North Dakota dairy farm plans to add processing; bill would add state incentives
A cow feeds inside the barn at the North Dakota State University dairy research facility in Fargo on March 14, 2025. (Jeff Beach/North Dakota Monitor)
North Dakota's struggling dairy industry could get a boost from a new milk processing plant and state incentives for more processing.
As North Dakota House Agriculture Committee members heard testimony last week in favor of incentives to add milk processing to the state, one committee member said his family plans to add a processing plant.
Rep. Dawson Holle, R-Mandan, is part of a dairy farming family in Morton County. He said the farm has the goal of breaking ground on a processing plant in June, though the project still is in the planning stages.
He said the plant would be built on the Holle farm or a neighboring property. Holle said the farm is one of the larger dairy farms left in central North Dakota, the traditional heart of the dairy industry in the state.
The dairy industry has been shrinking in North Dakota over several decades. Processing plant closures in Bismarck and South Dakota are forcing Holle's family and other dairy farmers in central North Dakota to send milk greater distances, with transportation costs cutting into their profit margins.
Holle announced his plans during Thursday's discussion of Senate Bill 2342, which would provide a grant of 5% of the cost of opening a milk processing plant, up to a maximum of $10 million.
Bill sponsor Sen. Paul Thomas, R-Velva, told the committee that the bill was not proposed with a specific project in mind, but was intended to get the attention of milk processors that could provide a market for North Dakota milk.
He also said the bill that was approved by the Senate contained an error and suggested an amendment to correct the error. He said the bill should be worded to make grants available to processors capable of handling 3 million pounds of milk a day. Instead, the bill says it could go to a processor with the capacity of 3 million pounds per year, making the grant available to much smaller processors.
Holle informed the committee of his family's plans but said he was unsure they would take advantage of the incentives.
The Agriculture Committee voted down the amendment, with Holle among those voting against it.
The committee gave the bill a 'do pass' recommendation Friday.
In an interview after the Thursday hearing, Holle said he supported the bill with or without the amendment.
'It's great for dairy either way,' Holle said.
Holle said his parents and grandparents are still active in the dairy farm. He said the family has been considering a processing plant for some time, but closure of nearby processors has sped up plans.
'It wasn't really our intent to get government handouts,' Holle said.
Holle participated in the committee votes and discussion on the bill. He said he didn't see any potential for a conflict of interest because the bill will benefit the dairy industry as a whole.
'We're just in a unique circumstance that we're one of the largest farms close to Bismarck-Mandan,' Holle said.
Holle is not among the bill sponsors. 'I have just been very encouraging from the sidelines,' he said.
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Thomas, the bill sponsor, said the bill builds on efforts to increase animal agriculture in North Dakota, which lags behind neighboring states.
'Dairy without processing is going to be really tough to kick back in,' Thomas said.
More livestock helps provide a local market for corn and soybeans, with the North Dakota Corn Growers Association among the farm groups testifying in favor of the bill.
North Dakota has gone from about 93,000 dairy cows in 1980 to 14,000 in 2023 and about 10,000 last year.
Huge dairy farms planned for eastern North Dakota
Deputy Agriculture Commissioner Tom Bodine testified that there are only 23 permitted dairy farms left in North Dakota and one of those is not operating. There are only about 8,700 cows in the state.
That number could quadruple with plans for two huge dairy operations in eastern North Dakota, closer to existing milk processing facilities, including plants in Fargo.
Holle said North Dakota is an importer of milk and his family's plant would concentrate on fluid milk and possibly cream at the outset. He said dairy products such as butter could come later.
Holle remains optimistic about the dairy industry.
'There's been growth, and especially demand for locally sourced milk,' he said.
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