Fourteen Ky. dairy farms running out of options

Published in The Farmer’s Pride May 3, 2018

Dairy farmers who lost their market to Dean Foods have learned that DFA will not buy their milk, leaving them without a customer after May 31.

Around 100 dairy producers across eight states were told in March that Dean Foods, the nation’s largest fluid milk processor, would no longer buy their milk as of May 31. Since then, producers, farm organizations and elected officials have looked for alternative markets for producers who want to stay in the business.

While representatives of Dairy Farmers of America, the nation’s largest dairy cooperative, said in March the co-op would not be able to accept producers who lost their contracts, the atmosphere on the ground was much different, according to Maury Cox, executive director of the Kentucky Dairy Development Council.

Cox recalls a recent conversation with a DFA board member who said that DFA was going to pick up the producers.“Their field people were going out and filling out applications. I collected releases from all the producers to send their quality and production records to every market available in Kentucky, but DFA field staff was going out to every one of these farms…the field staff thought it was going to happen, too,” Cox said.

Horse Cave dairy producer David Sammons also had confidence that DFA would pick up producers. He was under the impression that Dean Foods no longer wants to buy directly from producers and wants to buy from the cooperative instead.

“I was told it would be the same milk, just a different name,” Sammons said. “But the name in the middle won’t do it.”
DFA’s board met last week and voted to not accept the contracts, Cox said. He said he does not know what factors determined their decision. A call to a spokesperson for DFA was not returned by press time this week.
Sammons said he understands that DFA board members, who are dairy farmers, were looking out for their best interest.
“It’s better for them to turn us down. They are farmers from Ohio and Indiana. They are making money bringing milk from Ohio and Indiana into Kentucky,” Sammons said. “There’s probably 100 loads of milk a day coming into Kentucky and they are going to shut us out.”
Other options have been considered since producers received letters from Dean Foods in March, but Cox admits “we probably put too much weight in this anticipation with DFA.”
Kroger representatives indicated that company would like to buy more Kentucky-produced milk and Cox and Sammons believed there would be a market for the product should DFA bring the former Dean producers into the fold.
“Kroger is a good advocate for agriculture. They said they want the milk but they don’t buy direct from farmers,” Sammons said. “Kroger is the customer for us. DFA is the middleman. Why did they say no?” Sammons said.
When the Dean Foods letters were sent out in March, 19 dairy farmers in Kentucky learned they were losing their market. Since then, five of those producers have sold out or are in the process of selling out. The remaining 14 producers represent less then two truckloads of milk a day, around 93,000 pounds.
“It’s not a lot of milk, but it’s a lot of lives,” Cox said. “It is the loss of a dream. It’s the loss of a livelihood. It’s the loss of your home potentially.”
KDDC board members held an emergency board meeting last Friday to discuss DFA’s decision and consider other options. Cox said he is currently contacting the 14 producers to see if they are interested in forming their own cooperative, something that is highly regulated and will take an investment that producers may not find financially feasible. Producers in some other states are moving in that direction, he noted.
“With the present milk price, what it would take to form a cooperative and operate within that, trying to get a market–most of these markets have so much milk they are already used up–the price back to the producer may be prohibitive,” Cox said.
If nothing else, however, forming a cooperative may give producers a chance to stay in business until other options open up, prices improve, or at the very least until they could get better prices for their cattle, he added.
“Some of these producers have been breeding top genetics for years and they are going to get pound price for their cow; it’s sickening,” Cox said.
While Cox is disappointed DFA is not taking on farmers who lost their market, he says he is not blaming them for the situation.
“We don’t know exactly why DFA decided to do what they did,” he said. “They weren’t just looking at Kentucky farmers. They were looking at Indiana, that’s 20 million pounds a month; they were looking at Pennsylvania and Ohio, too. They had a lot bigger picture to look at than what we are looking at.”
Sammons says he also isn’t trying to put blame on DFA and believes the state should step in and provide an incentive to encourage the co-op to take on the Dean Foods producers.
“My farm grosses $900,000 to $1 million a year. That’s a million dollars that goes into my community and we are going to let this business go for no reason,” Sammons said. “There are 20 of us being sacrificed for no reason. There’s a market.  DFA moves milk all over the United States. Why can’t they move this two loads of milk to someone who wants it?”
Cox said he has been working closely with Commissioner Ryan Quarles and Warren Beeler at the Governor’s Office of Agricultural Policy to try to help producers who are losing their market and they will continue to search for options to help those farmers stay in business.
“I have not given up hope yet. It’s not May 31 yet,” he said.
Sammons said he believes they have two weeks left to find a solution. After that, it’s too late.
“After that I’m going to have to start advertising a sale,” he said.

By Sharon Burton
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