Dairy CEOs: Do You Have A $500 Million Opportunity?


Prepared by:
Roy E. Carawan
Extension Food Scientist


Published by: North Carolina Cooperative Extension Service

Publication Number: CD-29

Last Electronic Revision: March 1996 (JWM)


Did you know that water and sewer costs for some dairy plants have risen almost tenfold during the last two decades? This means that water and sewer charges have probably become a significant part of your operating budget.


Opportunities to Save

Water Use

In 1986, Grade A dairies in the United States processed over 60 billion pounds of products (milk, cream, cottage cheese, and ice cream). They used about 9.3 billion gallons (80 billion pounds) of milk to make these products. If the average plant used 4 gallons of water to process each gallon of milk (a typical amount), total water use for that year by the Grade A dairy industry exceeded 37.2 billion gallons.

Some plants now use less than 1 gallon of water per gallon of milk processed. If all dairy plants could save 3 gallons of water per gallon of milk processed, savings would amount to approximately 28 billion gallons of water -- enough to supply a city of 200,000 people for a year.

Waste Load

The average Grade A dairy plant produces 5 pounds of biochemical oxygen demand (BOD5) per thousand pounds of milk processed.

The resulting annual BOD5 load from dairy processing is almost 400 million pounds.

Some plants discharge as little as 1 pound of BOD5 per thousand pounds of milk processed. If all plants reduced their discharge to this level, about 320 million pounds of BOD5 could be eliminated - the same amount discharged annually from a city of 5.2 million people.

Cost Savings

Water and sewer costs have increased rapidly for many dairy processors. Some dairy plants have experienced an increase of 5 to 10 times in water and sewer costs over the past 25 years. As much as $117 million could be saved annually if the U.S. dairy industry could successfully conserve water and reduce waste load, as shown in the table.

Surcharges for excess waste load are not the only costs associated with waste from dairy processing plants. More than 90 percent of the waste load from a dairy plant consists of product that has been lost to the sewer and therefore can never be sold. A wastewater analysis can thus indicate a plant's efficiency.

One pound of BOD5 in the sewage means that at least 9 pounds of milk have been lost in processing. The 320 million pounds of BOD5 that could be eliminated represents a milk loss of 2.88 billion pounds. With milk valued at $13.50 per 100 pounds, the potential savings could be as much as $389 million per year.

Combine this $389 million with a possible $117 million reduction in water and sewer charges and you can see that the U.S. Grade A dairy industry has the potential for saving $506 million annually.

Why Is Reducing Water Use and Waste Load Especially Important Now?

Regional water shortages, new pollution regulations, and new policies on water pricing make water conservation more important now than ever before. Widespread areas of our nation have struggled under severe droughts in recent years. Many plants were faced with conserving water or curtailing production.

As the U.S. Environmental Protection Agency (EPA) tightens restrictions on the quality of water consumed and wastewater released into the environment, water costs will probably rise even more rapidly than in the past. To face these changes and be ready for possible future shortages, leaders in the dairy processing industry must look ahead and start water conservation efforts now.

Water conservation and waste reduction are important because:

Questions for Your Management Team

Here are some questions for your management team to ask as you think about your company's water use and waste discharges:

What Can You Do?

Compute your share of the $500 million opportunity. For example, if your company accounts for 5 percent of all U.S. Grade A milk production, you may be able to save $25 million per year by reducing water use and waste load. If water and sewer costs increase tenfold over the next decade, you may be able to save $250 million annually by 1997.

Here are some suggestions to help you start a conservation program:


Other publications of interest to dairy processors include:


Distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914. Employment and program opportunities are offered to all people regardless of race, color, national origin, sex, age, or disability. North Carolina State University, North Carolina A&T State University, U.S. Department of Agriculture, and local governments cooperating.
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