Litchfield, Minn. — It’s not surprising that California and Texas have dairy processing plants twice the size of Minnesota’s biggest. But Arizona, New Mexico, Idaho? They all have plants that process at least six to seven million pounds of milk a day — twice the capacity of First District Association, the Midwest’s biggest processor of milk, cheese, whey protein and other dairy coproducts.

“We need more capacity if we want to compete with other areas of the country and the world,”says Clint Fall, First District Association president. To keep Minnesota milk from heading west and build markets for local farmers, AURI is helping First District with pre-engineering plans to make the plant more efficient and expandable.

“Wisconsin has reached capacity for their processing capacity and they’re talking about Minnesota as being in danger of the same scenario,” says AURI project director Jen Wagner-Lahr, who grew up on a central Minnesota dairyfarm. “For AURI to be involved, we’re sending a good signal to our state’s dairy producers.”

“Right now we’re in the position where we’re notable to take on any new dairy producer’s milk,” Fall says. “To plan for the future and remainsustainable and viable … with the ability to provide our dairy farmers with a good market for their milk long term, our goal is to continuepursuing smart growth.”

“The challenging part is to develop equipment that can operate very efficiently” and is expandable to handle growth five to 10 years from now.

Whey more than cheese

First District processes more than 3.5 million pounds of milk into 160,000 pounds of cheddar cheese and other products daily. Milk comes from First District’s owners — 1,050 member-farmers, from as far as 100 miles away, and nine member creameries.“This company is one of the most true-to-life grassroots cooperatives — members are very involved,” Fall says.

Besides selling milk to Midwest bottlers, the plant churns out 131 million pounds of cheese a year. First District markets 500-pound barrels and 40-pound blocks of cheddar to major food manufacturers, including its original customer Land O Lakes (see sidebar story). The cheese is used in processed products such as slices, sauces, spreadable cheese, balls, dips and shredded cheese. The cheese on your favorite snack foods— nachos, cheese curls, potato chips — likely came from First District.

The co-op also sells its own Fieldgate brand, but it’s minimal. “Our company is not so focused on branding as on producing a very high-quality food ingredient,” Fall says.

When milk comes to the cooperative, it is first pasteurized, “then we remove a portion of the water that’s in the milk – that helps us process more milk with a smaller footprint.”

The concentrated milk then goes to the cheese plant where curds of protein and fat are separated fromwhey. “From 100 pounds of milk, you get 10 pounds of cheese and 90 pounds of whey.”

“Years ago, farmers made butter out of the (milk) fat, then they dumped the whey or fed it to pigs,” Fall says. “In today’s world, whey is a very valuable component … the actual dollar value goes up and down just like cheese.”

From whey liquid, First District extracts out whey protein concentrates — used in protein powders, bars and other nutritional foods and supplements. The plant produces 1.5 to 2 million pounds monthly of various powder-concentrate varieties, with up to 50 percent protein. “From a nutritional standpoint, whey protein concentrate is more nutritious than cheese.”

Sugar from milk

After whey protein concentrate is extracted, the liquid leftover is called permeate; about 95 percent is water, the rest minerals and lactose or milk sugar. “We take a significant portion of the water out” until only slurry remains “with the viscosity of a cold pancake syrup.”It is cooled in large tanks with agitators and “the sugar actually crystallizes out of the solution.”

“This sugar has a lot of very valuable characteristics. When you look at baby formula, lactose is the closest thing to mother’s milk from a carbohydrate standpoint,” Fall says. Besides infant formula, lactose is used in pharmaceuticals and “by nearly every confectionary company or chocolate manufacturer” for making milk chocolate and other candies. “It provides the right type of creamy taste.”

“After you take the lactose out, you have a product that is, for the most part, minerals with some lactose left in there” that is used primarily for dairy cow feed.

Throughout the extraction process, “the only waste is water that comes off in the very beginning,” before butter fat is extracted, Fall says.

Although it’s called “cow water,” it is potable – “very pure and soft distilled water coming out of the evaporation process” that is used to clean “massive amounts of equipment every day.”

Get better and expand

First District is a “very automated high-tech plant” that employs 150 and “85 to 90 percent of those are highly-skilled jobs,” Fall says.

While First District processes valuable co-products with little waste, each extraction step takes “a tremendous amount of energy,” Falls says. The co-op has been working on new evaporator technology for two years. “We know we have an evaporator that is a very complex system — retrofitted to meet our needs. It’s a good piece of equipment but it’s the heart of our entire production … and is approaching 30 years of age. We’re nervous about any flaw in that equipment that could impair our ability to produce our product.”

The AURI-supported pre-engineering project looked at technologies, costs, feasibility and specifications of a system “that will be more efficient,” Fall says. New equipment “would be strictly customized to this plant… more than likely the first of its kind.”

“When it comes to rural economic development, the money is going to support many, many jobs in these rural communities,” Fall says. “Other states inthe country are truly capitalizing on an industry that, some would say, belongs here and not there.”

Litchfield dairy plant made first

Land O’ Lakes butter

First District Association, the Midwest’s biggest dairy processor, built its reputation on Land O’ Lakes butter.

The association, based in Litchfield, Minn., traces its roots to the 1920s when rural creameries started consolidating to better compete in the U.S. butter market, unify standards and save transportation costs. “There were little creameries in almost every town; they combined to capitalize on efficiencies,” says Clint Fall, First District president.

The Minnesota Cooperative Creameries Association was incorporated in 1921 and represented dozens of rural Minnesota creameries. The association’s first production unit — 24 creameries formerly known as the Meeker County Creamery Association — eventually became First District Association, an independent cooperative. John Brandt was president of both the Minnesota and Meeker County associations.

In 1924, the Minnesota Cooperative Creameries Association began marketing its sweet cream butter under the “Land O’ Lakes” brand. Two years later, the Minnesota cooperative was renamed Land O’ Lakes Creameries Inc. and First District Association continued to produce butter for Land O’ Lakes, but it was a separate co-op.

“In the 50s, First District converted to cheese and, even at that time, sold most of its cheese and whey products to Land O’ Lakes. Sometime later, First District became more diverse.”

The cooperative now daily processes 3.5 million pounds of milk into cheddar cheese, whey protein, lactose, feed and other dairy coproducts.

“To this day, Land O’ Lakes is a good customer of First District — not the largest, but significant … The two organizations over the years have grown more independent of each other,” but at the same time, have a shared history.