Chobani’s 3-billion-pound challenge

HARRISBURG, Pa. — “You might not need more cows, but you do need more milk,” said Chobani Vice President of Government Affairs Max Finberg as he put Chobani’s challenge to Pennsylvania Dairy into perspective during a Center for Dairy Excellence All Things Dairy conference call. This is Part Two in our coverage of the discussion. Part One appeared in the Oct. 21 edition of Farmshine.

Joined by over 75 dairy farmers and industry representatives meeting virtually by zoom, company and Commonwealth officials discussed what it will take to supply Chobani’s new $1.2 billion dairy manufacturing operation near Allentown.

At full buildout, Chobani wants more than 3 billion pounds of Pennsylvania milk annually — equivalent to about 30% of the state’s 2025 production. The investment is also expected to create more than 900 jobs over five years at the former Keurig Dr. Pepper facility.

Chobani’s goal is to use all Pennsylvania milk at the Pennsylvania plant, where Super Milk will be the first product. The high protein, ultrafiltered shelf-stable milk is currently bottled in Idaho for donation through food banks and Red Cross disaster relief. Super Milk will launch commercially from Pennsylvania. The plant will build out for other dairy innovations to follow, rather than its well-known Greek yogurt.

“You can stay small”

Finberg said Chobani founder and CEO Hamdi Ulukaya turned down the opportunity to receive Pennsylvania’s Special Milk Processor Tax Credit during negotiations.

“Our founder said, ‘No thanks, I don’t need that money on our bottom line. I need the dairy industry in Pennsylvania to produce milk at the levels and specifications we need.’”

The focus is on reinvestment in Pennsylvania dairy producers, working with Penn State, the Center for Dairy Excellence and state agricultural officials to improve productivity and components.

Pennsylvania has the second-largest number of dairy farms in the country, behind Wisconsin. “A lot of them are small, and you can stay small, but being able to get more (milk and components) per cow is necessary,” Finberg said.

He cited feed, nutrition, animal health and other management as areas to focus on.

With milk prices under pressure and the cost of facilities, equipment, land and labor weighing on expansion and farm transition decisions, the challenge for farmers and lenders is producing that additional milk profitably.

More than cows and milk

“That’s going to take more than just more cows and expanded dairy farms,” said Jared Grissinger, managing director of project and account management for the Pennsylvania Department of Community and Economic Development’s Business PA team. “That’s going to take all of the service providers and equipment dealers and crops and everything else that will go into supplying that much more milk in the state.”

Pennsylvania produced 9.7 billion pounds of milk in 2025.

“We believe that there is certainly the potential here for that demand to be met,” Grissinger said. “Not too many years ago, the state was pushing 11 billion pounds of milk a year.”

Chobani has specific volume and quality milk needs. It is a fact that ultrafiltration must start with high quality, low somatic cell milk because the solids are concentrated as the lactose permeate is removed. That starting SCC has to be low enough to account for doubling, tripling the protein concentration in the Super Milk.

What about premiums and milk prices?

What will the additional demand mean for farm milk checks? Will premiums stimulate competition and support reinvestment and expansion? How much of the economic benefit will reach individual producers?

Chobani dairy procurement leader Tony Nassar confirmed that the company is negotiating premiums with cooperatives expected to supply the plant. Chobani’s goal is to source 100% of its milk from Pennsylvania as production ramps up at the Pennsylvania plant.

“I know that’s the million-dollar question,” Sebright said. “We hope that the added demand will increase pricing in the region, but we also don’t know what global and other supply factors are going to come into play.”

Grissinger pointed to the broader economic impact of keeping milk production, processing and related services within Pennsylvania. Shorter milk-hauling distances could also reduce transportation costs compared with shipping milk to more distant markets.

Whether those savings and the added processing demand translate into stronger farm-level returns remains to be seen as cooperative supply agreements and premiums are finalized. Those premiums will need to go through the cooperative and reach the cooperative’s dairy farmer owner members in Pennsylvania making the commitment. The additional Class I and II utilization should also boost the Federal Milk Marketing Order blend price.

The additional demand will also test the commitment of the Commonwealth’s agricultural infrastructure, from feed and crop production to transportation, equipment and farm services.

$127 million: Mostly existing programs

Of the $127 million in state resources identified to help Pennsylvania dairy farms grow and modernize, $117 million represents existing programs and anticipated funding over approximately three years. Another $10 million was identified as new funding, including $5 million that Grissinger said had been secured in the most recent state budget.

“A lot of this money is rolling out and can be rolling out the door today,” he said about resources that include the First Industries Fund Loan Program, Beginning Farmer Tax Credit, Next Generation Farmer Loan Program, Agricultural Conservation Assistance Program (ACAP), agricultural innovation grants and Center for Dairy Excellence programs.

Some accept applications on a rolling basis; others have specific funding rounds. Eligible investments can include land and equipment purchases, farm expansions, building modernization, conservation improvements and transitions to the next generation.

“This is not the amount of money that’s going to be needed to supply 3 billion pounds of additional milk for processing,” Grissinger said. “The vast majority of that is going to come from private lenders, through investments that farms are making.”

State assistance can help leverage that private investment, but farm profitability and milk prices will be critical.

“All of these things are going to need to happen to have the capital available and the farms the ability to invest that capital,” he said.

The Commonwealth is bringing together a Dairy Development Committee to tackle farm planning and infrastructure, financing and profitability, workforce needs, supply-chain capacity and production per cow.

“We’re really looking forward to what this does to catalyze the industry,” said Katie McLaughlin, agriculture coordinator in the Governor’s Office of Transformation and Opportunity. “Yes, Chobani will benefit, but really the entirety of our dairy industry should benefit from the momentum of this project.”

Among the ideas raised during the call were additional incentives for smaller farms to increase production, similar to volume- and quality-premium approaches used in other states at the state program level through public-private partnership investments.

“If you have ideas or you see things happening in other states, we really encourage you to please reach out,” McLaughlin said. “It is up to us to investigate and say what can we do and how can we work together through this process.”

“There is a very big light and focus on dairy right now because of the Chobani project coming to Pennsylvania,” Grissinger said, encouraging farmers to make their needs known to lawmakers, lenders, and industry.

Securing Chobani’s investment required extensive coordination on water and wastewater capacity, transportation access and permitting. Upper Macungie Township and the Lehigh County Authority played important roles, along with the departments of Environmental Protection, Transportation, Agriculture, Revenue and Community and Economic Development.

Grissinger recalled how local officials had spent years developing a wastewater plan, only to face major changes after Chobani’s needs emerged shortly after its approval. The Governor’s Office of Transformation and Opportunity helped bring the agencies and municipalities together.

McLaughlin called planning and permitting a “team sport.”

Meanwhile, Chobani is not the only dairy processing project in Pennsylvania’s development pipeline. “We do have a number of dairy processors not called Chobani that are in our portfolio right now,” Grissinger said.

Some are nearing announcements, he added, and involve different classes of milk. The state continues using grants, low-interest loans and permitting assistance to support dairy processing investment.

For Pennsylvania’s dairy farmers, the decisions will be made farm by farm. Increasing production per cow through management, nutrition, genetics and technology may be one path. Facility improvements, herd expansion or bringing the next generation into the business may be another.

Each requires capital, labor, land, facilities and confidence that future milk returns will support the investment.

The Dairy Development Committee will examine those needs as existing state programs continue and additional tools are considered. However, the bulk of the investment needed to meet Chobani’s projected demand will come from dairy farms and their lenders.

“Three billion pounds is a lot of milk, but I believe we can get there, and I think it’s going to take everyone to do it,” Sebright concluded.