Walmart announced it will build a new $350 million fluid milk processing plant in south Georgia.
The new facility, to be located in Valdosta, Georgia, will break ground later this year and is scheduled to open in 2025. The site will process and bottle a variety of milk options including gallon, half gallon, whole, 2%, 1%, skim and 1% chocolate milk for Walmart’s Great Value and Sam’s Club’s Member’s Mark brands. The products from the facility will serve more than 750 Walmart stores and Sam’s Clubs in the Southeast.
Despite growth in population, the Southeast has seen declines in dairy processing and milk production, noted Calvin Covington, a retired dairy cooperative CEO who now does some farming, consulting, writing and public speaking. In 2000, there were 44 pool distributing (fluid milk) plants in the Southeast and Florida Federal Milk Marketing Orders (FMMOs). In early 2023, there were only 23. On the production side, the two FMMOs combined had an average of 354 loads of producer milk per day in 2022. This is down from 389 loads per day in 2021 and 548 loads in 2010.
More recently, Georgia has shown a resurgence in milk production. Based on USDA preliminary milk production data through August, Georgia is the only “major dairy state” in the Southeast to increase milk production compared to the same period a year earlier, up about 3.4%. Of other states located within the Appalachian, Florida and Southeast FMMOs, Kentucky’s first-half 2023 milk production was up slightly. That’s in contrast to Florida, where January-August milk production was down about 4.1%.
The USDA will release preliminary September and third-quarter milk production estimates on Oct. 19.
“For some time, the state of Georgia and dairy farmers in Georgia have worked to attract dairy processing into the state,” Covington said. “Currently, the state only has two fluid milk processors [in Atlanta and Lawrenceville]. Those two processors only use a portion of the state's growing milk production.”
Florida and Southeast FMMOs have the highest Class I (fluid) milk utilization percentage among 11 FMMOs, frequently hitting 80% or more of all milk marketed.
With that dependence on the fluid market, Covington said a majority of milk producers in the region will find the Walmart facility positive. According to the Walmart press release, the facility will source milk from local milk producers.
There will be potential market pressures. If Walmart sources the milk locally, it will only have to work with a few farms, due to their large size. If Walmart procures an independent milk supply, it could make it more difficult for Southeast cooperatives to charge over-order premiums. Existing fluid plants currently packaging milk for Walmart would see a significant drop in their milk volume, potentially leading to closure as milk processing shifts to the new Walmart plant.
“Georgia is home to some of the finest dairy farmers in the country,” said Bryce Trotter, executive director of the Georgia Milk Producers. “This announcement is a reflection of the strength of our dairy sector and the tremendous job our farmers are doing."
Trotter said his organization would work with other regional dairy producer and promotion groups to determine how the Walmart facility will impact the Southeast U.S. dairy industry.
Benefits: Transportation
Producers serving the Walmart plant will not only have a large milk market but could also see significant savings in milk hauling costs. Covington estimated it is about 300 miles from the center of the south Georgia milk supply to current processing plants in central Florida. The estimated cost is about $3.30 per hundredweight to transport the milk.
“A local fluid milk plant would save south Georgia dairy farmers millions in milk hauling costs each year,” Covington said. “Transportation expenses would shift from farms paying to truck their milk to distant plants to the plant transporting packaged milk to distant locations.”
Distance to market has been a major barrier to dairy growth in the region. In late 2022, multiple dairy cooperatives and organizations submitted proposals to the USDA’s Ag Marketing Service, calling for an increase in transportation credits and creation of new distributing plant and assembly performance credits, providing financial incentives for milk handlers moving milk within and into the region. Those assessments would add significant dollars to the three FMMO pools and could be used by handlers to offset hauling expenses currently paid by dairy farmers.
A public hearing on proposed FMMO amendments was held in February and March 2023, with recommendations published in July. Separate from the national FMMO hearing currently underway, a public comment period on the proposed rule closed on Sept. 18.
For additional regional dairy information, read Progressive Dairy’s 2023 “State of Dairy” articles published earlier this year:
