Battle over 160-year-old Minnesota dairy hinges on whether big is bad

LEWISTON, Minn. – Pressed by an ongoing slump in milk demand that's played havoc with their conventional business model, dairy farmers are resorting to novel ways to survive, from making ice cream or artisan cheese to selling cow embryos to other farmers.

For the Daleys, who run a dairy 30 miles east of Rochester, the plan is to expand — a lot.

"The way things are moving, you either get bigger or you get bought out," said Gabe Daley, 24. "Getting bigger seems to be the most efficient way to stay in business."

Daley and his cousins are the sixth generation on a farm that started 160 years ago. Now at 1,500 cows, the Daleys want to triple their herd to produce the income that would allow their generation to stay in business and pay for the retirement of their parents and grandparents.

They need permission from Winona County and the state pollution agency. Environmental groups and others opposed to large-scale farming are trying to stop them.

Two years in, nothing has been resolved in a battle that involves family farm succession, county politics, dairy economics and water quality in southeast Minnesota.

At the core of it all is a debate about whether the big should get bigger in American agriculture.

Barbara Sogn-Frank, an organizer for the Land Stewardship Project, a Minneapolis-based group that seeks to keep more farmers on the land, says the groundwater of southeast Minnesota is too vulnerable to handle such a large dairy expansion, and that in general the forces leading to bigger farms must be reversed.

"That is not an unbeatable unfolding of natural law," she said. "That's a man-made economic model that benefits a relatively small number in the state and across the country, and that corporate agriculture has been selling us."

John Daley, an Irish immigrant, settled in Winona County in the 1860s and started a dairy just south of Lewiston. For more than a century, the business remained a small one. Grandson George Daley and two of his sons — Michael and Stephen — took the first consolidation step in the 1990s. Each had a dairy with fewer than 150 cows, typical in those days as well as now, and they joined forces.

In 1997, they built a state-of-the-art milking parlor with a concrete platform carousel and four long, blue barns just west of Lewiston. In the years since, the family's fifth generation increased the herd.

That generation — Mark Daley, Neil Daley, Shelly DePestel, Brian Daley and Ben Daley, now in their 40s and 50s — leads 26 employees plus family members who milk about 1,500 Holsteins each day and raise corn and hay on 3,700 acres to feed them.

Michael Daley, or Grandpa Mike, still roams the premises. One morning last week he cleaned the window that looked in on the backsides of the white-and-black cows rotating by on the carousel.

"He's adamant about the windows," Gabe Daley said.

Gabe Daley and the other members of the sixth generation — Dustin DePestel, Dylan DePestel, Sidney Greden and Dominick DePestel — grew up working with their parents and grandparents.

Greden, who is Mark Daley's daughter, remembers accompanying her mother for the night milking from 11 p.m. to 3 a.m. The children folded towels until they fell asleep. Back then, the front room of the parlor was like a day care, with a playhouse, tricycles and a little television with a VCR.

"It's kind of frustrating that we get called a factory farm when it's like, 'Hello! This is us!' " says Greden, 26.

In 2012, when Greden and Dylan DePestel went to college aiming to study agriculture, the family started planning an expansion. They would need revenue to pay for older family members to exit the business without breaking up the operation.

It's a challenge faced by farmers all over the Midwest, and it's often complicated.

The fourth-generation Daleys, Michael and Stephen, still own the bulk of the land — about 3,500 acres. Ownership and management of the dairy are split between them, Michael's five children and his 13 grandchildren.

The Daleys see three options. They could sell parts of the farm, leaving the sixth generation with a smaller business. Or the sixth generation could borrow money against the farm to pay their parents and grandparents in retirement. Or they could make the farm bigger to generate more revenue.

In 2018, the Daleys applied for a state permit to store and manage the manure from 3,000 more cows.

After a public comment period, the Minnesota Pollution Control Agency issued the permit in early 2019.

The Land Stewardship Project and Minnesota Center for Environmental Advocacy immediately sued the agency, saying it glossed over the effects of the Daley expansion on drinking water and greenhouse gas emissions from cows. They want the agency to require an environmental impact statement, which would be more detailed and time-consuming than the 235-page environmental assessment work sheet the Daleys already completed.

The Minnesota Court of Appeals in October revoked the permit and ordered the MPCA to come up with an estimate of the expansion's greenhouse gas emissions. The agency released that estimate in January and kicked off another public comment period that will end March 6. A decision will come later this spring.

The larger obstacle is Winona County's Board of Adjustment, whose five members include three people who belong to the Land Stewardship Project and wrote letters to the MPCA in 2018 opposing the Daley expansion.

The Daleys need a variance from a zoning ordinance that caps feedlots at 1,500 animal units, which the Daleys already exceed because they were grandfathered in. To grow further, the family must demonstrate "practical difficulties" in complying with the ordinance. Economic considerations don't apply.

The Board of Adjustment rejected the variance by a vote of 3-2 in January 2019, and the family sued, arguing the three members who belonged to the Land Stewardship Project were biased and had prejudged the matter. Since then, one board member who voted against the variance stepped down. Winona County commissioners, on a split vote, tapped another Land Stewardship Project member to replace her.

The lawsuit is on hold until the MPCA rules on the manure permit. Marie Kovecsi, chairwoman of the Winona County Board in 2019, declined to comment, citing the pending lawsuit. Sogn-Frank, from the Land Stewardship Project, said the Daley lawsuit is a "malicious attack that attempts to bully the county into ignoring the law."

"The Winona County commissioners acted rightly when they appointed knowledgeable and public-spirited citizens to the Board of Adjustment," she said.

Underlying all this is the geology of southeast Minnesota, which is roughly the northeast quadrant of a formation called the Driftless Area, where the bedrock is cracked and water soluble. Municipal sewage lagoons at two towns in the area — Altura and Lewiston — disappeared into sinkholes in 1976 and 1991.

Nearly half of the 86 wells tested by the Minnesota Department of Agriculture in Utica Township, which includes Lewiston and the site of the Daley Farms, in 2016 tested high for nitrates, which have been linked to different types of cancer and other conditions. That percentage of contaminated wells is among the highest in the state.

The Daleys' ground scans show the site of their proposed manure basin has 40 feet of soil under it, rather than the bedrock underneath the old Lewiston lagoon that collapsed. Family members say they don't want to ruin ground­water. They drink it, after all.

They say that they will not be applying manure in greater quantity to any one piece of land; that they'll grow alfalfa, which absorbs more nitrogen than corn or soybeans; and that they'll inject manure directly into the dirt.

They say the debate is clouded by environmental groups' blanket opposition to large-scale farming.

"It's kind of like trying to change someone's religion," said Dylan DePestel, 26.

The older Daleys remember their small farms and don't romanticize the long days and the months or years without vacation. Now the Daleys share the work at the farm. They and their employees work shifts and take sick days.

"People have that American Gothic picture in mind, pitchfork in hand, the wife right there, and I don't live in that world," Ben Daley said. "Every portion of society has changed, either with technology or things have gotten better, but they don't want farming to do that."

Adam Belz • 612-673-4405 Twitter: @adambelz