Landwehr dairy cows. Photos by Tate Carlson
Landwehr dairy cow barn
The First District dairy cooperative in Litchfield thrives by adding value for its members
Litchfield-based First District Association is a comparatively modest-sized dairy co-op, but it’s growing. It has roughly 975 Minnesota dairy farmers as members and processes at least 5 million pounds of milk daily. That could rise to 7 million pounds when a tentative expansion takes place in the next three to five years. First District completed a $32 million expansion in 2012.
And it’s busy.
Upwards of 100 milk tanker semis roll through every day, ceasing only for a few hours in the dead of night. The processing equipment that turns milk into cheese, whey powder and lactose crystals never goes offline. Neither does First District’s distribution, which delivers its three principal products to customers that further process, package and label them for retail sale.
Even if you’ve never heard of First District Association, you’ve heard of its customers: the co-op sells bulk cheese to Land O’Lakes, for instance, and is one of many suppliers of cheese used by McDonald’s.
First District directly employs about 150 workers. (By comparison, Land O’Lakes has 10,000 employees.) First District employees are a loyal bunch: some 60% have been with the co-op for more than 20 years.
Clint Fall with one of First District’s cheese-making tanks.
“We call ourselves an ‘all in the family’ operation,” says First District president and CEO Clint Fall. “Our employees’ work ethic is unmatched, and many feel like they own the place themselves.”
Of course, First District’s actual owners are dairy farmers. Most are small and midsize family operators from central and west-central Minnesota. A multi-decade consolidation trend — exacerbated by an ongoing milk price depression that’s devastating margins across the industry — means that a relative handful of much larger operators are responsible for a disproportionate share of First District’s purchasing volume.
“Those larger [operators] constitute a small fraction of our membership, but account for perhaps 50% of our milk production,” says Fall.
Counterintuitively, this may actually be good for Minnesota’s dairy industry, which is responsible for tens of thousands of jobs. Historically, says Fall, the Upper Midwest was chockablock with small dairies with, say, 40 to 60 cows apiece. In the late 20th century, massive new feedlots sprang up in California’s warm Central Valley, shifting the industry’s center of gravity west. Recently, this large-lot approach — what Fall grudgingly calls “the West Coast model” — has crept into western Minnesota and eastern South Dakota. The shift is likely to continue, and perhaps accelerate, as California’s water crisis deepens; adult cows require more than 100 pounds of forage and feed per day, and there’s far less competition for the water required to grow those crops in our neck of the woods.
Small and midsize First District Association members, like Watkins-based Landwehr Dairy LLC, see the writing on the wall. Husband-and-wife co-owners Dennis and Marlene Landwehr and their son Mike (“She’s the real boss; I just work here,” Dennis laughs, ever affable) have grown the milk herd to about 850 head. They’re aiming to add another 200 cows in the medium term; a smaller spread nearby has at least 200 head as well. The Landwehrs employ about 20 people. Like First District’s processing plant, the farm runs 24/7 — except for brief cleaning breaks, the milking floor is always running. In this business, scale and margins are closely intertwined.
Dennis and Marlene Landwehr.
Despite the incessant buzz about the farm, the Landwehrs are serious about doing things the right way. They’re fanatical about milk quality and purity, thanks in part to the premiums First District pays for high-quality milk.
“We do not tolerate sloppiness, and we will not tolerate sloppiness,” says Dennis Landwehr, his easy smile darkening.
Landwehr Dairy analyzes every batch on site to ensure compliance with tight somatic (non-bovine) cell count limits; milk that doesn’t pass is promptly tossed. (First District’s meticulous, high-tech, quality-control operation, which includes a sophisticated testing lab that processes every incoming tanker load, catches any problems its members miss.)
The Landwehrs run a sustainable ship too. Under their cow barns, great sealed holding pits capture vast quantities of manure: 14 million gallons annually, at present. Every six months, an outside contractor pumps liquefied manure out of the pits and pipes it into the surrounding fields, where tractors and mechanical diggers forcibly inject it into the topsoil. Roughly 10,000 gallons per acre is enough to offset a year’s worth of ammonium-based commercial fertilizer and helps produce, on average, 175 bushels of corn (which ends up in dairy cow feed). Local farmers are so happy to take the Landwehrs’ manure that they collectively cover the $150,000-plus removal cost each year — far cheaper, and clearly more sustainable, than paying for commercial fertilizer.
There’s a good reason central Minnesota farmers prize Landwehr cows’ manure: it starts with the best ingredients money can buy. Much of the Landwehrs’ main property is reserved for huge piles of high-quality forage material, which appear almost overnight at harvest time and dwindle slowly over the following 12 months. Super-nutritious value-add feed, a highly scientific mix developed over the course of decades, supplements the forage.
Sandy Hansen-Wolff of AgVentures with tanks full of feed for cows at Landwehr Dairy and other dairy farms
“In terms of actual nutrients, cows eat better than we do,” says Sandy Hansen-Wolff, whose Watkins-based AgVenture Feed & Seed supplies and manages the feed inventories at Landwehr Dairy’s in a value-added partnership. “We can’t expect them to produce if they aren’t treated well.”
AgVenture is one of hundreds of service businesses that keep First District’s members running. Hansen-Wolff has hundreds of customers, from small hobby farms to large dairies. Her team (and delivery truck fleet) ensure these customers have ample feed supplies, and work with nutritionists to keep the feed’s nutrient mix optimized.
AgVenture doesn’t grind or mix its own feed — plenty of other feed companies already do, says Hansen-Wolff, and her focus is more on customer service on the farm — so it’s smaller than many feed businesses. But that’s intentional. Many quasi-competitors — feed companies with grinding and mixing capacity, and in-house nutritionists — tap AgVenture for tasks they can’t or don’t want to handle, like small-scale distribution and supply management.
“We do what we do well, and let our partners do what they do well, so that farmers benefit from all the best pieces of their vendor companies,” says Hansen-Wolff. “We’re all on the same side here.”
So, next time you bite into a McDonald’s cheeseburger — or any of the dozens of food items containing First District’s cheese, whey protein or lactose — don’t just thank Clint Fall and his tireless team of milk processing veterans. Save some love for the Landwehrs, Hansen-Wolff, countless other agribusiness vendors, and the nearly 1,000 other First District members doing their part to keep Minnesota’s dairy industry humming along.
Heeding our agricultural roots
Some of my earliest memories were at my grandmother’s dairy farm in Stockholm, Wisconsin. I remember being attacked by a chicken. I was defeated for the moment, but I’ve had revenge numerous times over the years, aided and abetted by BBQ sauce and mesquite smoke. The rules at the farm were that “if you don’t work, you don’t eat,” so we kids were always trying to help. I offered to help push a wheelbarrow full of grain into the barn to feed the cows, but I couldn’t budge it. My uncle said, “You need to eat your potatoes.” I took him seriously, and had an extra helping of (homegrown) potatoes that night. I’ve continued that habit all my life — sometimes to excess when in the form of chips — but I’m happy to say my uncle was right. Now I can move that wheelbarrow.
Then there was the time I was in the vegetable garden with my mother, and she pulled a tomato off a plant and gave it to me to eat. It was ripe, juicy and delicious. It set such a high standard, that these days I can only find such tomatoes at the farmers market. Unlike a lot of city kids, I learned at an early age where my food came from. And I learned how good it can be when it is fresh. I am happy to see a greater interest these days in farm fresh foods, whether farmers markets or CSAs.
We always had fresh milk at the farm, too, and sometimes made it into ice cream. It took a little elbow grease, but boy was it good! That was my first lesson in “value added.” Others seeking to add value are returning to the time-honored ways of preparing food, with raw materials straight from the farm. These days there’s a ton of new food companies, everything from honey butter to buttery cookies to beer. But truth be told, there’s more to farming than what makes it to our table. Ever since Minnesota Territory farmers plowed the prairie soil to plant wheat, we have been harvesting more than we can eat — in a big way. Indeed, agricultural exports outrank manufactured ones, and account for a third of all exports.
Of course, a lot of things have changed since the gravy days of the Mill City. It always struck me that farmers had more common sense than city people. They were more in tune with nature because they depended on it. They could predict the weather by the smell of the air or the increased pain in a knee joint. Farmers still dance to an annual rhythm, but these days it is often accompanied with digital music coming out of an ear bud. As the small family farms gave way to larger and larger ones, operations became more digital and businesslike. This has made them targets for digital marketing, because they have this chronic habit of buying huge quantities of seeds, fertilizer and feed every year. Of course, the wise ones cut costs by combining their buying power and their productive capacity by cooperating.
I hope this focus on agribusiness helps you to put our statewide economy in wider perspective. At the very least, it should certainly serve to whip up your appetite!
Editor in chief
Local hops farm to break ground on new processing facility
This week will see another step in the development of the expanding Minnesota craft brewing industry, but it won’t involve anything foamy.
Mighty Axe Hops will break ground on a new processing facility on its newly-acquired hops farm in Benton County. The $1.3 million steel-walled building will give the company the ability to process its hops into the pellets that brewers use as a key ingredient in their beer.
“The hops grow on strings on 18 foot tall trellises. When we harvest, we use a picker to get the hop blossom, which is called a cone,” explains Mighty Axe co-founder and CEO Eric Sannerud (who was also a Minnesota Business Young Entrepreneur last year). “That will go to the harvest facility and go into the dryer there. We remove the moisture, then bale them into 100 pound bales, then turn that into pellets.”
Sannerud, 25, and his 26-year-old partner, Mighty Axe COO Ben Boo, formed their company four years ago, shortly after they graduated from the University of Minnesota. For the past four years, they have grown and harvested hops on a 3 acre hopyard in Ham Lake, selling their product to several Minnesota breweries eager for the option of purchasing locally sourced ingredients.
For months, Sannerud and Boo were on the prowl, searching for farmland for an expansion. Earlier this summer, they closed on an 80 acre plot of cropland in Gilmanton Township, 20 miles north of St. Cloud in central Minnesota. With the expansion of the acreage, their farm became the biggest in the state devoted to the production of hops.
The state-of-the-art processing facility will be built onsite, allowing Mighty Axe Hops to operate a one-stop operation, from seedlings to the finished pellet, which will be packaged into 11-pound (5 kg) boxes.
“The building is our biggest outlay of cash. We are importing equipment from Germany that the construction company will build around; there’s nothing like this in Minnesota. We anticipate it will be fully functional by next year,” says Boo. “This system is in line with the standards that brewers are used to working with. This step forward lets us render the harvested hop into a form and a quality that brewers value.”
Mighty Axe is financed with a $4.6 million mixture of a cash from an investment partner and financing from Bremer Bank.
“When we are at our full production, we project that we will produce 150,000 pounds of hops every year,” says Boo, who studied horticulture at the U. “We will have contracts with breweries before the hops are harvested. They are very finicky about what they want, and we can deliver. It’s not a risk.”
Hops, often called the spice of beer, are a perennial plant. As an ingredient, hops add bitterness, flavor and aroma to the finished fermented liquid. Mighty Axe has begun selling its hops to a few local breweries, and expect to be able to market their product to Minnesota brewers who will value a locally grown ingredient.
“We’re big baseball fans, and we say that our 3 acre farm in Ham Lake has been our spring training, where we tested varieties and growing methods,” says Sannerud. “Now we’re ready for the big leagues.”
Rendering of new Mighty Axe facility in Gilmanton Township, north of St. Cloud.