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Selling Grade A and B Dairy and Dairy Products in South Dakota

Updated October 23, 2023
 Curtis Braun

Curtis Braun

SDSU Extension Food Safety Field Specialist

Producer dispensing pasteurized milk from a pasturizer.
Courtesy: Canva

Written collaboratively by Curtis Braun, SDSU Extension Food Safety Specialist, and Gene Stegeman, South Dakota Department of Agriculture and Natural Resources Dairy Program Manager.

There has been an interest in the manufacturing and processing of dairy products in the state of South Dakota by food entrepreneurs. These interests have ranged from interest in selling goat milk, cheeses, yogurts, and other types of dairy products. This article will seek to clarify the requirements for allowing a food processor to sell Grade A and Grade B dairy and dairy products in the state of South Dakota.

Grade A Milk and Milk Products

In the state of South Dakota, no milk products may be manufactured or distributed for human use or consumption within the state unless the milk and fluid milk products are pasteurized in equipment approved by the secretary (SDCL-40-32-4 and ARSD 12:05:03:01). Additionally, all bulk shipped milk and milk products that have been previously pasteurized or heat treated are required to be re-pasteurized in the plant of final processing with packaging as deemed necessary by the South Dakota Department of Agriculture and Natural Resources (abbreviated as SD DANR). Therefore, plants that re-pasteurize milk or milk products are required to be licensed as well. Additionally, the law does not allow one to sell, offer, or expose for sale any milk or milk products labeled Grade A unless the milk or milk products have been produced and processed by a person having a permit issued by the secretary. Milk and milk products will include the following.

Included Products

Bottles of on-farm pasteurized and packaged whole milk.
Courtesy: U.S. Department of Agriculture
  • Cow’s milk
  • Goat’s milk
  • Cream
  • Frozen cream
  • Plastic cream
  • Fluid skim milk
  • Sweetened and unsweetened condensed skim milk
  • Powdered whole milk
  • Powdered skim milk
  • Sweet cream buttermilk
  • Sweet cream condensed buttermilk
  • Sweet cream powdered buttermilk
  • Cottage cheese
  • Whey and whey products
  • Yogurt

Selling Requirements

The requirements to sell milk and milk products in the state of South Dakota require that processors meet the Grade A standards for fluid milk. To meet the standards for Grade A fluid milk and/or dry milk products, a processor would need to be compliant with the Pasteurized Milk Ordinance (abbreviated as PMO). The PMO provides regulations for the dairy industry, such as drug residue testing, pasteurization requirements, sanitary design standards, plant construction requirements, sanitation requirements, Hazard Analysis Critical Control Point (abbreviated as HACCP), Good Manufacturing Practices (abbreviated as GMP), and more.

The capital requirements for complying with the PMO can be quite extensive, and, therefore, may not be a justifiable case to pursue this option for most food entrepreneurs. Additionally, the programs, documentation, and recordkeeping can also be quite extensive. Therefore, a food entrepreneur seeking to become a licensed milk plant will likely require extensive work and capital.

Pasteurized milk being bottled at an on-farm facility.
Courtesy: U.S. Department of Agriculture

Selling Options

When it comes to selling Grade A milk and milk products in the state of South Dakota, the options are limited. However, there are two options that exist for hopeful food processors and entrepreneurs.

  1. Become PMO compliant.
    The first option is to become compliant with the PMO in order to sell Grade A products. Of course, this would most likely be a significant investment, as this would require that the equipment, facilities, utilities, and grounds meet the PMO regulations. Additionally, the facility would need to have documented food safety programs, documentation, and record keeping in place.
  2. Pursue co-manufacturing.
    The second option would be to pursue co-manufacturing. This option would allow the food entrepreneur to enter into an agreement with a company that is already compliant with the PMO in order to produce the desired product. There would likely be tolling charges and other expenses associated with this option, but it would allow the food entrepreneur the opportunity to process their product without the upfront capital costs. To pursue this option, the SD DANR could be contacted to provide a list of licensed milk plants for the food entrepreneur to contact. A processor desiring to find a licensed dairy plant can contact the SD DANR.

Grade B Milk and Milk Products

Grade B milk is milk that does not meet the standards of Grade A but can be used in dairy products, such as cheese, ice cream, and butter. The Grade B milk standards for South Dakota are found in ARSD 12:17. The requirements to process Grade B milk to produce products, such as cheese, ice cream, and butter would, thus, need to meet the requirements of ARSD 12:17. These regulations will include ensuring safe handling, meeting testing standards for the milk, pasteurization, becoming licensed, and more.

Raw Milk Hard Cheese

Pieces of raw-milk, parmigiano Reggiano cheese on display.
Courtesy: Canva

The state of South Dakota does allow a processor to manufacture cheese that has been cured for at least 60 days after manufacture at a temperature no lower than 35 degrees Fahrenheit without meeting pasteurization requirements. Raw milk hard cheese is cheese that has been aged to allow the acidifying process that happens during aging to act like a natural pasteurization process, killing any disease-causing pathogens that could potentially be in the cheese. Please contact the DANR for complete requirements for this product.

Conclusion

For food entrepreneurs in South Dakota desiring to sell Grade A and Grade B milk and milk products in South Dakota, the options to bring one’s products to market can seem daunting. Becoming compliant with the PMO may take significant upfront capital. However, another feasible option is to pursue a contract manufacturing agreement with an already-licensed milk plant. Although the work to sell these products will take more effort and work, there are still options available for the one desiring to break into this food sector.