WHITE CLOUD — A statewide rush to increase livestock production has proved to be a boon for one West Michigan producer of animal feed.
Crawfordsville, Ind.-based Ceres Solutions Cooperative is investing $11.5 million in an expansion project for a feed-processing facility in White Cloud, about 45 miles north of Grand Rapids. The Newaygo County facility will directly serve the growing number of pork, dairy, turkey and chicken producers in Michigan.
In part, that growth has been spurred on by the opening of Clemens Food Group’s $255 million pork processing facility in Coldwater, about 35 miles south of Battle Creek.
“With the advent of the Clemens’ processing facility in Coldwater, hog production in the state of Michigan has been expanding rapidly,” said Martin Hall, Michigan Regional Manager for Ceres. “We’ve started to pick that up in the mill, which put us over the top of what we could manufacture.”
Once fully operational, the Clemens facility in Coldwater will be processing roughly 10,000 hogs per day, Senior Vice President Eric Patton told MiBiz in a March interview.
The Ceres outfit, known previously as North Central Cooperative, currently operates in downtown Fremont. However, with a number of new orders already on the books, the company had to find a new location, according to Hall.
“We didn’t have a location and additional space here right in downtown Fremont to continue to expand, so we opted to move to a greenfield in the White Cloud Industrial Park,” Hall said.
Ceres only plans to move its feed production to White Cloud. It will continue to operate its grain business — which includes drying, storing and retail — and its agronomy business in Fremont.
The new facility is expected to open in January 2018. When it does, production will immediately increase from 50,000 tons of animal feed per year to 125,000 tons annually. At full production, the new facility will be able to produce 300,000 tons of animal feed annually.
Hall attributes the majority of the increase in Michigan livestock production to rising freight costs required to ship goods via rail to processing facilities outside the state, which he says have tripled over the last two years.
“Before the rate increase, we would ship several hundred cars a year from Fremont and go to the Southeastern United States to feed chickens,” he said. “After the rate increase took effect, we don’t ship any corn out of the state anymore. It all stays local and gets fed or processed. It either goes into an animal or into ethanol.”
Having more feed accessible in the state has led to livestock producers increasing their populations of animals, further fueling the demand for feed-processing capacity.
“There’s absolutely no question about it that more livestock numbers are driving more feed demand,” said Jim Byrum, president of the Michigan Agri-Business Association. “We’re going to see more feed production.”
For his part, Byrum expects more agribusinesses to expand outside of their traditional rural downtown-based operations in coming years.
“Many of our members are located in downtown locations,” Byrum said. “As they look to grow, expand or modernize, we’re going to see more of these greenfield sort of developments like Ceres is pursuing with their new feed plant.”
The feed-processing operation in Fremont was previously operated by North Central Cooperative, a farmer-owned organization based in Wabash, Ind.
Earlier this month, North Central Cooperative merged with Ceres Solutions in a move that Hall said will further reduce operating costs and increase sales.
“Today’s trend in most businesses is continuing to grow and to drive costs out of operating our businesses. One of the easiest ways to do that is to continue to merge and get larger,” Hall said. “That allows us to cut overhead expenses while still maintaining our business volumes.”
As a result of the merger, the new cooperative boasts some $700 million in annual sales; it employs roughly 300 workers.
“It was a merger of two almost equals and a really strong balance sheet from both companies,” Hall said. “When it’s really strong before and you put the two together and you drive out costs, guess what: It’s even better (now).”
The discussions for the merger began about two years ago and the agreement was formally voted on in early September. Even so, North Central had planned to expand its operation into White Cloud regardless of the merger, Hall said.
The new feed mill will operate fully autonomously and also include a variety of bio-security measures, which includes mandating that incoming vehicles undergo a sanitation procedure before entering the facility.
“That’s cutting edge in the feed industry,” Hall said. “We do that on hog farms and turkey farms, but to our knowledge we’re the first ones to do that with a feed manufacturing facility.”