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Dairy business is booming across Texas Panhandle

BROWNFIELD, Texas (AP)--Mike Schouten has watched the dairy industry grow in the Panhandle.

As many as six tankers stop daily at Schouten's Mission Dairy near Hereford to haul milk produced by his herd of nearly 4,000 cows.

Schouten moved his dairy operation to the region five years ago from near Stephenville in Central Texas, one of dozens who have done so since 2001.

Six years later in the Panhandle, the cow population has ballooned from about 20,000 to 140,000, and the number of dairies has more than tripled to about 70.

And more cows are on the way. Officials predict the region's dairy herd will increase by 20,000 annually for the next five years.

The dairies have created jobs--one new job is added for every 100 cows--and improved the economies in numerous small towns, some of which courted the industry aggressively to help sustain their viability.

The region is attacting dairies from within and outside Texas. Land in the wide-open Panhandle is cheaper and the climate is ideal--low humidity and less rainfall--which aids swift evaporation and limits runoff into the few streams running through the region.

"You don't have the heat stress in the summertime and the winter times are similar to Central Texas with the exception of more wind," Schouten said. And there is "the ability to grow my business in an area that understands agriculture."

There's also a reliable water source--the Ogallala Aquifer--which lies deep underground. And feed for the cows can be grown on the dairies or by nearby farmers.

Panhandle dairies now produce more than 40 percent of Texas' milk, up from about 10 percent in 2000, said Ellen Jordan, a dairy specialist with the Texas Cooperative Extension. Of the state's Top 5 milk producing counties, three--Parmer, Deaf Smith and Castro--are in the Panhandle.

"The cows don't have to expend any energy to just stay cool or warm," said Ellen Jordan, a dairy specialist with the Texas Cooperative Extension. "Consequently, they can be more efficient. That has piqued the interest of a lot of people."

Texas' dairy industry historically operated mostly in verdant East Texas and in Erath and Bosque counties west of Waco. Wet conditions and higher normal rainfall created an environmental impact from manure and runoff into nearby rivers, which created problems for dairy farmers there.

"It's easier to be in environmentally compliance because there is less rain" in the Panhandle, Jordan said.

All dairies must meet the state's environmental permitting requirements regarding discharge and health standards for food safety.

Environmentalists are not enamored with dairies and they remain wary of the operations moving to the Panhandle, even if they do seem to pose a lesser pollution threat.

Despite the drier climate, there's still plenty of wind.

"Now, not only are you going to breath sand, you're going to be breathing dried cow dung," said Jerome Collins, a spokesman for the Lone Star chapter of the Sierra Club.

With about 660 dairies, Texas is the nation's eighth-leading milk production state and is expected to surpass neighboring New Mexico this year. California remains the top U.S. milk producer.

"They are coming from a wide area of the country and find the people in the Panhandle ag friendly," Jordan said of dairies relocating to the region from New Mexico, Arizona, California, and from New York, the nation's third most prolific milk producer.

"We've grown dairies by leaps and bounds the past few years, and I would expect that to continue for the next few years," said Jeff Ammons, a Texas Farm Bureau field representative for 12 counties in the western Panhandle. "It's happening."

Lower transportation costs are another reason for the growth. Milk producers in the region have four plants in West Texas and eastern New Mexico to choose from, including the Hilmar Cheese Co., factory in Dalhart which opened in October.

Cheese plants took notice as more dairies started springing up in the Panhandle. Since 2000, many municipalities and counties in the Panhandle and South Plains aggressively recruited dairy operators and related industries.

Many offered incentives, which have paid off.

"You see the changes in the towns," said Jordan, who pointed to new stores, restaurants and hotels in Hereford, with about 14,500 people, as an example.

And it's hoped the effect will radiate into the region's biggest city. The $190 million Hilmar plant, which has expansion plans through 2014, got the support of Amarillo, 65 miles southwest of Dalhart. Amarillo's economic development group gave a $5 million grant to the California-based company; the Texas Enterprise Fund gave another $7.5 million and the state predicted a 600 percent return on its investment.

Amarillo's payback was forecast to be $570 million over 10 years. Hilmar guaranteed the state about 2,000 new jobs, 350 jobs at the company's plant and an additional 1,600 from new independent milk producers and new dairies across the region, officials have said.

Out-of-state dairies have also relocated far south of the Panhandle. Brownfield on the South Plains lured two dairies from California--one still being built.

The Brownfield Industrial Development Corporation gave acreage to entice Cal-Star Dairy, said Jack Cargill, the development group's executive director.

The dairy, which opened about three years ago and has an annual payroll of about $500,000, is showing signs of success like most in the Panhandle.

"This dairy has done well, he said. "I think the biggest benefit is our local farmers being able to grow silage for the dairy."

1 Star WK\23-B

Date: 1/3/08

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