A growing force in America's dairyland

California Dairies, Inc. is just eight years old and is already one of the nation’s premier milk producers. Now, this innovative California cooperative is taking the next step by building a new plant and significantly expanding capacity.

DATO 2017-07-13 FORFATTER Harvey Marks

California Dairies Inc. is poised for growth. Created in 1999 by the merger of three financially-successful dairy cooperatives, this fledgling company has quickly become the largest cooperative in California and the second biggest in the United States.

Why would a group of independent-minded dairy farmers, each with strong traditions and roots, choose to form a cooperative? One major reason is that as a memberowned business, a cooperative is democratically-controlled and operated, returning any margins or profits to its members on the basis of patronage. That makes it especially well suited for business owners who value their autonomy but want to exercise collective strength in the processing and marketing of their products.

In the relatively short time California Dairies has been in existence, that strategy has paid impressive dividends. Today, the cooperative has over 650 farmer members with approximately USD 100 million of equity invested in the company. Total sales for 2006 were over USD 2 billion, and the growth rate is an impressive four per cent per year.

Member dairies cover a wide swath of the state. They are located as far south as San Diego county close to the C Mexican border and extend all the way north to Marin county near the city of San Francisco. However, the single largest concentration is in California’s agricultural heartland – the fertile San Joaquin valley in the centre of the state.

Two-fold commitment

To meet the needs of its member dairy farmers, the cooperative has five processing plants strategically located throughout its milk procurement area, with a sixth plant under construction. Given the size of its operation and with so many products touching so many lives, safety and security are of paramount importance, especially in the post-911 era. To safeguard production, the raw milk in every tanker truck shipped to California Dairies is tested before being unloaded and state-ofthe- art security systems are in place throughout each of its plants.

Remarkably, despite its success, California Dairies remains a small company with just 600 employees and a relatively flat organizational structure. This small size allows the company to be more nimble and aids in the decision-making process. One half of the management team focuses on improving and innovating production while the other half looks for ways to improve plant safety and maintenance. This two-fold commitment creates a natural check-and-balance system that has fuelled growth while helping California Dairies to reinforce its reputation as an industry leader.

In 2006, California Dairies processed approximately 17 billion pounds (7.7 million tonnes) of milk. (As a bulk seller, California Dairies totals are customarily given by weight, not volume.) That figure represented 43 per cent of all the raw milk produced in the state of California and was more than 9 per cent of the national total.

Profitable diversification

Of that amount, approximately half or 8.8 billion pounds (4 million tonne) was sold as fluid with cheese customers accounting for 5.6 billion pounds (2.5 million tonne) of the total. The cooperative also makes some cheese itself, last year producing 16 million pounds (7.3 thousand tonnes), primarily for bulk sale.

Over 1000 of the Alfa Laval Tri-Clover 700 Series valves are installed.In addition, California Dairies churned 227 million pounds (103 thousand tonne) of butter, which was over 50 per cent of the total for the entire state and 17 per cent of national production. Most of this butter was shipped in bulk to food processing companies for use in baking and cooking. However, the company also produces 27 private label brands for retail grocers and food service companies all across America.

The remaining 50 per cent of the raw milk it processed was converted into milk powder. California Dairies dominates the domestic market for milk powder, supplying about 60 per cent of the U.S. total, and it is making plans to export increasing amounts of this product to other parts of the world.

This focus on milk powder is based on the cooperative’s commitment to continued growth. Liquid milk is a product with a relatively short shelf life and significant constraints on how far it can be transported successfully. As a result, virtually all of California Dairies’ fluid milk is sold within the state, a mature market with limited growth potential.

A way to profitably diversify and extend its marketing area is to convert fluid milk into milk powder – a product that is extremely stable and already plays an important role in the world’s food-supply chain. Milk powder can be shipped in bulk across the U.S. or around the world where it is used by bakeries, ice cream manufacturers, groceries, restaurants and other food suppliers. It is also extremely valuable in areas where milk or other dairy products would otherwise not be available at all.

A long and productive relationship

Alfa Laval has partnered with California Dairies from its very beginning, and the relationship extends even further back since founding members were already Alfa Laval customers and had used its products for a long time.

The list of products Alfa Laval currently supplies is extensive and diverse. “We use their valves, plate heat exchangers and installation equipment for our different processes,” says Harry DeLint, Vice President of Engineering for California Dairies. “We also installed refrigeration and evaporation equipment from Alfa Laval.”

DeLint adds that the commitment to Alfa Laval products is pragmatic and based on a long track record of results. “We’ve had outstanding results over the years with Alfa Laval products,” he says. “Our plants run continuously 24 hours a day, seven days a week, and we get excellent life out of our Alfa Laval valves and other components. The quality has been consistently superior, and the need for spare parts is minimal. We’re simply not seeing any breakdowns with their products.”

Currently, Alfa Laval is working with California Dairies as it converts a former snack food plant in Visalia, California, in the state’s central region into a state-of the- art dry-milk and butter-processing facility. The main emphasis in designing the Visalia facility has been to find faster ways to receive milk through the plant’s eight bays and to process milk more efficiently so the final product can get to customers as quickly and safely as possible.

The plant in Visalia produces dry-milk and butter.The plant will have approximately 340,000 square feet (31,587 m2) under roof. It will also have the largest milk spray dryer in North America with the capability of converting five million pounds (2.3 thousand tonnes) of milk per day into milk powder. A second phase expansion is currently under consideration and could add up to another five million pounds of additional capacity.

For its role, Alfa Laval is supplying all the valves, process piping and fittings, as well as refrigeration components and the dryer and evaporator units. “Our relationship with Alfa Laval has been a real success,” says DeLint. “We tend to feel a lot of loyalty to products and companies that have performed well for us over the years. In return, we expect our vendors to work at understanding our needs and to show us that same kind of loyalty. I’m pleased to say Alfa Laval has done just that.”

Valves and service that pass the test

The relationship between Alfa Laval and California Dairies Inc. has evolved over the years. In 2005, a new chapter began when Alfa Laval’s US valve team started working directly with California Dairies.

“It’s led to a more personal relationship and has been a big help in coordinating shipments,” says Harry DeLint, Vice President of Engineering for California Dairies. “Recently we placed a bulk order for valves, and the logistics were excellent. Alfa Laval managed the order for us, eliminating the need to take our entire inventory at once and store it onsite. If we had a certain room becoming available on a certain day, they made sure our shipment was there ready to be installed when we needed it.”

California Dairies uses a number of Alfa Laval products, but over the years the Tri-Clover 700 Series seat valve has been a real mainstay with over one thousand of these valves currently installed.

They’ve found the Teflon seat ring and overall durability of the 700 Series perform well for California Dairies, especially in the milk receiving area where temperatures in the central valley exceed 38°C in the summer. DeLint adds that they hold up extremely well in the plant environment with outstanding life expectancy. “Once they’re installed, we don’t have to go back except for normal routine service, so we get our investment back over the life of the valve.”

“Most of our plants either had them originally installed or have been retrofitted with them,” says DeLint, “and we’ve found them to be a very well-built, low-maintenance product.”