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Dairy co-op Land O'Lakes to close one cheese plant, expand another in Wisconsin

A cheddar plant in Kiel will be expanded; an Italian cheese plant in Denmark will close on July 1.

May 1, 2014

Dairy giant Land O'Lakes Inc., Arden Hills, Minn., announced today that it is buying silos, vats and other equipment totaling millions of dollars for its Kiel, Wis., cheese plant. Meanwhile, it will close its Denmark, Wis., plant on July 1.

[Updated May 2. Dairy Foods asked if the equipment would be moved to another plant or sold. A company spokeswoman said no decision has been made yet. "We’re considering all options and haven’t ruled anything out," she told Dairy Foods.]

Land O’Lakes reported a realignment of its Eastern Wisconsin milk supply strategy, including a multi-year investment in the milk shed that includes increasing capacity at the Kiel plant, known for its award-winning cheddar and Monterey Jack cheese production.

"Wisconsin is a key growth area for Land O'Lakes, and decisions such as this will help us achieve our aggressive growth goals," said President and CEO Chris Policinski. "The investments at our Kiel plant will provide our members with increased opportunities to grow production in this critical region for our company."

As part of the realignment, the company is making a multi-million dollar investment to increase capacity and expand receiving at Kiel through improvements in plant infrastructure. Among the improvements are new milk silos, new cheese vats, upgraded whey receiving and a new vat room. The total planned investment was not released.

In February, Land O’Lakes reported that its Dairy Foods segment generated record pretax earnings of $75 million on sales of $4.5 billion in 2013, up 8%. This year’s results were driven by improved margins on milk powders and butter in Global Dairy Ingredients along with records in sales volume and earnings in the dairy cooperative’s Retail Foods and Foodservice businesses. The company ranked 5th on the 2013 Dairy 100, Dairy Foods' annual list of the largest dairy processors in North America. The company is the largest dairy cooperative in the list and the fourth largest dairy processor overall based in the United States.It ranks behind Nestle USA (Oakland, Calif.), Dean Foods Co. (Dallas) and Screiber Foods (Green Bay, Wis.) and ahead of Kraft Foods (Northfield, Ill.).

In announcing the closing of the Denmark plant, where it makes provolone and mozzarella semi-soft Italian cheese products, the company said the operation had not been profitable in recent years. Member milk that was shipped to the Denmark facility will be sold to an unrelated third party beginning July 1.