Virginia Dairies See More Opportunity With Expanding Industry

In partnership with: Virginia Department of Agriculture and Consumer Services

The dairy industry has a long history in Virginia; however, a lack of dairy processors in the state has proven challenging for local producers. To address this supply chain gap, the Commonwealth has focused its efforts on bringing more dairy processors to the state through initiatives that have already led to the expansion of local creameries and processors.

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The Impact of Dairy

Dairy currently ranks fourth among Virginia’s agricultural commodities based on cash receipts and 24th in the country. While the number of dairy farms across the Commonwealth has diminished in recent years, the number of dairy cattle has remained high. Around 360 Virginia dairy farms produced an astounding 1.4 billion pounds of milk in 2023, which equals about 170 million gallons of milk.

With 340 of those farms being Grade A producers generating high-quality milk to supply the mid-Atlantic fluid milk market, dairy is a source of pride in Virginia.

“We’re an industry that has an outsized impact for the number of dairy farms we actually have,” says Eric Paulson, executive director for the Virginia State Dairymen’s Association, an organization that has represented the Commonwealth’s dairy farmers since 1907.

While the infrastructure for a thriving dairy industry is in place, a lack of local processing facilities presented challenges for dairy producers. As a perishable product, milk must find a processing destination daily. A greater variety of local value-added processors would allow more options for dairy producers and help reduce transportation costs.

“The more processors we can bring to Virginia, the better,” Paulson says.

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Closer to Home

In an effort to draw more processors to the state, several programs, including the Governor’s Agriculture and Forestry Industries Development Fund (AFID), provide grants to projects seeking to bolster local food production. Using the AFID program to incentivize processors arose from conversations in 2022 between Secretary of Agriculture and Forestry Matthew Lohr, Virginia Department of Agriculture and Consumer Services Commissioner Joseph Guthrie and dairy farmers from across the state. Since then, funding from the AFID program has allowed six dairy processors in Virginia to expand their facilities.

Homestead Creamery, a dairy processing facility in Franklin County, was the first-ever AFID grant recipient in 2012, and the company received a second AFID grant in 2024 to help expand its state-of-the-art ice cream production room. As the largest dairy production facility in Franklin County, the expansion helped bolster the industry in the region.

“The recent expansion at Homestead Creamery shows the dairy industry in Franklin County is a serious business,” says Jesse Novak, controller for Homestead Creamery Inc. “Local dairies create jobs not only for the farmers and their families but also in processing, distribution and retailing of dairy products, directly impacting rural communities.”

The company plans to invest $2.5 million in Franklin County to continue expanding its Virginia facilities.

“Dairy farms are a foundational element of a state’s agricultural economy and infrastructure,” says Rebecca Wallick, senior director of dairy sourcing and policy at HP Hood, a Massachusetts-based processor with a facility in Frederick County.

HP Hood’s Winchester plant was recently awarded an AFID grant to support an $83.5 million investment to expand dairy processing operations.

Across Virginia, the economic impact of local dairies and processors, no matter the size, has a far-reaching effect. With more processors in Virginia, everyone from farmers to feed companies, veterinarians, farm equipment suppliers and beyond can benefit from a bolstered dairy industry.

“Growing demand at our facility not only adds jobs but also acts as an economic development tool that directly invests in Virginia’s communities, helping sustain and grow the Commonwealth’s local food system and safeguard its rural character,” Wallick says.

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