white milk bottles being filled on milk bottling line

Why Dairy Processing Matters: Investing $12 Million into Processor Expansion for the Region 

By Katie Spring, Outreach & Content Specialist

When Danone/Horizon canceled contracts with 89 organic dairies in New England and eastern New York in 2021, the company cited transportation and operational challenges, pointing to a weakness in the region’s dairy sector: lack of processing capacity. 

Since processing plants often co-pack and process milk from multiple states, closure in one state leads to a lack of capacity across the region.  Just as farms have consolidated and become bigger, processing plants have done so, too, with larger milk plants establishing outside of New England. Trading long milk routes and multi-day driving jobs for proximity to a processing plant, Danone exited the region to work instead with farms closer to its Western NY plant. 

On the flip side of these challenges are the Northeast’s strengths:

A network of dairy farmers committed to environmental sustainability, animal welfare, business efficiency, producing high-quality milk that’s the foundation of some of the best dairy products in the country, a strong local food system and proximity to major markets including Boston and New York City.  At the request of USDA Secretary Vilsack to provide an actionable response to Danone/Horizon leaving, the Vermont Agency of Agriculture, Food & Markets (VAAFM) convened the Northeast Dairy Task Force to recommend long-term systems improvement for the Northeast dairy sector.”  

The task force came back with a clear call to action to invest in dairy processing, writing:

“The impact of processing investment will advance regional capacity in meaningful ways and better position the sector for the next decade and beyond.” They recommended two approaches to processing expansion: “First, invest catalytic levels of funding into existing successful track-record processors who are positioned and can scale production quickly; and second, invest in new processing facilities to continue to develop system flexibility. ”

Based on the Task Force’s recommendations, the USDA awarded the Northeast Dairy Business Innovation Center (NE-DBIC) an additional $19 million to address the stability and viability of Northeast regional dairy.

Now, the NE-DBIC is making those catalytic investments in dairy processing with the Existing Dairy Processor Expansion Grant.

With $12 million in total funding, this grant is one of three processing-focused funding opportunities. A $1 million Dairy Processing Research & Development Innovation Grant closed in March, while a grant focused on developing new dairy processors is due to come out later this year. This investment will help ensure dairy farms have options for their milk and increase the amount of local dairy on store shelves throughout the region. 

Learn more about the NE-DBIC dairy processing grants on our grants page.

Read the full Northeast Dairy Task Force report on the VAAFM website.

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