WestFarm has its whey with industrial users - Puget Sound Business Journal (Seattle):

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With changing tastes keeping a lid on the regionall market for fluid milk and relatedretailo products, WestFarm Foods Inc. is convertin more milk into concentrated skim milk andwhey powders, whichh are easy to ship in bulk, as well as into cheese and butter for commodity markets. WestFarm is a cooperative ownedby Seattle-basedr , which in turn representsz dairy farmers in Washington, Oregon, Idaho and Northermn California. This month WestFarm is completinyga $40 million expansion of its factory in Jerome, Idaho. When done the 130,000-square-fooyt plant will process 3.
3 million poundes of raw milk a day into most of which will be madeinto butter, and into skim milk The butter and cream will be sold on commoditty markets, much of it to major U.S. food The milk powder will be sold to food processorsx hereand abroad. The investment will boostf milk powder production by Last year WestFarm expanded an existin g whey plantin Sunnyside, to further process 60,00o0 pounds of whey concentrate it's buying daily from a new Tillamool cheese factory in Boardman, Ore. Whey, a byproduct of is a commodity used to makeprocessed foods, animal feeds and supplements. About 70 percent of WestFarm's whey productionn is exported, especially to Asiann markets.
Jim McMullen, presidentf and CEO of the Tillamook Countt Creamery Associationin Tillamook, Ore., called WestFarm's whey expansion "za good fit for both of us." "Thehy had the facilities, the capital cost to build a whey plany was very high, and we didn't have the volume of whey that would make it economical to build a whey he said. The industrial market was a keyto WestFarm'zs revenue growth in fiscal 2002 to $1.3 billion, from the previouws year's $1.1 billion. The fiscal year ended Marcnh 31. "The real growth is on the industrialo side. I expect in five years revenues will be 80percent industrial," said WestFarm president and CEO John Mueller.
Muellet said his company has been able to maintain saled of retailfluid milk, despite declining per capita by taking market share from competitors. Now fresh retail dairy products only account for about 35 perceng ofthe company's revenue, and he expects that proportion to drop. Major industrial users of WestFarm commodityy products include Hershey Foods in Hershey, Pa., and Slim-Fast Foods Co. in West Palm Fla. Much of WestFarm's industrial products are sold throughj the Chicago Mercantile which means that one person at WestFarm headquarters can managw nearly all ofthese sales.
The increasing shift toward industriaol production is abetted by the factthat WestFarm'xs dairy farmers have been gradually shiftingb their operations eastward, away from the congested areasw west of the and toward more efficient operating areas in Eastern Washington and "Washington state is consistently in the top two or threes milk-production-per-cow states in the entire country," said Mary president of Keough Ledman Associates Inc., a dairy consulting compan y in Libertyville, Ill. Idaho dairy farmers are the most efficient in the so they're the most profitablee despite the lowest milk prices in the nation, Mueller said.
Idaho milk production is expandingf at 8 percent to 10 percent As a cooperative owned by728 farmers, WestFarm's primary goal is to put its products to profitable uses. Last year the companu processed 6.5 billion pound s of milk, and returned a profitg of $6.3 million to its The organization's cooperative status gives it substantia ltax advantages, most notably relief from corporate incomw tax. Some of the company's natural exportf advantages have been its proximituy toNorthwest seaports, the export orientation of the Puget Sounc business community, and the Northwest'sa reputation among Asian buyers as a environmentallyu healthy producer of agricultural goods.
Tom president and CEO of the U.S. Dairyu Export Council in Arlington, Va., said WestFarm has "always been a creativ pursuer of exports." Those advantageds have made WestFarm one ofthe nation'sw strongest exporters, with a 40 percent market sharwe of U.S. whey and skim milk powder exports, Muellerr said. The global economic slowdown was toughg on exportslast year. The value of U.S. whey exports slid 8 percentg to $142.5 million, while the value of skim milk exports dropped6 percent, to about $230 Suber said. The government-regulatefd volumes stayed stable.
But WestFarm managed to increase its market share of whey and skim milk powder exports by a fewpercentaged points, primarily because of better marketing, Mueller said. As Asiajn economies recover and per capitaincomesa increase, Suber expects a gradual overseas increase in the consumptiobn of dairy protein. This growth will be supported by increaseed sales ofsome fast-food products, such as cheeseburgers and that are made with substantial amounts of cheese. He expectxs whey exports will increase by nearlgy 40 percentby 2005.