“Fast forward 50-plus years to 1975 when the board of directors made the big decision to retool the plants, stop producing butter and powder and begin making cheese,” he tells Dairy Foods during a recent visit and plant tour.

“At that point, we had about 2 to 2.5 million pounds of milk being processed into cheese. In 1997, we completed the first major expansion since 1975. All the cheese equipment was updated into the newer style vats, from the horizontal style open cheese tables,” Huffman continues. “The next major milestone for First District was around 2012 when the plant’s capacity increased from processing 3.5 million pounds of milk to processing 5 million pounds of milk a day.”

A $200 million capital investment 

Then came FDA’s loftiest expansion in the company’s history, a $200 million capital investment to update and expand plant and product capacity so “the cooperative is set up to thrive in the next 100 years,” Huffman relays.

To continue driving innovation, in 2021 FDA unveiled three new facilities built from the ground up: a 62,862-square foot cheese plant and cooler; an 11,244-square-foot addition onto its lactose plant; and a milk receiving facility/intake plant of 15,000 square feet. Currently, FDA has five dairy processing plants, with two additional plants that can be retrofitted as the need arises.
 The company orchestrated its expansion strategy with sustainability top of mind, as it focused on ordering equipment and parts from top USA-based dairy manufacturing companies within about a 60-mile radius of Litchfield. For example, Tetra Pak, out of Winsted, Minn., supplied most of the state-of-the-art cheesemaking equipment; Willmar, Minn.-based RELCO built the dryer equipment pivotal for making whey and lactose powders; and APT (Advanced Processing Technologies), Cokato, Minn., designed and built the advanced cheese packaging and bulk conveyor systems. Even the approximately 12, 700,000 gallon vertical silos on FDA’s campus used for milk storage were constructed by a local company, DCI Inc., out of St. Cloud, Minn.

“Every decision we made wasn’t spur of the moment, but was based on where we want to be 15-20 years from now,” Huffman explains. “We’re not a national co-op, we’re a regional co-op in the upper Midwest that operates primarily in the state of Minnesota and that’s who we are. We stick to grassroots when it comes to our leadership and core values in how we operate. We try to make good conscious decisions and by sourcing locally, there’s less freight, less shipping, less miles on the road and less expense.”

Another plus was the timing since much of the work and investment occurred with pre-COVID-19 inflation dollars, so “we were very fortunate on our timing. If we had delayed six to 12 months, we could have seen our costs double,” the CEO says. “We were fortunate that during the entire pandemic, we never missed a beat. We were pretty much at full staff and I’m grateful for the 215 employees working for us as well as our dairy farmers for all their hard work.

“Several members of our team grew up on a dairy farm or have family members that are dairy farmers,” he continues. “We have team members who are related to current dairy farmer owners of First District. It’s just a cool passion that you can’t fake.”

Huffman proudly points out that today FDA is a $1 billion dairy cooperative represented and owned by 650 dairy farm families with 120,000 cows — all based in the “Land of 10,000 Lakes” to intake the freshest quality milk to make the freshest quality cheese.

FDA’s portfolio includes cheddar barrels, long-held cheddar barrels, GoudaCurd, Monterey Jack barrels, uncured swiss for manufacturing, along with whey protein concentrate (WPC) and lactose, which are cheese byproducts used in, natural and processed cheese, snack food, confectionary and infant formula markets.

FDA’s goal is to market the milk and return the highest value back to its farmer-owners. “The plants we operate are indispensable to our cheesemaking operations,” Huffman states. “We make 270 to 280 million pounds of cheese a year out of the 2.6 billion pounds of milk that we use internally to make cheese and also sell 335 million pounds of milk to Class I and Class II markets. …I’m proud to say we use every single drop of milk, all the way down to the water out of the cow's milk gets reused in the processing process.”

Innovations at every turn

In addition to sustainability and the creation of a new modernized plant that melds automation with technology, (see “Inside the Plant” feature), the company has added new 40-pound blocks of cheddar cheese to its portfolio, is ramping up production of its global whey business, and in early summer will be relaunching and selling its own brand of cheese — Fieldgate Cheese — in a designated retail shop in Litchfield.

Huffman explains that FDA’s and the co-op’s own cheese brand and retail store came to life in the mid-1980s, but was shuttered a few years ago when the organization that purchased it closed the store, ceasing production.

However, membership and regional community loyalty for FDA’s American-style, flavored cheese began reverberating. Huffman notes: “We really heard loud and clear the demand for the brand of cheese we produce and sell throughout the region … primarily American-style cheese based on our core cheddar with different flavors like ranch cheddar and bacon cheddar. While the brand is owned by First District, it will have the Fieldgate logo on its packaging and be sold right down the street with other products that our co-op partners wish to sell.”

In 2023, FDA also is boosting revenue and increasing capacity by reinitializing the commercialization of 40-pound blocks of cheese. Out of 20 SKUs that FDA produces, its cheddar varieties are No. 1 in dollar and volume sales.

All of the cheese that is manufactured is sold to customers for further processing. “I'd say we're about split in the middle between foodservice, but are a little heavier on the snack food volumes of cheese we produce,” Huffman states.

The CEO emphasizes that the company’s production of 500-pound barrels of White Cheddar sets it apart from other cooperatives. “We’ve been the largest US Dairy Farmer Owned Cooperative in that market for quite some time,” he states. “At the end of the day, our reputation is a key driver for us along with our good reputation for food safety and sustainability.

“We know costs are going to change and investments need to be made,” he continues. “Our farmers put their investment back into our manufacturing facilities as their No. 1 priority and have for years.”

While First District’s cheese operations is domestically based and represents a large volume, around 55%, of the company’s bottom line, its whey and lactose powders — which represent 100% of the company’s global export business — are sold internationally to countries like China, Japan and Mexico, to name a few. In the near future, the company hopes to export some of its cheese as well.

The company invests in innovation every year and finds that the more they work to meet a customer’s specific needs, the more the innovation pays off.

A 10-year FDA employee, Zac McCann started off on the production floor before being named the company’s cheese plant manager. He oversees around 46 employees — an average of 12 employees per shift running the plant — working 24/7, 365 days a year.

McCann recalls when a customer tasked FDA with creating a Swiss cheese to replace them from having to buy Swiss trim. “What we did was put the culture into our vats, but we didn’t cure it the same way they would a regular Swiss cheese because the customer is using this cheese in their own process, McCann says. “This way they’re getting a 500-pound barrel of cheese of high quality at a better price point.”

All the way with whey

Further innovation on dairy, milk, and the usage of whey and lactose byproducts is crucial for the growth of the customer-centric company.

“We try to show our customers the value of the sustainable side of dairy,” Huffman states. “On the protein and the lactose side, that’s where we’re really matching up technology and innovation. If you look at the project we just completed, some of that technology has never been used before and we’re the first ones to install it and use it.

“So, a lot of our investments in the last 36 months alone have been on the technology side to help us innovate and grow,” he continues. “The protein we get as a byproduct from cheese really has a wide range of uses in food, infant formulas, and pharmaceutical production.

ABOUT FIRST DISTRICT ASSOCIATION

Founded: 1921

Headquarters: Litchfield, Minn.

Campus size: Six square city blocks occupying 765,773 square feet.

Co-op size: 650 dairy farm families supplying 3 billion pounds of milk annually

President & CEO: Bob Huffman

No. of employees: 215

1975: FDA discontinued manufacturing butter and converted to cheese and whey products.

1984: New evaporator installed, making FDA one of the most energy-efficient plants in the world.

2021: Co-op celebrates 100th anniversary; opens new cheese processing plants and debuts world’s longest, three-story cheese belt that can make 42,000 pounds of cheese an hour.   

2023: FDA opens new retail store in downtown Litchfield, and relaunched its licensed Fieldgate Cheese brand.

Shane Dill, director of manufacturing for FDA, concurs that whey processing has dramatically increased with new resources. “First District wisely decided to really invest into the whey side of operations because we run such a clean process from the start which provides a really high quality of whey,” Dill says. “It’s used for infant formula and other products and we’re exporting a large volume of our whey products internationally.”

Geared for the future

In preparing to become First District’s ninth CEO in its 102-year-old history, Huffman says he learned the ropes during 17 years working on dairy farms, a dairy cooperative, and by managing large single-plant and multi-plant operations. He also gained deeper technical knowledge of milk intake, block and barrel cheese, and whey operations.

“First district is unique in that we talk directly to the customers that we supply,” the CEO notes. “They are long-time customers, and they’ve worked with us for more than 20 years because we produce high-quality products that meet their customized specifications. The consistency we offer and specializing in those specs sets us apart from a commodity cheese producer.”

Citing data from Chicago-based Information Resources Inc. (IRI), Huffman notes that competition is fierce in the $15.3 billion milk industry — which saw dollar sales climb 7.3% compared to a year ago. With cheese clocking it at No. 2 in overall revenue and sales, the CEO is “optimistic and excited for 2023 revenue.”

Even before the pandemic hit, First District was seeing steady revenue growth. “If you look at our revenue history in the last three years, we've pretty much doubled our revenue,” he explains. “Back in 2018, we were at a little over $500 million. Now we’ve hit the $1 billion milestone. We've been on an upward trend with the new plants and adding new products.

“It’s really exciting going through our brand-new, sparkling clean plants. The build and startup brought forth new innovation in size, scale, volume, and the ability to meet higher quality specs from new technology and to explore different types and flavors of cheese for our customers,” Huffman concludes. “The way I wake up every morning — and I’m a competitive person — is focused on the team behind me. The key ingredients to our success are our amazing employees and our dairy farmers who foster quality and consistency at every turn.”