Idaho dairy farmers Jesus Hurtado and Dirk Rietsma are expanding their dairy business globally with their new plant, Suntado, which features advanced aseptic production technology to extend milk’s shelf life. The plant, representing a $150 million investment, is poised to tap into the growing Chinese dairy market. With China’s dairy consumption projected to increase significantly, Suntado’s innovation positions it strategically in the global dairy industry.
Suntado, a new dairy processing plant located in Idaho’s Magic Valley, USA, is the result of a significant investment by two prominent local dairy farmers, Jesus Hurtado and Dirk Rietsma. The plant represents a $150 million venture aimed at revolutionizing dairy production with cutting-edge technology. Suntado is equipped with 18 aseptic production lines designed to extend the shelf life of milk from about two weeks to 12 months. This innovation positions Suntado as a key player in the global dairy market, particularly targeting international markets such as China.
Innovations and Investments
On a sweltering July day, Jesus Hurtado and Dirk Rietsma, prominent dairy farmers from Idaho’s Magic Valley, welcomed international visitors, including a Chinese official, to their new dairy processing plant, Suntado. This visit marks a pivotal moment in their venture aimed at exporting Idaho milk to global markets.
Unlike most of Idaho’s 500 family-owned dairy farms that primarily serve local markets, Hurtado and Rietsma have invested in advanced aseptic production lines at Suntado. This technology extends the shelf-life of milk from approximately two weeks to 12 months, making it viable for international shipping. Their plant, which produces around 100 million gallons of milk annually, is now positioned to tap into global markets, with China emerging as a key target.
China’s Dairy Import Market
China, which is the third-largest importer of American dairy products after Mexico and Canada, spent $607 million on U.S. dairy last year. Despite rising geopolitical tensions, the Chinese market represents a substantial growth opportunity. Currently, China’s per capita dairy consumption is about 15% of that in the U.S. If this gap narrows, it could significantly boost global dairy market values.
In response to changing consumer preferences and efforts to rebuild trust following a 2008 milk contamination scandal, China has been actively working to revitalize its dairy industry. From 2017 to 2022, China’s dairy consumption increased from 30.4 million to 39.3 million metric tons and is projected to reach 62.2 million metric tons by 2032. If per capita consumption in China matched that of the U.S., it could surge to 326 million metric tons, valued at $626 billion.
U.S. Investment in Dairy Exports
The U.S. Department of Agriculture recently announced a $1.2 billion investment in dairy exports, underscoring the country’s commitment to expanding its share in the Chinese market. Major American banks are financing a $7 billion dairy boom, with significant investments from private equity firms and commercial banks. For instance, Suntado’s expansion, supported by $45 million in collateral and $150 million in funding from BMO Harris, is expected to generate $300 million in revenue in its first year.
Competitive Landscape
Idaho’s Suntado is not alone in the competitive dairy market. Global dairy giants, such as Coca-Cola’s fairlife and Darigold, are also investing heavily in new facilities. Fairlife is constructing a $650 million plant in New York, while Darigold is building a $600 million facility in Washington. The surge in dairy processing facilities reflects a broader trend driven by commercial banks, including Bank of America, Bank of Montreal, and Wells Fargo, which have allocated over $1 billion to the dairy sector.
Silicon Valley venture capital firms are also exploring opportunities in the Chinese dairy market. Sequoia Capital’s affiliate, Sequoia China, had investments in Chinese dairy companies such as Simple Love and Junlebao Dairy Group, although geopolitical tensions have impacted these ventures.
Strategic Moves and Future Prospects
China’s vice minister of commerce, Wang Shouwen, recently met with U.S. Dairy Export Council CEO Krysta Harden to discuss the potential of U.S. dairy in China, despite concerns over U.S. tariffs. Additionally, there are growing concerns about foreign ownership of American agricultural land, which some view as a national security issue.
At Suntado, Hurtado and Reitsma have already processed their first dairy truck and are preparing for further expansion. The initial phase of the plant is operating at full capacity, with plans to add 12 more production lines. This expansion will triple their capacity and facilitate access to international markets. Discussions with multiple Chinese companies are underway, with hopes of entering the market next year.
As Idaho’s dairy farmers make significant strides toward international expansion, the focus on China highlights the growing importance of global markets in the dairy industry. With advanced technology, substantial investments, and strategic partnerships, Idaho’s dairy sector is poised to play a significant role in meeting the increasing global demand for dairy products.
