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Plans move forward on $80 million facility

Rochester Business Journal
January 18, 2013

A Pittsford resident is leading an effort to build an $80 million milk plant in Aurelius, Cayuga County.
 
Kevin Ellis, CEO of Cayuga Milk Ingredients LLC, is working with a consortium of roughly 25 dairy farms around the region, including some in Wayne County, on the plant to be located roughly an hour from Rochester.
 
The 160,000-square-foot facility will process liquid milk to produce dairy ingredients for the global food and nutrition industry. The ingredients will include milk protein concentrates, milk protein isolates, cream, skim milk powder and whole milk powder.
 
Site work is nearly complete, and construction is expected to begin shortly, Ellis said.
 
He expects the plant to be operational by spring 2014. The company already is hiring workers and estimates it will create 60 jobs. A second phase would increase milk protein production and add more jobs, but that will depend on the success of the first phase, Ellis said.
 
Reaction so far has been good, he said, and potential customers already are inquiring about the venture.
 
Ellis, who previously worked with dairy farmers in the region as a loan officer and consultant, said the dairy farmers would serve as co-owners of the plant, as well as milk suppliers to it, although the plant could get milk from other places, too.
 
The company is seeking financial aid through a payment-in-lieu-of-taxes agreement to help fund the project. It also received $4 million in the statewide economic development council awards.
 
Cayuga Milk Ingredients is a wholly owned subsidiary of Cayuga Marketing LLC, which was begun more than 20 years ago by eight dairymen to bargain for high milk prices. It now has 29 members with more than 32,000 cows that produce more than 830 million pounds of milk annually. The members have a combined 50,000 acres of farmland and employ some 600 people.
 
Jon Merrell of Merrell Farms Inc., a 3,000-cow dairy farm in Wolcott, Wayne County, is one of the owners of the plant. The group has spent a lot of time researching the business and designing the plant, he said.
 
Cayuga Milk Ingredients will allow its owners to tailor specific milk proteins to individual buyers, he said. It also will reduce trucking costs for his farm, since the milk will be trucked to one location instead of several across the state and beyond.
 
"It's exciting and has been a long time coming," Merrell said. "It's a new venture with new technology."
 
The project is one of a few announced recently in the region that arise out of the state's dairy industry. New York is the third-largest dairy producer in country.
 
In Genesee County, two companies are taking advantage of opportunities in the growing market for Greek yogurt. Alpina Foods LLC, a U.S. subsidiary of Alpina Productos Alimenticios S.A. of Colombia, opened a $15 million, 40,000-square-foot plant last year in Batavia. Also, Muller Quaker Dairy, a joint venture of German company Theo Muller Group and PepsiCo, is investing $206 million in a 363,000-square-foot plant across the street from Alpina's factory.
 
The upstate region's ability to meet the demand for milk has raised some concern, however, and received attention last year when officials for Chobani Inc. announced it would open a plant in Idaho instead of expanding its site in New Berlin, Chenango County.
 
Last August, Gov. Andrew Cuomo held the first state yogurt conference in Albany to hear ideas from industry leaders, farmers and other stakeholders for ensuring that the yogurt industry continues to grow and create jobs in New York.
 
At the meeting, Cuomo announced that the state would take new actions to help dairy farmers increase the size of their herds and thereby increase production to ensure that the yogurt economic boom continues in New York. The actions included changing state regulations to allow for smaller farms to have more cows while being exempt from some permitting processes.

1/18/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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