INDIANAPOLIS, Ind. — Indiana Lt. Gov. Sue Ellspermann unveiled a new strategic plan for the state’s dairy industry at an agricultural forum March 16 at the Indiana Convention Center.

“I know what you are thinking,” she began. “We’ve been at dairy for about 200 years; what could we do about dairy strategy?” She cited a study recently conducted for the state by Orrani Consulting of Bath, United Kingdom, and Madison, Wis., which revealed a startling statistic.

“Each day, 4 million pounds, or 40 percent, of raw dairy product produced in Indiana is actually shipped outside of our state for processing,” she said, then outlined a four-point strategy for the state’s dairy industry.

“First, we need to increase our dairy processing capacity through expansion of our existing 21 plants that make products ranging from ice cream and cheese to powdered milk, and/or attracting new processing plants. Our objective is to keep that 4 million pounds of milk each day from leaving Indiana ... And I’m told that a reasonably-sized cheese or yogurt processing plant could use 2 million pounds per day of that milk.

“We also believe that if we’re successful in increasing our processing capacity we will also create demand for the product. And then we must have policies that will allow our dairy farms to grow and to operate efficiently,” Ellspermann gave as the second point.

Next, “Our strategy also recognizes that Indiana dairy processors can benefit from Indiana’s central location ... (as) the Crossroads of America ... That means that we must have great transportation infrastructure, and policies like weight limits to move product from the farm to the processor, and to the ultimate consumer.

“We can also see the research and the innovation coming out of AgriNovus helping to support the dairy component (of Indiana agriculture),” she concluded. Launched last November, AgriNovus is a research organization involving numerous ag businesses and institutions across Indiana.

“We’re very excited” about the strategy, Indiana State Department of Agriculture (ISDA) Director Ted McKinney said, noting the opportunities for expansion in dairy processing. “(Indiana’s) business climate is very friendly, welcoming, even embracing. We have a AAA bond rating, our taxes are flat – if not going down at times – and we have a couple billion (dollars) in reserves.

“That has already helped with other industries, but continues to indicate to potential dairy processors that we’re fiscally sound, and they are not going to face increased cost, at least not from a government structure standpoint,” he added. “And we already have a very good base in dairy from which to build.”

Indiana ranks 14th in the United States in milk production and second (to California) in ice cream production, according to the ISDA. There are more than 1,400 licensed dairy operations in the state with a total dairy herd of 173,000 cows, which produced approximately 3.8 billion pounds of milk in 2013, according to Ellspermann.

Providing local customers

Finding processors for the 4 million pounds of milk leaving the state daily wouldn’t have to require immediately increasing herds or production. “But we don’t intend to stop there,” McKinney said. “We believe if we do it right on the processing strategy, we’ll use current milk supplies and give farmers the opportunity to expand their herds if they like.

“The vast majority of the cow herds in Indiana are mid to small (85 percent are under 100 head, another 12 percent under 500), so this is a size-neutral strategy with the excess 4 million pounds. If dairy processors – let’s say cheese producers – figure out that this is really a good place to do business, then we’re happy for them to take up and use that 4 million, and we’re happy to produce even more. We think that can happen.”

The actual process of expanding ag businesses will involve local governments, as well as the Indiana Economic Development Corp. (IEDC), he said. “Often, we’re the first source of information that the entity wants to expand. After all, we know these companies, we know these producers.

“So it is not uncommon for ISDA to get the first call, to say, ‘Hey, we want your involvement; we want your guidance,’ and that is when we bring in IEDC. And the reverse is true, sometimes they are notified first, and they bring us in. We have a very strong partnership.”

McKinney said the strategy is not dependent on any action by the state legislature. “This strategy was developed irrespective of current legislation and regulations,” he said. “We think the regulations that are out there in place already are fair. We think the opportunity is there now to expand in the manner that we’d like to proceed, and that we think dairy producers and dairy processors would like to, so the rules are there – there’s no need for change.”

Steve Obert, president of the Indiana Dairy Producers, which represents 70 percent of the state’s dairy herd, was pleased with the strategy. “At the highest levels of state government, dairy is on the map,” said Obert, a fifth-generation dairy producer from Gibson County. “We have their attention, and that’s a great thing for dairy in Indiana.”

He doesn’t see a problem with adding more industrial-style facilities to the state’s rural landscape. “I think Indiana dairy farmers, and the industry as a whole, are committed to delivering products that consumers want,” he said. “We are committed to safe, wholesome dairy production, as well as making it in a way that is sustainable and in a way that maximizes the welfare of our animals.

“So I don’t see that as being a real change. It’s bringing manufacturing from somewhere else to right here in the state. Why not manufacture it right where it’s produced, and bring those benefits to our state as a whole?”

“Let’s put it this way,” McKinney said, “with our business climate, which is almost second to none across the U.S., and our infrastructure access to the human population of the U.S. – add to it an excess 4 million pounds of milk, and finally the interest on the part of dairy producers to fulfill that gap, if not raise more milk – we have a very powerful combination that says. ‘We’re open for business, let’s talk.’”

The March 16 event, The Forum, was presented by the Indiana Soybean Alliance in cooperation with numerous state agricultural organizations including the Indiana Corn Growers Assoc., Indiana Dairy Producers and the Indiana Farm Bureau.