The dairy industry is big business in South Dakota and it’s becoming more compact and efficient.

According to the state Department of Agriculture’s Annual Dairy Report for fiscal 2011, the state’s 332 farms produced more than 5 million pounds of milk daily. One of South Dakota’s 92,000 dairy cows will generate $13,594 worth of milk products per year.

That’s a big change from a few decades ago. In 1981, there were 4,650 dairies running 159,000 cows and producing 1.69 billion pounds of milk.

In 2011, 332 dairies totaling 89,000 cows produced 1.8 billion bounds. That’s a 42 percent reduction in herd size, but an 11 percent increase in production.

David Skaggs, a dairy development specialist with the

department of agriculture, said the high number of dairies 30 years ago can be partially attributed to counting farms that had one or two dairy cows for personal use as a dairy.

The fewer dairies remaining have also been accumulating more cows. In 1995 there were four herds above 500 cows in the state; today there are 42, Skaggs said.

The increase in production with fewer cows is because of more efficient feeding and rationing, better nutrition and genetics today, he said.

Marv Post, the president of the South Dakota Dairy Producers and dairy owner in Volga, said the state offers “aggressive milk buyers” and a “milk deficit” that dairies can capitalize on, mostly found along the Interstate 29 corridor.

Post pointed to several high-profile milk needs in that area, including the Lake Norden Cheese Company, Valley Queen Cheese Factory Inc. in Milbank, and the announced Bel Brands USA plant going into Brookings.

Skaggs said there are also ideal places for dairies further west. Areas such as Pollock or Hoven have plenty of water, land and crop owners who understand the value of cows, he said.

However, others remain skeptical about such expansion. Post said any place the industry could move has to have the same corn production for feed as the I-29 corridor. Also, with the closing of a processing plant in Rapid City in 2007, milk would have to be trucked eastward anyway.

“I just see it as hard to expand to the west,” he said.

Professor Alvaro Garcia, an extension dairy specialist at South Dakota State University, said he expects dairy production to remain mostly in the I-29 corridor because the center of milk processing is still there and high fuel costs make setting up farther away fiscally prohibitive.

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