dairy cows on farm

HARRISBURG, Pa. — Pennsylvania Gov. Josh Shapiro is supporting the state’s bid to attract trendy dairy processor Fairlife.

“The governor is personally engaged and involved, and we’re peddling as hard as we can,” Deputy Ag Secretary Cheryl Cook told the Pennsylvania State Council of Farm Organizations on March 7 at the Capitol.

The new governor’s backing is the latest step in Pennsylvania’s long-running effort to strengthen its leading ag sector, which produces $2 billion in milk per year.

Fairlife, founded in 2012, sells ultrafiltered milk, which is lactose-free, low in sugar and high in protein. The premium-priced product is aimed at health-conscious consumers.

A subsidiary of Coca-Cola Co., Fairlife is based in Chicago and has plants in Arizona, Michigan, New Mexico and Ontario. A plant in Pennsylvania would give the company a processing presence in the populous Northeastern U.S.

“It’d be a great opportunity,” said Dave Smith, executive director of the Pennsylvania Dairymen’s Association.

Fairlife’s reputation took a hit from a 2019 undercover video alleging animal abuse on a supplier farm. The company says it immediately cut off that operation, began unannounced farm audits, and set up an animal welfare advisory council.

Otherwise, Fairlife has been a symbol of hope in the dairy industry. It has injected innovation into a beverage category seen as stagnant and bucked the decadeslong trend of declining fluid milk sales. The brand surpassed $1 billion in annual retail sales last year.

Ag Secretary Russell Redding, who Shapiro retained from Gov. Tom Wolf’s administration, has been working for years to attract additional dairy processors to Pennsylvania — especially companies that could diversify a portfolio heavy on conventional fluid processing.

That effort has been slow going. The state scored a win last year when baby formula maker ByHeart opened a plant in Reading, though the company initially bought all of its milk from New York — a state that could be competing with Pennsylvania for Fairlife’s plant.

“I was under the impression that there was supposed to be a decision fairly soon whether Fairlife set up a facility here in Pennsylvania or in New York,” Smith said.

Smith hadn’t heard of a potential location within either state.

New York does not comment on which companies it is negotiating with until agreements are concluded, said Hanna Birkhead, a spokeswoman for the Department of Agriculture and Markets.

Coca-Cola did not respond to a request for comment.

To strengthen its bid, Pennsylvania in November created a tax credit worth up to $15 million a year for new dairy processing. Redding said the state was trying to attract a particular dairy company but hadn’t had tax credits to offer like competing states did.

“If the final step is making sure that in our quiver of arrows we need to have a tax credit, then let's do that,” he said in a Lancaster Farming forum at January’s Pennsylvania Farm Show.

Redding said he was not able to name the targeted company because he had signed a nondisclosure agreement.

Spotlight PA reported Fairlife as the company in November, citing an unnamed source close to the negotiations. Cook’s statement provided further confirmation this month.

Though the tax credit is designed with one company in mind, it’s not limited to one big fish.

“We hope this company, we can attract them here and they use it. But it's a standing tax credit that if for some reason that doesn't happen, we can use it in the future,” Redding said.

Pennsylvania is a major dairy producer, ranking second in the nation for number of dairy farms and eighth in milk production.

But as in other states, Pennsylvania’s farmers suffered through rough milk markets from 2015 to 2020. The state lost a quarter of its dairy farms in just eight years.

Hemmed in by the Appalachian Mountains and the nation’s fifth largest state population, Pennsylvania’s dairies are relatively small. That’s a challenge for remaining relevant as dairy farms increasingly focus on economies of scale.

The state has been trying to ensure the industry’s future by undertaking studies, financing processor investments, loosening restrictive milk sell-by dates, and re-evaluating state milk pricing mechanisms.