy.

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