By Charles Thompson | cthompson@pennlive.com

The Pennsylvania dairy industry got a boost last month in its eternal quest for market stability and — dare we say it, growth — as one of the nation’s larger farmer-owned cooperatives launched its first dairy processing operations in the state.

The Maryland & Virginia Milk Producers Cooperative acquired and took over operations of an existing ultra-pasteurization plant in northeast Philadelphia on March 1. First and foremost, that saved the jobs of about 178 plant workers.

In the not-too-distant future, it could also mean an expanded market for hundreds of Pennsylvania farms’ milk, as Maryland & Virginia — known by some as MDVA for short — also announced plans to more than double milk processing capacity at the site within two years.

And for non-farmers? That, in the long-term, may help more farms stay in active production in a neighborhood near you. Here’s why.

Making the milk you want

This kind of expansion has been something of a holy grail for Pennsylvania dairy farmers for many years, as the industry has battled flat consumer demand for beverage milk and increasing competition from all kinds of dairy substitutes.

Pennsylvania lost a chance to land a major new processor last year, when Coca-Cola chose to open a new Fairlife plant in New York state.

MDVA, though, sees new opportunity for its member farmers in Philly because the former HP Hood plant there offers ultra-pasteurization — a super-heating, fast-cooling formula that creates a product with a much longer shelf life than traditional pasteurization.

The new process is ideal for the kinds of “value-added” dairy products like whipping cream, half-and-half and fitness and recovery drinks in which dairies have seen growth in in recent years, and that still get their farmers the best prices as a sale of Grade A, or fluid milk.

“Ultra-pasteurized milk products are pulling the largest value or return back to our farmer owners... So really this is sort of realizing this peak potential of what we can do with milk in the marketplace,” said cooperative spokeswoman Amanda Culp.

Until now, MDVA has made its ultra-pasteurized product at co-packing facilities — another plant that is under contract to make the product for the cooperative’s Maola retail label.

Now, with its own ultra-pasteurized production lines, executive vice president Lindsay Reames said, the cooperative will have a freer hand to increase production and tap the full growth potential in those products.

As production increases, proximity will also help in the work of expanding Maola’s presence in store cases in Pennsylvania, New Jersey and beyond.

The cooperative did not announce the purchase price for the Philadelphia plant because of a non-disclosure agreement with HP Hood.

But it has pledged that more investment is coming. The company, as part of its acceptance of $10 million in state funding, has committed to boost production capacity from 10 million to 25 million gallons annually over a two-year period.

A bumpy ride

The dairy business has veered between a bumpy ride and just plain decline in Pennsylvania for about 20 years now.

According to federal data, the total number of farms with milking cows in the state has been more than halved since the start of the century, and the state’s aggregate dairy herd has shrunk by 24 percent since 2000, from 617,000 to 468,000 in 2022.

So, fewer farms and somewhat larger herds on average.

According to the last Agriculture Census, dairy ($2.5 billion in farm sales) has also been edged out by the poultry business ($2.6 billion) as Pennsylvania’s single-biggest ag sector in terms of the dollar value of annual production.

But dairy’s proponents still see a clear future for the business, given the state’s natural resources, historic dairy infrastructure and the proximity to so many major markets, plus access to seaports for international export.

Pennsylvania, at the moment, still ranks 6th in the nation in terms of the size of its dairy herd, and second in the number of active farms.

Finding a market for that milk is critical. State Agriculture Secretary Russell Redding said last week that the quest to find new dairy processing to help reverse the recent slides continues.

But the MDVA decision is a big deal, too, he said.

“Yes, it was an operating, functioning dairy processing plant previously. However, that milk that was coming to feed that plant was coming from all over the mid-Atlantic region,” Redding said. “It could have been flowing down from New York. It was coming up from Virginia. It came across from Ohio.

“Now, you have 720 farms in Pennsylvania that are Maryland Virginia members and their milk is feeding that plant.”

David Poole, whose family runs a 190-cow dairy farm near Robesonia in Berks County, is one of them. He gave voice to what it means recently during an informal turn-key celebration at the Philadelphia plant.

“Seeing this plant open here in Pennsylvania means a lot to me and the farmers across the state,” Poole said. “It means more opportunity to sell our milk into value-added products. It means more certainty in the marketplace. And it means more certainty for our farm and our future generations.”

Maryland & Virginia is the third-largest of the dairy cooperatives in Pennsylvania, trailing Land O’Lakes and Dairy Farmers of America.

But don’t let the name deceive you.

With about 80 percent of MDVA’s 900 member farms located in the Keystone State, what’s good for the cooperative is very definitely good for Pennsylvania dairy — many of them family-owned farms in the southeastern and south-central regions.

“It is a big deal, there is no question about it. We take it a tremendous vote of confidence in Pennsylvania,” Redding said. “They could have done this plant somewhere else and had the same vision. They did it here.”

Looking for Maola

Maryland & Virginia’s Maola brand is in Food Lion, Giant Food and Shoppers Food groceries, and sold in the grocery departments at some Costco and Sam’s Club stores. Most of general retail sales occur now in Virginia, North Carolina and South Carolina, Culp said.

Redding said a push is coming for greater retail market penetration in Pennsylvania and New Jersey.

“Now that it’s here, they’re making a really strong play for the retail sector to include grocery stores and convenience stores, and the restaurant and institutional buyers,” he said.

Aside from the Philadelphia plant, MDVA has two ingredients plants that make milk powder, cream and butter that moves, on an industrial scale, to other food processors. “We have dozens of customer relationships for these types of ingredients,” Culp said.

The cooperative’s four existing dairy plants are more traditional dairies that make the typical plastic jugs now seen in grocery cases.

The new Pennsylvania plant will increase the cooperative’s overall capacity, but also give MDVA its important entree into the ultra-pasteurized market.

“Our job as a dairy cooperative is to provide certainty to our farmers, knowing that their milk always has a home,” said Culp. “We’ve a done a pretty darn good job at that. But this addition in Philadelphia just brings that even greater level of certainty to the farmers who own our cooperative.”

Redding said what he really likes about the cooperative’s deal it that folks at the farm level have ownership in a significant processing plant.

Making the leap from simply supplying raw milk to somebody else, to adding value to that milk by way of their own plant, he said, is “a really strong statement of what consumers want and need.

“But it’s also where the predictability and, I think, comfort comes at the farm level in terms of being able to make those types of long-term investments knowing that you’ve got a long-term play in a plant that’s going to produce what people actually want and are telling you every day they are ready to buy.”