The plant will be able to process milk from roughly 16,000 additional dairy cows from around the region once the project is complete.
ongards is making progress on its Perham plant expansion project, and they intend to milk the new space for everything it’s worth — $125 million.
So what comes with that price tag? The ability to process milk from roughly 16,000 additional dairy cows from around the region. That makes its expansion an opportunity for local farmers as well.
“The expansion will represent a 30% increase in plant capacity,” said Bongards Vice President of Marketing Evan Carlson. “The added capacity will allow us to support the continued growth of our business, allow our farmer-owners to expand and allow us to bring on new members for our cooperative.”
Bongards is a Minnesota dairy co-op — owned by its dairy farmer patrons — that has been around since 1908. The co-op bought the former Land O’ Lakes dairy plant in Perham in 2003 and has made many improvements to the facility since then. Despite various upgrades over the years, the existing facility was running at full capacity, which limited opportunities for Bongards to increase milk intake from their farmers.
There are three Bongards plants in Minnesota, and the Perham plant is the only one that processes raw milk. With each expansion project, the volume of milk that the plant can handle per day increases. It has gone from 2 million pounds of milk a day in 2014, to 3.2 million pounds per day in 2015, to 4.2 million pounds a day in 2018. This new project will take the plant to 5.5 million pounds per day when it’s completed, with the capacity to handle 6.5 million pounds per day in the future. For reference, there are 8.6 pounds in a gallon of milk.
The timeline
According to Carlson, new cheese packaging equipment has already been installed at the plant. New milk intake bays are currently being built and are expected to be completed by September. There are now four receiving bays for those milk tanker trucks, but soon that will soon be expanded to seven.
New whey drying and packaging rooms are also in the process of being built, with equipment installation and startup expected to be complete by early 2025. An additional wastewater treatment pond is also currently under construction to expand the current capacity and is expected to be operational by mid-2025.
Carlson added construction of additional whey warehousing space will begin soon, with expected completion by early 2025. If all goes as planned, Bongard’s expansion project is expected to be completed by the end of 2025.
Community cooperation
Once completed, the Perham plant expansion project is expected to generate about a dozen new jobs and allow dairy farmers to expand their operations, but according to Perham Economic Development Authority Director Nick Murdock, it will also eventually bring an increase in tax revenue.
Murdock said the Otter Tail County Assessors Department estimates that once the project is completed, it will increase the tax value of the property by $4.7 million. That equates to a roughly $78,000 per year increase in tax revenue, not accounting for inflation.
“That’s not just the city’s share. That’s the city, county and the school district combined,” Murdock said. “We also have tax increment financing, so the city is assisting with this whole project through that. We take that $78,000, we capture it through state statute in increments, and we use it to assist in the cost of the project. You can kind of equate it to a property tax rebate.”
Murdock explained the tax increment financing district is administered by the city, but the county and the Perham-Dent Public School District also had to give their approval. He added it could be up to nine years before the city, county or school district see additional revenue from the increase in property taxes. The maximum amount the taxing jurisdictions would support for the “rebate” to assist with the project would be about $716,000.
“Bongards has been a great community partner with us, a great employer, very involved with everything,” Murdock continued. “So we’re just excited to help them out where we can.”
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