Milking cows on an industrial scale arrives in western Minnesota, and some farmers shudder

MURDOCK, Minn. – The milking carousel at the Louriston Dairy turns 22 hours a day and milks more cows in half an hour than most dairies do all day.

Cows step onto the slow-moving merry-go-round in single file. A worker sprays disinfectant on each cow's udder, another wipes the teats clean with a paper towel, and another secures suction cups onto the teats for milking during a seven-minute trip around the room. Gleaming silver tanks in the next room fill with flash-cooled milk as 106 cows are milked at once.

The farm 18 miles west of Willmar is home to 9,500 cows, 40 times larger than the average U.S. dairy operation. It is part of a fast-growing network of giant farms built and run by Riverview LLP, a Morris, Minn.-based firm that is a game-changer for the Minnesota dairy industry. The company owns 92,000 milk cows — more than all the farmers in Illinois or Virginia — and 60,000 of them are in western Minnesota, where it has nine dairies and is building more.

"We are really bullish on the dairy industry, especially in the Upper Midwest," said Brad Fehr, one of the company's founders.

But farmers at smaller dairy operations are aghast. How, they ask, can a company build such huge operations when milk prices yield meager profits and many of their neighbors are leaving the business?

"All the large dairies — not just the ones in Minnesota, all over the country — they're just flooding the market with milk," said Heidi Beyer, who raises beef cattle near Clontarf, about 18 miles from Murdock, and helps her parents run the 60-cow dairy where she grew up. "Why are they doing this to other dairy farmers?"

For 30 years, farms in the Upper Midwest have gotten bigger and farmers who used to work a couple hundred acres now work a couple thousand. In that time, new methods of raising livestock emerged to take advantage of efficiencies of scale. Hogs, poultry and beef cattle disappeared from fields and were moved into massive barns.

This upsizing has come more slowly to dairy farming, but as the number of U.S. dairy farms shrinks, milk production continues to rise. Amid low milk prices and a trade war threatening exports, Riverview is placing massive bets: $50 million in construction and startup costs for each new dairy.

The basics of Riverview's farms are not so different from other dairies, but in Minnesota, their scale is unprecedented. The cows at the Louriston barn drink enough water to drain an Olympic-sized swimming pool in just over two days, and produce enough manure to fill one every three days. For each new dairy, the Fehrs must show they can get sufficient feed and water and process and distribute the manure without harming the environment.

Riverview started in 1995 when brothers Gary and Brad Fehr, with the help of their father, Lloyd, decided the only way for them all to stay in farming was to expand. They were raising beef cattle then, but they decided to shift into dairy.

"If you're going to add people, you have to add work," said Brad Fehr. "One of the reasons we chose the dairy industry is it was one industry that hadn't consolidated."

The Fehrs studied dairies in other states and built big, then bigger. The company, which now employs 1,200 workers and offers ownership to employees, owns cows in Minnesota, South Dakota, Nebraska, New Mexico and Arizona. It builds dormitories at new dairies to house workers. It contracts with nearby farmers to assure a steady supply of feed for its cattle. And it processes manure from its cattle into fertilizer that those same nearby farmers can use to help grow more feed.

And each day, an average of 25 new calves are born at each dairy. Half of them are dairy cattle that will be shipped to New Mexico to grow up in warm weather for about 18 months before returning to Minnesota to be milked and bred for several years. The other half are beef cattle that get sold to beef feedlots, mostly in South Dakota.

All of the milk that's trucked away from Riverview's nine dairies in Minnesota goes to make cheese. Riverview is a major source of milk for five cheese factories in western Minnesota and South Dakota.

"All the processors in the region work with them, and to a good extent, because of Riverview's expansion over the last two decades, we haven't seen as many cheese plant closures as we might have otherwise seen," said Marin Bozic, a dairy economist at the University of Minnesota.

An Agropur cheese factory in Lake Norden, S.D., that's a chief customer for Riverview is tripling its capacity by early next year. Riverview is building a new dairy in Swenoda Township, a few miles west of the Louriston Dairy, that will also supply the Agropur expansion at Lake Norden.

There are other large dairies in the United States: in California, Idaho and even Wisconsin. The most famous dairy in the country is probably Fair Oaks Farms, halfway between Indianapolis and Chicago, where 36,000 cows are milked across 11 barns. It's also something of a tourist destination.

In Minnesota, Riverview is by far the biggest player, but its rapid growth frustrates some other farmers.

Within the past year, three smaller dairies in Swift County — home to three Riverview dairies and another under construction — have closed. Beyer said she worries milk prices won't rise, that small dairies won't survive and that their demise will ripple out in rural communities, hurting local farm-implement dealerships, veterinarians and feed companies.

Riverview already has a dairy operating 2 miles northwest of the Beyers' farm. She and her husband helped push back a proposal from the company to build another one a mile to the southeast. They didn't want to be sandwiched between two massive farms.

"Have some compassion for somebody else in the industry, who loves the dairy industry, who's been working in it their whole life, taken it over from their father, their grandfather," Beyer said. "You're forcing them out. Nobody can argue that."

Fehr said he hears that concern a lot, but he said all sizes of dairy are necessary to meet market demand. No cheese plants are turning away milk, he added.

"I do understand the perception," Fehr said. "I don't agree with that argument, because I don't think us adding 9,000 cows changes the global milk market. It just doesn't."

Milk cows drink around 30 gallons of water a day, so abundant groundwater is critical when Riverview builds one of its farms.

The company had to drill an extra well near a dairy in Campbell to make sure it wasn't pumping too much from the aquifer under the dairy. Riverview has also been scrutinized for its role in depleting the aquifer in a heavily farmed valley in southeast Arizona, where it operates a dairy and grows its own feed to supply it.

But Riverview is also admired for the tidiness of its operations — the stalls are cleaned thoroughly when the cows head out to be milked — and its work with other local farms. The Minnesota Pollution Control Agency monitors the company's operations and, once in 2014, put a halt to one of its proposed farms by seeking a deeper, more expensive review. Each new proposal from Riverview is accompanied by soil, water and air-quality studies done by contract inspectors that are available for public review and comment.

Fehr said the company will build a new dairy typically only when nearby farmers support it, or even request it. When Riverview floated the idea of building a dairy near the Beyer farm, the township board pointed to an ordinance that capped the number of cows at a dairy farm and the company backed out without making a formal proposal.

"We have no desire to fight," Fehr said. "If the core group of farmers around the site aren't excited about it, it doesn't work."

Fehr believes Minnesota is well-positioned for the milk business because of its cool climate and abundance of water and corn. "Dairy cattle like to eat corn and corn silage, and most of the corn in the U.S. is grown in the Upper Midwest, so generally speaking we have a cheaper feed supply," Fehr said. "We're also from here."

While the vast majority of dairies in the U.S. are still small with an average of about 240 cows, farmers have been quitting for decades. The number of U.S. dairies fell from 678,000 in 1970 to fewer than 40,000 this year. Just under 3,000 are in Minnesota, the nation's seventh-largest milk producer.

The balance of production in the industry shifted to large farms from small farms in the last decade. In 2001, dairy farms with fewer than 500 cattle produced two-thirds of the nation's milk. By 2009, their share fell to 40 percent. The large farms also proved to be more productive, yielding more milk per cow, according to federal data.

Today, milk prices are down by a third since their most recent peak in 2014. Growth in demand has lately been driven by exports, mostly to Mexico, which have plateaued. Now President Donald Trump has launched an international trade war and cheese factories in the region are already running at full capacity, so they are not bidding up prices for local milk, said Bozic, the U dairy economist.

Bozic shocked many in the state's dairy sector when he estimated in legislative testimony at the State Capitol earlier this year that 80 percent of the remaining dairies in Minnesota are "last generation" farms. He suggested that small farmers get out of the business to preserve their wealth, saying, "The sooner they exit the sector the more equity they will preserve."

In an interview, Bozic said he regrets not expressing sympathy for "the little guy" and noted the federal farm bill provides a safety net for many dairy farmers. But the upsizing and consolidation of the industry will go on, he said.

Brothers Chris and Andy Emmert run a dairy with a quonset-shaped white barn east of Hancock, just a few miles southeast of Morris, where Riverview and the Fehrs started. Two robotic, Dutch-made machines handle milking of the Emmerts' 140 cows. The machines spray and scrub their udders and, guided by lasers, position milking cups onto the cows' teats.

Even with such high-tech efficiency, Chris Emmert said the business is tough. "We're break-even right now at $14 milk," he said, referring to the price of 100 pounds of milk, or hundredweight.

The Emmerts' father bought the farm in 1959, and Chris Emmert's wife grew up on a dairy, too. He said he knows all his cows individually by sight, and some have lived on the farm for 16 years.

Twenty miles to the southeast, near Clontarf, John Beyer, Heidi's husband, said he wonders whether his children will be able to carry on their grandparents' dairy legacy. "That's the question I ask every day," he said. "You hope so."

Asked why Riverview needs to keep growing, Fehr said that drive comes from the company's employees, about 15 percent of whom own a stake in the firm. When he and his brothers floated the idea of getting into dairy, their father could have said no, but he was "all in." And for that, Fehr is grateful.

Now a similar dynamic is at work. New owners in the partnership want to expand, and Fehr isn't going to stand in their way, he said.

"They want to be owners. They want to grow. I'm with them," he said. "That's some of the why. Truthfully, that's a lot of the why."

adam.belz@startribune.com 612-673-4405 • Twitter: @adambelz