Large Minnesota dairy co‑op asks legislature for $10 million to complete Litchfield wastewater digester; warns of production cuts

First District Association, a Minnesota dairy cooperative that represents hundreds of family farms, asked the House Agriculture Finance and Policy Committee on Wednesday for state help to complete a wastewater pretreatment and digester project at its Litchfield processing plant, saying a failure to finish the work could force a substantial scale‑back of production.

"We are the largest dairy processing plant in the state of Minnesota," said Bob Hoffman, president and CEO of First District Association. Hoffman told the committee his cooperative represents roughly 570 family‑owner farms across 46 counties and moves about 8.5 million pounds of milk per day — about 3 billion pounds per year — into processing.

Hoffman described a multi‑year cooperative investment to modernize the Litchfield plant, including upgrades tied to wastewater capacity. The cooperative began a project to add on‑site pretreatment and an anaerobic digester on city land in partnership with the city of Litchfield after state wastewater limits tightened and the plant fell out of compliance with its Minnesota Pollution Control Agency (PCA) schedule of compliance.

"We went into agreement to do that, and we, took steps and break ground," Hoffman said, adding the cooperative moved forward to meet compliance timelines. He said that without completing the pretreatment and digester project the plant could be forced to cut manufacturing volume by roughly 50 percent.

Hoffman told the committee the cooperative and the city led earlier wastewater investments to support the modernization; the plant added new buildings and equipment in 2021 after roughly $46 million of earlier investment to shore up wastewater capacity. He said the current digester and pretreatment plan is intended to address volatile‑organic‑compound (VOC) and tightened phosphorus and nitrogen parameters in the compliance schedule.

Cooperative members accompanying Hoffman described the farm perspective. Tim Schrupp, a fifth‑generation dairy farmer and long‑time cooperative member, said he has been sending milk to the co‑op for decades. Megan Shrupp, a dairy farmer and cattle veterinarian, said the processing plant is critical to ensuring a stable market for family farms and their ability to continue into future generations.

Hoffman said First District’s Litchfield plant produces about 800,000 pounds of cheese per day and roughly 100 million pounds of whey protein and lactose powders annually; he said just over 60 percent of those powders are exported. The cooperative said its 10‑year modernization plan cost hundreds of millions of dollars and left it servicing debt while trying to meet the PCA schedule of compliance.

The cooperative requested state support of $10,000,000 to complete the pretreatment and digester project; Hoffman said the same request had been made in the prior legislative session but was not enacted. Committee members asked whether other funding sources — including dairy checkoff funds and bonding — could cover the cost. Hoffman and staff said checkoff marketing funds cannot be used for a single entity’s capital project and that because the cooperative already began construction certain bonding mechanisms may be unavailable.

Representative Rick Hansen and others pressed for technical and budget details. Nonpartisan staff confirmed a separate $4 million dairy appropriation remained under discussion from the prior session. Members did not vote on a funding measure during the hearing.

Hoffman emphasized the urgency: without resolved wastewater compliance and installed pretreatment, the plant’s managers could be required to reduce throughput substantially, a result that would ripple to the cooperative’s 570 farm owners and to downstream ingredient customers.

No formal committee action was recorded at the close of the testimony; lawmakers signaled they would continue to review the cooperative’s request and the PCA compliance timeline.