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A dairy plant in the central Minnesota community of Perham will expand intake bays, cheese packaging equipment, whey warehousing and its wastewater treatment on its way to expanding milk intake by a full third in the next two years.

The plant's owners, Chanhassen-based dairy cooperative Bongards Creameries, said the $125 million project comes on the heels of other expansions at the Perham plant.

"With this latest investment, we will be able to continue supporting the growth of our business, allow our current farmer-owners to expand, and allow us to bring on new members," said Daryl Larson, CEO of Bongards, a nationally recognized cheese and whey producer.

The expansion — which is expected to begin in July — will increase plant capacity to take in 5.5 million pounds of milk per day.

The announcement comes as the dairy industry faces an economic pinch point, with many processors oversupplied, forcing producers across the Upper Midwest to deliberately drain milk.

"We just have a lot of milk out on the market," Nathan Hulinsky, an educator with the University of Minnesota Extension, said. "All the different creameries and processing plants in Minnesota and the Midwest, even across the nation, are at capacity."

Bongards was founded in 1908 and is a cooperative of Minnesota and North Dakota farmers. It has processing plants in Bongards, Minn. — just southwest of the Twin Cities — and Tennessee.

Perham, a city of 3,500 people, is in Otter Tail County. The company said it expects to undertake the expansion with Perham contractors.