The facility in St. Johns, about 20 miles (30 kilometers) north of Lansing, will include one plant that will process 8 million pounds (3.6 million kilograms) of milk daily into cheese and whey protein powder and another that will use byproducts from the milk operation to make whey products for human consumption and animal feed.
"Michigan's dairy industry is an essential economic driver in our state, and this new investment elevates and expands our potential to rise even higher while bringing new jobs and opportunities to this region," Gov. Rick Snyder said.
State agencies are working on tax breaks, grants and other incentives, although they still need approval of various boards. The Michigan Strategic Fund on Thursday recommended designating the site as an Agricultural Processing Renaissance Zone, which will provide $26.1 million in tax relief over 15 years. The state Administrative Board is expected to decide whether to approve the proposal in September.
The assistance is needed to make the Michigan location competitive with other sites the investors have considered and to help offset high start-up costs, particularly wastewater treatment upgrades, said Jeremy Webb, business development project manager with the Michigan Economic Development Corporation, the state's primary business support office.
The project is "vital to the success of the Michigan dairy sector," said Jeff Mason, the corporation's CEO.
Michigan has more than 1,700 dairy farms and ranks fifth among milk-producing states but has too little processing plant capacity. That requires farmers to ship their product elsewhere, adding to their expenses. Meanwhile, an oversupply of milk is driving down prices.
The double whammy caused farmers to lose more than $164 million in 2017. Some have even dumped their milk rather than sending it out of state at a loss, said Kathy Achtenberg, spokeswoman for the economic development corporation.
"It's been very difficult to watch so many hardworking people struggle unnecessarily," said Gordon Wenk, director of the Michigan Department of Agriculture and Rural Development.
Milk processed at the 146-acre (590,000-sq. meter) complex will come from Dairy Farmers of America and Select Milk Producers. Both are cooperatives that joined with the global nutrition group Glanbia plc to form Spartan Michigan LLC, which will develop the $425 million dairy processing plant. The Michigan Milk Producers Association also will send milk there. Glanbia will oversee commercial, technical and business operations.
Proliant Dairy, an Ankeny, Iowa-based company that manufactures products from dairy ingredients, will invest about $85 million in an adjacent byproduct facility.
Construction is scheduled to begin in September and be completed by December 2020.
"Michigan is ripe for growth with a surplus of quality milk, so there's tremendous opportunity to not only benefit the dairy farm families in this area, but also the local economy and region," said Greg Wickham, CEO of Dairy Farmers of America.