New Incentive Grant Helps Fund Va. Creamery Expansion

1/19/2013 7:00 AM
By Jennifer Merritt Virginia Correspondent

WIRTZ, Va. — A lack of water turned out to be a blessing in disguise for a pair of Franklin County, Va., dairy farmers.

“It all started because we needed water at the creamery,” said Donnie Montgomery, president and co-owner of Homestead Creamery in Wirtz.

The result was the first-ever grant from the state’s new Agriculture and Forest Industries Development Fund (AFID). The $60,000 award will help fund the company’s three-year expansion plan.

Homestead Creamery sells value-added dairy products, including ice cream, butter and flavored milk through Kroger, Whole Foods and their own retail store. They also deliver their products, along with local produce and eggs, to more than a thousand customers across three counties.

“We tried drilling wells on the property, but we got three dry holes,” Montgomery said. “We’re buying water from a well across the road. It’s a good well right now but we don’t have but the one. The one here at the plant doesn’t give a lot of water — less than two gallons a minute. It takes a lot of water (to run the creamery.)”

Montgomery and co-owner, David Bowers, both third-generation dairy farmers, approached Franklin County to try to resolve the water issue, talk about their expansion plans and explore options. It was the county administration that introduced them to the AFID grant.

“The company had some expansion plans. They met with me and we went through them and looked at what grants might be available to them,” said Mike Burnette, director of economic development for Franklin County.

Like the Commonwealth of Virginia as a whole, Franklin County’s largest industries are agriculture and forestry. Until recently, however, there weren’t many incentive grants available for agricultural operations. That changed with Gov. Bob McDonnell’s introduction of AFID in 2012 during Virginia’s General Assembly.

“For a long time the state’s economic development incentives were not a good fit for agriculture and forestry,” said Stephen Versen, project manager for Agriculture and Forestry Development Services in the Virginia Department of Agriculture and Consumer Services.

Agriculture and forestry projects are typically small, with fewer jobs, and place specific, with no state-to-state competition. The requirements for project size, number of jobs and wages, and competition with neighboring states effectively excluded Virginia’s largest industry.

“That’s just wrong,” said Todd P. Haymore, secretary of agriculture and forestry. “Agriculture and forestry are Virginia’s largest two industries. They are job creators, they’re economic revenue generators. That doesn’t mean they should be precluded or fail to qualify for incentive grants when we’re recruiting businesses from other states to come here or helping existing businesses grow and expand.”

AFID was designed to bridge that gap and support businesses that add value to Virginia-grown agriculture or forestry products. It passed with bi-partisan support and is funded at $2 million over two years, with $750,000 a year dedicated to economic development projects and $250,000 dedicated to localities to enhance their support of agriculture and forestry businesses.

Grants are for less than $250,000, and a minimum of 30 percent of the agriculture or forestry products used by the business must be produced in Virginia.

“We put together a program that we believe goes a long, long way toward providing growth opportunities for agriculture and forestry operations,” Haymore said. “We’re very pleased to have the first project announced. I dare to say we couldn’t have had a more perfect project than Homestead Creamery.”

Homestead Creamery is already sourcing all its milk locally. Both Montgomery and Bowers are dairy farmers, each with a herd producing around 2 million pounds of milk a year. Montgomery’s 100-head herd is Holstein and Bowers’ similarly-sized herd has some Jersey mixed in. With the expansion, they are hoping to add milk from other Franklin County farmers and add a loading dock to increase their home delivery operation.

“We’re putting in a storage silo for raw milk, tanks inside and we plan to start making cheese and yogurt,” said Montgomery. “We’re also trying to buy more of the (products) locally for home delivery — produce, eggs and any of the other products.”

The expansion project will allow the creamery to balance its milk supply and increase the products it offers. It will also double the creamery’s workforce.

The locality and the business apply for the AFID grant together. In Homestead Creamery’s case, Montgomery and Bowers applied with Franklin County.

“We’re going to see an increase of over 20 jobs and they are going to be buying a number of food items from local farmers. It will have a dual impact on the county,” Burnette said.

With an unemployment rate of 5.3 percent, Franklin County is doing better than much of the nation. Twenty jobs are unlikely to impact that number. County administrators, however, are eager for the growth.

“These are the kind of projects we’re trying to do in Franklin County,” Burnette said. “(Projects) that add 20 to 40 jobs and add up.”

The creamery is also going to get its water.

“The county is supplying some funds and there is a $250,000 tobacco grant, as well as funding from the Western Virginia Water Authority. Those are the three sources as of now,” Burnette said of the funding the county will use to run the water line. “We feel it will have a good impact on a lot of businesses as they try to move forward.”

Localities or agribusinesses interested in AFID can contact Stephen Versen at Stephen.Versen<\@>vdacs.virginia.gov or find more information at www.vdacs.virginia.gov/agribusiness/afid.


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