Big Island Dairy to process its own milk, bypassing Meadow Gold

Hawaii consumers can soon expect to see a new brand of local milk, and for the first time in a long time it will be direct from a major dairy.

The state’s largest milk producer, Big Island Dairy, is about ready to start processing and packaging its own milk in a new $10 million facility on its farm in Ookala between Hilo and Waimea.

Big Island Dairy plans to distribute the milk statewide under its own name in January, and also expand with butter, cheeses and creams.

“It’s a big endeavor,” said Steve Whitesides, the dairy’s owner.

The move has been two years in the making, and was prompted in large part when the only milk processor in the state, Meadow Gold, threatened to quit buying raw local milk from the only two major Hawaii dairies — Big Island Dairy and Cloverleaf Dairy — unless it was allowed to pay less than minimum prices set by state law.

Meadow Gold contended that it needed its cost for raw local milk to be more competitive with prices the company and its competitors were paying for cheaper mainland milk. The company, however, left it to the dairies to seek the state minimum-price waivers.

Hawaii’s Board of Agriculture agreed to allow the waivers in 2015, and Meadow Gold reduced what it paid local dairies. The state board acknowledged that Meadow Gold, which also imports milk from the mainland, wasn’t required to buy any local milk.

Big Island Dairy’s new processing plant will eliminate some business for Meadow Gold, which also imports mainland milk. The plant also may encourage expansion of local dairy farming, and represents a return to a model that once existed in Hawaii when 100 percent of the milk supply was local.

Up until 1985, Hawaii dairies produced all the milk consumed locally. Much of that local milk supply was sold wholesale to processors, though dairies on Kauai and Maui processed their own milk.

Loss of local milk production continued after the 1985 shift, which was touched off when Safeway began importing milk in response to contamination of the local supply by the pesticide heptachlor, which dairy cows had ingested through “green chop” feed made from the tops of pineapple plants sprayed with it.

Much of the industry’s gradual decline was influenced by land development pressures as well as high real estate and feed costs. Since 1999, eight Hawaii dairies closed. Big Island Dairy and Cloverleaf Dairy on Hawaii island are the only major survivors. Together the pair produce a little under 20 percent of all milk consumed statewide.

Last year, Hawaii dairies produced 35.1 million pounds of milk, compared with 35 million pounds the year before, according to the National Agricultural Statistics Service.

Whitesides said his dairy processing and packaging its own brand of milk creates a fresher product compared with milk it sends to Meadow Gold in Hilo and Honolulu for processing and packaging under the Hawaii’s Fresh label. “The milk that is produced (in the new plant) will be a day or two or three before it goes on the shelves,” he said. “The quality of the milk should be outstanding.”

Milk processing generally involves taking raw milk and pasteurizing, homogenizing and separating it into products for packing or further processing.

Big Island Dairy intends to produce skim, 1 percent, 2 percent and whole milk as well as chocolate milk. The company also plans to sell heavy whipping cream and half-and-half initially. Cheese and butter are planned later, including bulk sales possibly to restaurants, hotels and other customers that could include local producers of ice cream and other foods.

“There will be new products,” said Landon Whitesides, the dairy’s marketing manager.

Potential also exists for Big Island Dairy to process milk for other dairies, but for now the company is concentrating on producing its own brand.

The new plant has a capacity of about 18,000 gallons of milk daily. Currently, Big Island Dairy has about 1,400 cows that produce about 11,000 gallons a day.

Initially, Big Island Dairy sought state support for the new plant, and received approval from the Legislature last year to sell low-interest bonds with the state’s assistance. The special purpose revenue bonds would have been the sole obligation of the dairy to repay, but the company opted for commercial financing instead.

Steve Whitesides said financing, building and certifying the plant was a bigger endeavor than imagined. “We’ve invested heavily in doing it right, and making a product we can service the Hawaiian islands with,” he said. “It’s been harder than anticipated, but we’re looking forward to getting the plant open.”