A truck delivers the first load of milk to Darigold’s processing plant at the Port of Pasco in Washington. (Photo courtesy of Darigold)

Darigold’s new processing plant in Pasco, Wash., plagued by cost overruns that have reduced payments to dairy farmers, has started processing milk, the Seattle-based cooperative announced June 4.

The 500,000-square-foot plant at the Port of Pasco represents an investment of more than $1 billion, counting anticipated investments by surrounding dairy farms to supply the plant, according to Darigold.

The Pasco plant will be the largest of Darigold’s dozen processing plants, capable of processing up to 8 million pounds of milk a day, according to the co-op. Darigold has been processing 9 billion pounds of milk a year, or about 24.6 million pounds a day.

When it broke ground in 2022, Darigold projected the plant would open in early 2024 and cost $600 million. Darigold acknowledges cost overruns, but has declined to disclose a figure.

Inflation, supply-chain problems, changes in building codes and the sheer complexity of the project contributed to cost overruns, Darigold spokesman Chris Arnold said.

“We’re really pleased to have started to take milk. It hasn’t always been easy,” he said. “It really feels good to be turning this corner.”

To finance cost overruns and pay for operating losses, Darigold has been deducting $4 per hundredweight, approximately 11.5 gallons, from milk payments. The deduction represents approximately a 20-25% cut for the cooperative’s approximately 250 members in Washington, Oregon, Idaho and Montana.

The $4 deductions will continue through at least the end of June and probably longer, according to a letter the cooperative sent to members.

“Right now, there’s a lot of uncertainty. We don’t really know as dairy farmers what’s going to happen,” said Dan DeRuyter, a Yakima County, Wash., dairy farmer and co-op member.

Darigold evaluates the deduction monthly, Arnold said. 

“No one here likes that check deduction. We certainly understand the hardship it creates for members,” he said.

Darigold said it expects to start producing powdered milk and butter in August and have a second dyer operating by the end of the year to make powdered milk.

For now the plant is separating milk into ingredients for butter and powdered milk. Final processing is being done at other Darigold plants. 

About 75 people are working at the plant, Arnold said. The plant is expected to eventually employ nearly 200 workers. The plant will take milk from more than 100 farms. Powdered milk and butter will go to customers in the U.S. and some 30 countries, according to the co-op.

“Our new Pasco facility solidifies the Northwest as a global dairy leader and reflects our farmer-owners’ long-term commitment to good stewardship, high-quality production, and maintaining dairy farming as a way of life,” Darigold President and CEO Allan Huttema, a Parma, Idaho, dairy farmer, said in a statement.

Darigold has no plans to close any of its other plants, Arnold said. “That hasn’t been the plan. The plan has been to increase capacity,” he said.

About 40% of Darigold products are exported, Arnold said. Darigold will be able to move products from Pasco by railroad, highways and the Columbia River, he said.