A mountain of corn silage and a parade of trucks hauling milk from Driftwood Dairy are daily reminders to Willem Vander Dussen why his family moved their operation from California and Colorado to South Dakota.
“We saw the writing on the wall,” says Vander Dussen. “If we wanted to stay in the dairy business, it wasn’t going to be there."
Vander Dussen’s parents, Daniel and Sophia, started milking cows near Orland, Calif., in 2002, carrying on a family tradition that started in the Netherlands four generations earlier. But stringent regulations, high feed and land costs, and water availability concerns cast doubt about the farm’s future, he says.
While still milking 3,200 Holsteins in northern California, the Vander Dussens leased a dairy farm from a family member near Greeley, Colo., in 2017 with hopes of relocating and building their own operation in that state. Vander Dussen says high operating costs and inability to secure a milk contract derailed those plans.
Then destiny struck. A dairy farmer from Baltic, S.D., contacted the Vander Dussens about purchasing his farm in 2019. The family jumped at the chance. Construction began in late 2019 on a 5,000-head dairy operation, which included a massive cross-ventilated freestall barn and a 106-cow rotary milking parlor. It became operational in 2021, selling milk to cheesemaker and dairy cooperative Agropur.
“For the same amount of capital we spent building the farm in South Dakota, we could have only built a 2,000-head dairy in Colorado,” says Vander Dussen, a CHS farmer-owner who manages Driftwood Dairy with his brother-in-law, Aaron Ramirez. “South Dakota is pro agriculture and assists with getting construction and operating permits. In other states, starting a new operation feels like you’re swimming upstream.”
Ramirez adds, “We have a desire to grow and we’re in a state where that’s possible.”
Cows are milked in a 106-stall rotary milking parlor at Driftwood Dairy, near Baltic, S.D. A cow exits or enters the carousel every 4 seconds.
Explosive dairy growth
Dairy delivers: South Dakota
- $5.67 billion economic impact
- 5,000 jobs
- $56.9 million exports
- 11% gross domestic product contribution
- $80.7 million state taxes paid
Source: International Dairy Foods Association, 2023
South Dakota’s dairy industry is experiencing rapid growth, especially on the eastern edge of the state along Interstate 29. Milk cow numbers have more than doubled in the past decade to 215,000 head in December 2024, according to the U.S. Department of Agriculture (USDA).
That expansion is bucking the national trend. Total U.S. milk cow numbers have remained relatively stable over the past decade, totaling 9.35 million head in January 2025, USDA data shows. South Dakota accounts for about 2% of the national total.
Tom Peterson, South Dakota Dairy Producers executive director, says the growth can be attributed to multiple factors. “About 20 years ago, South Dakota leaders and [industry] stakeholders came together with farmers and milk processors to develop a plan to not only ensure dairy industry survival in the state, but with aspirations of creating a dairy destination.”
Blessed with abundant feed and water resources, Peterson says several milk processors and cheese manufacturers also indicated plans to expand. “The cows followed.”
A combination of existing farms expanding and dairy producers relocating to South Dakota from other states accounts for the growth, Peterson says. Dairies with 3,000 to 5,000 or more cows are now common.
Economic opportunities
It takes a lot of feed to keep more than 200,000 cows productive, which has created opportunities for farmers, cooperatives and communities.
The dairy boom along the I-29 corridor stretches beyond South Dakota into northwest Iowa and northeast Nebraska, say Cody Millar and Rod Benson, dairy business development specialists with CHS.
Keeping up with industry growth, CHS has dramatically increased its dairy feed business. About three years ago, the company helped feed fewer than 15,000 cows in the region. That number has ballooned to about 160,000 cows.
CHS feed mills in Corson, S.D.; Tracy, Minn.; and Norfolk, Neb.; are humming, making bulk and bagged feed for lactating, dry and close-up (about to calve) cows. Most of the feeds for largescale dairies are formulated to each customer’s specifications and delivered in bulk. The company also supplies high-protein pellets, liquid feed and other feedstuffs.
“Dairy was an untapped market for CHS that is adding value for farmer-owners,” Millar says. “While other feed demand can be seasonal, dairy is year-round constant volume, which translates into a more sustainable and profitable business.”
The CHS grain location in Elkton, S.D., provides crushed corn to local dairies. Benson says strong demand required equipment upgrades to speed up processing of corn shipped in from other CHS locations.
“Most days, 25 semis leave the Elkton plant with crushed corn for dairies.” Sustained demand for corn helps improve local basis levels, Benson adds.
“Local growers are profiting from us being here and providing a market for their crops,” Ramirez says.
Joel Ysselstein, left, general manager of Meadowvale Dairy, Rock Valley, Iowa, and Cody Millar, a dairy business development specialist with CHS, talk about dairy industry growth in the region.
Local impact
The Jerseys and Holstein-Jersey crosses, often called HoJos, at Driftwood Dairy each eat about 90 pounds of feed per day, which is purchased from local farmers and suppliers. Corn silage — 70,000 tons from 3,000 acres was chopped in 2024 — is the bulk of the ration, followed by haylage, crushed and high-moisture corn and other feedstuffs.
CHS supplies 50 tons of a fatty acid supplement per month to Driftwood to boost milk and milk fat production. It also supplies 100 to 150 tons of molasses per month, an energy source that binds feed ingredients to ensure all cows receive a consistent ration.
Meadowvale Dairy near Rock Valley, Iowa, milks 11,000 Holsteins and Jerseys. Joel Ysselstein, general manager, says his parents, Sjerp and Natalie, started the dairy with about 300 cows in 1992. “We gradually grew, adding a barn every year as milk demand allowed.”
CHS supplies dairy feed mixes and crushed corn to the farm. While those ingredients make up less than 15% of the overall ration, the dairy buys about 100 tons and 500 tons, respectively, per week. Meadowvale Dairy’s goal is a whole-herd average of 95 pounds of milk per cow per day.
“The importance of working with any feed mill and supplier is getting high-quality ingredients at an affordable price,” Ysselstein says. “Working with a cooperative the size of CHS provides stability, economies of scale and great service. Working with Cody and Rod, I know I will never have to worry about running out of products and that matters.
“CHS is supporting us the way we need it to,” Ysselstein says.
Cooperative effort
The cooperative model and collaboration by the CHS animal nutrition team have helped grow the company’s gross dairy sales by 30%.
“There’s a lot of competition for dairy feed,” Millar says. “The farmer-owners I work with like having a voice in how we do things and sharing in the profits. CHS has built a reputation as a reliable, competitive supplier, so farmers are calling us [for feed bids].”
Feed mix formulas can vary greatly, depending on the production goals and needs of each herd. Millar and Benson, along with Brandi Gednalske, a research and development animal nutrition specialist with CHS, and CHS feed mill managers work together to fulfill customer needs.
“The nutritionists give us a formula for a lactating feed mix and I plug the ingredients into our system to see what we have in stock or what could be substituted if they’re open to it,” Gednalske says. “I’m the extra set of eyes to ensure cows get affordable, high-quality feed. When a cow is producing 100-plus pounds of milk a day, she is working her tail off, so the more we can do to keep her healthy, the better.”
Kent Corbin, manager of the CHS feed mill in Corson, says hundreds of ingredients are available in the dairy feed market and the right mix varies by herd needs and nutritionist preferences.
“Part of our job is to make sure we have as many options available as possible so we can best serve our customers,” he says. “The nutritionist, farmer, sales team, formulation expert and I all work together to figure out the best approach."
Focus on feed
Animal nutrition expertise and capabilities are growing at CHS. A full line of Payback® feeds serves herds and flocks of all sizes and the premium line of Equis® feeds is a favorite among horse owners.
Offered through an extensive dealer network, Payback feeds contain high-quality ingredients geared to improve animal health, performance and production. Versatility and variety set the brand apart, says Ken Bryan, who leads animal nutrition product development for CHS.
In addition to bulk feeds for dairy, beef and swine operations, “We manufacture bagged feeds for a wide spectrum of animals from chickens, goats, sheep and pigs to cattle and more,” Bryan says. “Our bagged products can meet the needs of livestock producers, as well as what we call the lifestyle segment, who buy a few bags at a time.”
Expanding in the lifestyle feed segment is good for CHS owners, since it is less prone to economic downturns, Bryan contends, noting the popularity of backyard chicken flocks. “It’s a stable segment with room for growth.”
Check out the full Spring 2025 C magazine with this article and more.
