June 14, 2022 at 2:29 p.m.
The expansion will boost the factory’s processing capacity from its current 5 million pounds of milk per day to 8 million pounds of milk per day.
Valley Queen Cheese Factory CEO Doug Wilke gave remarks during the ceremony.
“Our customers have told us they want more cheese, and our dairy producers want to make more milk,” Wilke said. “This three-year, $195 million expansion is our answer to those calls. It means 30,000 more cows, 140 new career opportunities, more families in our communities, growing schools and a busier main street. We’re proud to be a part of this growth that will benefit so many across South Dakota.”
Valley Queen Cheese Factory currently has 250 employees.
This latest expansion is the largest in the company’s history. The economic impact from the new addition is estimated to be as much as $1 billion annually within an 80-mile radius of Milbank. The expansion, which is scheduled to be complete by Jan. 1, 2025, will boost Valley Queen Cheese Factory’s yearly cheesemaking capacity by 125 million pounds.
“Ninety-three years ago, two Swiss immigrants took a chance on a small town called Milbank, South Dakota,” Wilke said. “We take great pride in being stewards of their legacy as we begin our next phase of growth.”
Valley Queen Cheese Factory was founded in 1929 by Alfred Nef and Alfred Gonzenbach. The two men had stopped in Milbank on their way to Montana where they had planned to establish a new cheese factory. Local dairy farmers and businessmen convinced Nef and Gonzenbach to stay in Milbank and start a cheesemaking business that would use the milk being produced by area dairy farmers.
Starting with these humble roots, Valley Queen Cheese Factory has grown steadily over the ensuing decades. Their last expansion, which was completed in 2018, was a $52 million project that boosted their cheesemaking capacity by 25%.
Valley Queen Cheese Factory makes an assortment of American style cheeses that are sold to various private label brands. The companies transform the cheeses into prepackaged slices that are enjoyed by consumers all across the nation.
In addition to this latest expansion of their cheese plant in Milbank, Valley Queen Cheese Factory has also made plans to build a distribution center in western Wisconsin.
“We’re picking a location that’s exactly between cheese manufacturing in Milbank and some of our customers in Wisconsin and even further south,” Wilke said.
Jason Mischel, vice president of procurement at Valley Queen Cheese Factory, said that the exact place for the distribution center has yet to be determined.
“We are building the distribution center as a way to become better partners with our customers,” Mischel said. “We want to make the logistics of distribution easier and more flexible while reducing our costs. The distribution center will also turn a two-day trip with a truck into a one-day trip. This will enable our truck drivers to get home every night and help reduce their deadhead time.”
The steady growth of milk processing capacity in South Dakota has led to a boom for the state’s dairy industry. Over the past few years, South Dakota’s milk production has grown by approximately 35%.
“This growth is the culmination of years, even decades, of effort by the South Dakota dairy industry,” said Tom Peterson, executive director of South Dakota Dairy Producers. “Our processing capacity has expanded, and our farmers were very willing to expand along with that. We have also seen a number of farmers come in from other areas to help fill that capacity.”
“It makes sense to produce cheese relatively close to where it’s consumed,” he said. “We have seen over time that South Dakota has increasing advantages. These advantages include low feed costs and good sources of water. We also have a solid infrastructure of experts and dairy service providers. The growth in the region’s dairy industry has reached critical mass and has resulted in a flywheel effect.”
Valley Queen Cheese Factory sells its byproducts to customers all over the globe.
“Our whey protein can be found in numerous sports drinks,” Mischel said. “Some of our lactose goes to a processor in New Zealand, and our butterfat makes its way into brand name chocolates that are sold both nationally and internationally.”
Mischel said Valley Queen Cheese Factory expects a portion of the milk needed to supply its new addition will come from existing dairy farmers expanding their operations.
“We also foresee the construction of some new dairy farms in the area that we serve,” he said.
Wilke said it is a good time to be in the South Dakota dairy industry.
“We’re excited to be positioning ourselves for many more years of product innovation with customers and even stronger relationships with key dairy producers here in the I-29 corridor,” he said. “We see an opportunity to supply more high-quality cheese to a growing industry, and our dairy producers are looking for the opportunity to expand.”
Wilke said the team at Valley Queen Cheese Factory has demonstrated their ability to lead change and execute a strategic plan.
“Continuous growth and improvement are at the core of our company’s successful history, and we’re proud to continue those traditions with this next phase of growth,” he said.
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