Walmart opens local milk plant

June 18th, 2018

When you're Walmart, you've pretty much done it all. Or so it seems.

The Bentonville, Arkansas-based retail giant had never tackled building and operating a food processing plant, but officials can now check that off their bucket list.

On Wednesday, under cloudy skies, Walmart officially opened a milk processing plant near Fort Wayne International Airport. The $165 million investment is creating more than 300 new jobs and additional demand for area dairy farms.

Construction began in 2016 on the 250,000-square-foot facility that will supply Great Value brand milk to about 500 Walmart stores in five states, including all of Indiana, Ohio and Michigan.

Almost 30 local farms will supply milk to the center at Bluffton and West Pleasant Center roads, including Next Generations Dairy in Berne.

Tina Dirksen, co-owner of Next Generations, said the Adams County farm will remain the same size with 1,850 milking cows and 20 employees.

But winning the contract allows the farm to be a direct supplier to Walmart, which eliminates co-op fees it previously paid, and reduces the distance its hauler has to travel to deliver raw milk.

Raw milk prices, which are set by the federal government, have been low since 2015, one year after the Dirksen family bought the farm.

“It was incredible,” Dirksen said about getting the call from Walmart officials. “We were in disbelief. It's something we took very seriously from the beginning.”

Charles Redfield, Walmart's executive vice president for food, said buying milk from nearby farms helps keep prices down. The average distance from a supplier farm to the plant is 140 miles. The farthest is 210 miles.

“In the dairy industry, that's close,” he said.

Redfield said the retailer passes savings on to customers.

“That's something we at Walmart do really well, we like to find efficiencies,” he said.

The plant started processing milk last week and is already supplying 38 stores in the state, according to Tony Airoso, Walmart's senior vice president of sourcing strategy.

Molly Blakeman, a Walmart spokeswoman, declined to say how much milk the plant will be able to process when it's at full capacity. She cited competitive reasons.

But, Blakeman said, it will be one of the largest milk processing plants in the nation. Almost 200 jobs have already been filled in the plant to filter and bottle milk. Blakeman declined to share wage information but called the pay competitive.

About 100 more jobs are being created with third-party trucking companies to transport the milk.

Gov. Eric Holcomb, who cut the ceremonial ribbon to open the plant, reminded the audience that the investment could have been made almost anywhere.

But after Walmart officials did their homework, they found Indiana had the most tempting location, workforce and business climate, he said.

“It's no secret that our economy is very attractive. We've set the table, so to speak,” for business investment, he said.

The Indiana Economic Development Corp. offered Walmart $2.9 million in Hoosier Business Investment Tax Credit and an $850,000 conditional tax incentive, based on the company's hiring plans. Allen County commissioners approved abatements that would save the company about $10.7 million over a 10-year period.

Walmart's decision to build its first milk processing center here helps cement Indiana's reputation as a leader in distribution and agriculture, Holcomb added.

Indiana ranks 14th nationwide in milk production and second in ice cream production. About 184,000 Hoosier milk cows produce 2 percent of total U.S. milk production, according to the IEDC.

Overall, agriculture contributes $31 billion to Indiana's economy annually and supports more than 100,000 jobs.

“We're taking it to the next level,” Holcomb said of the relationship between Indiana and Walmart. “This is a big deal and something we're very proud of.”

Holcomb spoke to about 100 people while standing in front of the processing plant and pallets of empty gallon milk jugs placed there for the occasion.

The gathering reminded the governor of the traditional celebration at the end of the Indianapolis 500.

“I want to open one of these up and start chugging like I'm in the winner's circle,” he said, “because I sure feel like I am.”