$900M dairy plant with 200 jobs fires up in Eastern WA. Biggest in the Northwest

KENNEWICK – Somewhere in the Mid-Columbia on Monday, dairy cows were milked, as usual.

The milk was collected in tanker trucks, as usual.

Then – unusually – the trucks detoured to north Pasco, where Darigold Inc.’s massive new processing plant was waiting for its first shipment.

Darigold, the Seattle-based processing and marketing arm of the Northwest Dairy Association, confirmed it processed its first shipment of milk on Monday amid ongoing construction.

The 500,000-square-foot new butter and milk powder plant on Railroad Avenue is the largest dairy processing facility in the Northwest. It employs 200 people and cost a reported $900 million, more than $300 million over the original budget.

It is one of the most significant economic development wins for the region in recent years, ranking alongside three Amazon Inc. warehouses and Local Bounti’s greenhouse operations, all in Pasco.

‘Big relief’

At full operation, Darigold will convert milk from 100 Mid-Columbia dairies into butter and powdered milk for customers around the world.

It is Darigold’s 12th plant. Its nearest neighbor is in Sunnyside, Washington, where Darigold makes various cheeses. Others are in Washington, Oregon, Idaho and Montana.

Officials say it was necessary investment in Darigold’s future, though one that came with significant engineering and financial challenges.

The Pasco plant began operating at least six months behind schedule and well above the original budget of $500 million to $600 million. In May, Capital Press, citing Darigold documents, reported milk payments were cut by 20% to 25% or $4 per hundredweight to cover costs.

Jason Vander Kooy, a second-generation Darigold farmer in Mount Vernon, Washington, is eager to see construction give way to operations.

“It will be a big relief seeing this plant be operational,” Vander Kooy told the Tri-City Herald.

Vander Kooy confirmed the cost overruns and that Darigold reduced milk checks to him and other member farmers.

‘Anchors our future’

The plant is centered around two high-efficiency, gas-fired milk dryers, billed as state-of-the-art gear.

Darigold began processing milk with skimmers and other gear. The dryers will come on line and it will begin making butter in July, said Allan Huttema, a Parmak, Idaho dairy farmer who serves as president and CEO of Darigold.

Huttema declined to elaborate on costs, saying Darigold is a private business.

“We’re happy that it’s to this point. We waited a long time for this,” he told the Herald.

He called it a necessary investment in Darigold and said it will benefit its 250 member dairies.

“It anchors our future. It allows our dairies to grow,” he added.

Darigold calculates its total investment in Pasco at more than $1 billion.

The eye-watering figure includes the cost to build the plant and improvements to the 100 dairies in the region that will supply it.

The plant cost increases were attributed to inflation, rising interest rates, supply chain issues and rising costs for stainless steel, as well as electrical conduit, switches and other building materials. Huttema said Washington’s overtime rules for labor and new building code requirements, including earthquake standards, factored into the added cost.

The Pasco plant will eventually process eight million pounds of milk a day or 930,000 gallons.

The process will yield up to 175 million pounds of butter annually and 280 million pounds of milk powder. The combined weight is equivalent to eight Statues of Liberty, according to TheMeasureofThings.com, a tongue-in-cheek site that uses silly comparisons to put large numbers into context.

Butter will be sold domestically while the powder products will ship to 30 countries. Huttema said the market for dairy products is strong.

“Butter and dairy are on trend nationally,” he said.

Choosing Pasco

Darigold announced it would site its next-generation plant in Pasco in 2021, after members voted to authorize the expansion.

It chose Pasco for its central location, access to Highway 395, future rail connections and a willing partner in the Port of Pasco, which sold 150 acres at Reimann Industrial Center for the project.

It broke ground in September 2022, projecting a 2024 start date. It pushed that back to mid-2025, citing delays in securing equipment, as well as the need to revise designs to comply with Washington’s changing building codes.

Huttema said the plant secured all necessary certifications from state and federal regulators. It is also certified halal and kosher to comply with Islamic and Jewish dietary requirements.

The port calculates the community has invested more than $25 million in public utilities and other infrastructure to support Darigold and its future neighbors. A rail spur has been designed but not constructed.

Pasco’s dairy cluster

Darigold partners are flocking to Reimann Industrial Center to be close to their customer.

In March, the port agreed to sell 30 acres to Cold Summit LLC. Cold Summit, based in Ketchum, Idaho, paid $4.5 million for the site and will build a cold storage facility.

In December, the port sold a separate parcel to Lynden Transportation Inc., for $2.2 million. LTI, known for its “Milky-Way” tankers with cartoon cows, will build a new hub to serve Darigold, a long-time customer.

Vander Kooy, the Mount Vernon Darigold farmer, said the new plant may be in Eastern Washington, but the benefits will accrue across the region.

Together with his brother, Eric, Vander Kooy milks 1,400 cows on two farms in western Washington. Most of their milk goes to Darigold facilities in Lynden, Washington, near the Canadian border, or Seattle.

They also ship to a Bellingham creamery under contract to Darigold.

Their father started the business in 1974 and the family has been part of Darigold ever since.

They may not ship to Pasco, but the plant there introduces new efficiencies to the system and reduces the need to haul milk between the two sides of the state.

“There’s a lot of good things that are going to happen,” he said.

That said, Vander Kooy said Darigold members are paying a steep price through their reduced checks.

He typically invests in his farms every year – remodeling barns one year, building new ones another, and replacing gear. He suspended the capital investments about two years ago.

He considers 2025 a year to hold tight.

“It’s making it difficult. There’s no other way to put it. It’s a struggle.”

He hopes short-term pain will bring long-term gains. Darigold needs the added processing capacity and reducing the trucking will save money.

“It will play a huge role in success in the long term,” he said. “We’re depending on Darigold being successful.”