Dairy is central to the protein race; component yield will matter more than ever

ALBANY, N.Y. — Dairy processors are investing over $3 billion in new and expanded facilities from western to central New York and into the North Country.

Amid the current U.S. dairy processing boom, New York ranks first for new investments east of the Mississippi River and among the top three states nationally. Projects unfolding between 2023 and 2027 could reshape milk flows within the state, across the Northeast and beyond.

Over the past two years, a dozen major projects have been announced, completed, or are in advanced planning stages in the Empire State, which together are expected to use 10 to 12 million additional pounds of milk per day — roughly 4 billion pounds annually (see Map and Table 1).

By 2027, the projected increase could reach 8 to 10 billion pounds annually, depending upon component yield and processing shifts.

Unlike past expansions focused on raw milk volume, today’s growth is driven by infrastructure evolution, product diversification, and milk component economics.

Component yields have steadily increased nationwide, including on Northeast dairy farms. Most new investments center on products using more components, with growing demand for high-protein and full-fat dairy.

Extended shelf life (ESL) and ultrafiltered (UF) fluid milk and dairy beverages are key parts of this trend. Growth includes not only more milk volume but enhanced component extraction and co-manufacturing approaches to upcycle byproducts from some processes as inputs for others.

The largest announcement in April was Chobani’s $1.2 billion yogurt mega-plant and ‘natural foods campus’ slated to open in 2026 in Rome, N.Y. With 28 production lines, it’s expected to consume up to 6 billion pounds of milk annually at full capacity — though actual intake may be lower as component yields improve and/or UF solids are used.

Fairlife, owned by Coca-Cola, is building a $650 million UF dairy beverage plant in Webster, N.Y., expected to require 5 million pounds of milk daily by 2026.

Great Lakes Cheese began packaging at its $600 million Franklinville,N.Y. plant in 2024 with full operation this year, using around 1.4 billion pounds of milk annually.

Cayuga Milk Ingredients launched a $270 million expansion in Aurelius, N.Y. with UF and aseptic UHT packaging for shelf-stable fluid products. It’s grand opening was in June.

Byrne Dairy, Cortlandville, N.Y. broke ground in July on its $120 million phased expansion in ESL fluid products, and HP Hood, Batavia, N.Y. has similarly sized investment for phased expansion in ESL beverage processing underway.

Lactalis USA invested in 2023 to boost whey ingredient output 30% ahead of announcing in July its further modernization and expansion of Walton and Buffalo sites in the Empire Stateto increase output of cottage cheese, sour cream, ricotta, mozzarella, and whey powders.

Upstate Niagara Cooperative had board approval for a $250 million upgrade and expansion at West Seneca, N.Y. for fluid milk, yogurt, sour cream and cottage cheese, which was then scaled back on July 10th from 250,000 sq. ft. to 165,000.

Wells Enterprises — maker of Blue Bunny and owned by Ferrero, the Italian chocolate giant — invested $170 million toward a $450 million Dunkirk, N.Y. expansion for 2025-26 phased completion. It includes the first U.S. segregated chocolate production facility alongside expanded ice cream and frozen dessert lines featuring ice cream bar, cup and cone innovations.

On the horizon is a proposed dry dairy ingredients and infant formula plant in Watertown, N.Y. Since 2023, Southern Dairy of Texas has made multiple visits, with plans presented to the Planning Board in July, according to Jefferson County Ag Coordinator Jay Matteson.

Transportation and logistics are key. The Southern Dairy plant would tap into CSX rail and power infrastructure for global shipping of dry dairy ingredients.

State and local incentives have spurred projects through Empire State Development funds, FAST NY approvals, PILOT tax credits tied to job creation, infrastructure grants, utility support, and transportation upgrades.

Words like “renaissance” and “geographically strategic” recur in announcements, pointing to New York’s position as fifth largest milk-producing state and its proximity to major metropolitan markets. New York Ag and Markets sees the state becoming a processing hub not just for yogurt and cheeses, but also for dairy ingredients, ESL fluid milk, and powders.

For farmers, these developments bring cautious optimism. New capacity would support long-needed processing demand and product diversity but also raise concerns over future disruptions to legacy plants.

Plant reductions have so far been minimal compared to the scale of current investment. However, changes in product mix, shelf-life, location, and waste-stream utilization could realign milk flows across the region.

What about neighboring Pennsylvania, which competed for some of these investments? As the top state for conventional fluid milk bottling and with a state-minimum retail price and over-order premium, processing shifts could impact cross-border fluid sales and farm revenue dynamics in varied ways.

Herd expansion in the Northeast remains more the slow-and-steady kind due to permitting, nutrient management, and land constraints. In Albany, lawmakers are heatedly debating proposed legislation to halt permits for dairies with 700 or more dairy cows — reflecting tension between upstate rural communities and downstate urban agendas.

On the ground, high cost of materials and credit, volatile milk prices, expensive heifers, and labor challenges temper enthusiasm a bit, but dairy herd expansions are underway.

In a 2020 Farm Credit East report, Dr. Mark Stephenson observed New York, Vermont, and Pennsylvania as milk-surplus states, yet the Northeast as a whole had a 6-billion-pound milk deficit annually at that time, in terms of consumption, not processing capacity, owing to the Boston–New York–Philadelphia–Washington D.C. corridor.

Stephenson calculated the Northeast milk production growth at 1.14% compounded annually in the years leading up to 2019, noting that regional processing growth would have to match this for farmers to avoid increasing transport costs or milk dumping.

Then, from 2019 to 2024, New York grew from 627,000 to 630,000 cows and from 15.1 to 16.1 billion pounds of milk output — a 6.6% production increase over five years, close to Stephenson’s regional forecast.

USDA’s most recent milk production report shows a 2% year-on-year (YoY) production increase in New York, with 8000 more cows in June vs. year ago. That’s notable compared to flat or slightly lower production across other Northeast states, though still below the U.S. average 3.3% gain in June.

How will it measure up when these projects are completed? Planned capacity represents a 25–30% boost in NYS processing, based on raw milk volume at standard component rates.

Component yields are rising nationally, and in the Northeast, and will be crucial. Cornell’s 2024 Dairy Farm Business Summary shows top-quartile farms in New York averaged over 4.25% butterfat and 3.35% protein, with total component pounds per cow increasing even when milk volume plateaus.

To meet demand, processors may also source milk from outside the Northeast Federal Order (FO 1). Michigan, in neighboring FO 33, is the sixth-largest milk-producing state with more rapid growth, up 4.5% YoY in June. Michigan milk has long flowed into the Northeast pipeline, per FO data.

Conversely, western New York and Pennsylvania milk also gets pooled in FO 33, especially considering that western Pennsylvania is located within FO 33, not FO 1. Western New York and north central Pennsylvania are outside both FOs, falling under state and federal pricing regulation depending on milk flows.

Some new processing types may supplement with milk protein concentrates (MPCs) or UF solids sourced from within the region or elsewhere. These are more efficient to ship by rail or refrigerated tanker than raw fluid milk and are already used strategically by cheese, yogurt, and high-protein ESL beverage companies to meet product demand, standardization ratios, and to supplement raw milk intake.

At the national and global levels, processors are also testing dairy/non-dairy hybrids and precision fermentation protein analogs in response to the hype around ‘sustainability’ and ‘protein customization.’

Chobani dipped a toe into non-dairy yogurt in 2019, but it was discontinued. The company did diversify into oat beverages and creamers, also acquiring La Colombe RTD coffee (2023) and Daily Harvest non-dairy frozen bowls and smoothies (2025).

Fairlife has filed patents (2022–25) for hybrid beverages and precision-fermented protein drinks.

Lactalis USA has grown into yogurt with the 2017-18 acquisitions of Siggi’s and Stonyfield, followed by General Mills’ Yoplait in 2025. Yogurt produces acid whey, a bit different from conventional sweet whey from cheese.

In 2023, Lactalis invested $32 million in a Buffalo, N.Y. whey facility to boost whey ingredient output 30%, ahead of its July 2025 announcement of $75 million in projects at Walton and Buffalo. These moves reflect co-manufacturing between soft cultured dairy, cheese, and whey products. In 2025, Lactalis also opened a Culinary and Sensory Institute in Buffalo to test and support future product innovations.

Research and innovation play a key role in what develops in the future. Cornell’s Northeast Dairy Foods Research Center, in partnership with USDA, checkoff, and industry, continues product development and functionality testing in ultrafiltration, microfiltration, fractionation, micellar casein, and shelf-stable dairy beverages, including studies of consumer trends and acceptance.

While working on fermenting dairy plant byproducts into value-added foods, beverages, and ingredients, these pilot labs are positioned to support future development of hybrid dairy proteins.

The bottom line — Dairy is central to the protein race. Meeting consumer expectations for flavor and nutrition, while delivering functionally sound products, and understanding the nuances of consumer attitudes about ‘natural’ and ‘ultraprocessed’ put real dairy protein in a strong position. That’s good news for dairy farmers and consumers in New York, Pennsylvania, the Northeast, and beyond.