Other milk buyers react by increasing payments to farmers

By CAROL RYAN DUMAS

Capital Press

TWIN FALLS, Idaho -- About 3,000 people showed up to welcome Chobani Greek Yogurt to the Magic Valley at its grand opening celebration on Monday.

The nearly 1 million-square-foot plant, the largest yogurt plant in the world, began production Nov. 20 with 300 employees. Employment is expected to grow to 600 by the end of 2013.

Chobani plans to process 2 million pounds of milk a day into 4.2 million cases of yogurt a week.

The plant is the size of 17 football fields. The milk it will use could fill 32 Olympic-size swimming pools annually and will be sourced from 55,000 Idaho cows, said Chobani founder, President and CEO Hamdi Ulukaya.

That's not only good for dairymen, it's good for the community as a whole and the Magic Valley, said Bob Naerebout, executive director of Idaho Dairymen's Association.

"The economic value it brings is tremendous," he said.

The company will be running 100 to 200 milk tankers a day through the plant, and already has its eyes on expansion at the Twin Falls site. The company bought 198 acres at the Twin Falls site, and the current facility occupies 23, said Kyle O'Brien, Chobani executive vice president of sales.

The company needs to get the plant up to the production level it was built for, but after that, it will focus on expanding its flavors, launching new products and expanding its yogurt use in food service as an ingredient in other dishes, he said.

The milk is being supplied by Dairy Farmers of America and will initially come from Idaho producers. But Chobani expects its business to continue to grow, and additional milk needs could be supplied from outside the state, he said.

The company expects to pay a premium for the milk, compared with area cheese processors, but the cost is still competitive for the company, he said.

Chobani has already affected pay prices to producers, with the two largest area processors, Glanbia Foods and Jerome Cheese, changing the way they pay producers and raising producers' bottom lines shortly after Chobani's groundbreaking a year ago, Naerebout said.

Chobani's effect has been to make the industry more competitive, he said.

Chobani chose Twin Falls for its new $450 million plant because of the ready supply of high-quality milk and the support of the state and local community, company officials said.

The grand opening was marked with speeches by Chobani officials, Idaho Gov. Butch Otter and Twin Falls Mayor Greg Lanting.

Otter and Lanting also signed proclamations declaring Dec. 17, 2012, "Chobani Day" in the state and city, respectively.