Area Dairy Farmers Could Be Left Out in the Cold

| March 9, 2018

VENANGO CO., Pa. (EYT) — The future of some Venango County dairy farm is in doubt after they were recently informed by a Texas company that their milk contracts will expire in a few months.

Nearly 100 dairy farms in six states, including Pennsylvania and New York, were informed by Dallas-based Dean Foods that their milk contracts will end  on May 31.

According to an article on dairyherd.com, Dean Foods’ Reace Smith, its director of corporate communications, issued the following statement:

“Unfortunately, Dean Foods has made the difficult decision to end milk procurement contracts with a number of farmers in about 90 days,” says Reace Smith. “We regret this decision had to be made.”

Lance and Gayle Mitchell, who operate Mitch Hill Dairy Farm in Venus,  are putting most of their hopes in their faith in God.

“We don’t have any plans yet, and we’re hoping for a miracle,” said Gayle, also a teacher in the Cranberry School District. “Things don’t look promising, but we are not without hope.”

“God is good, He has a plan for us and we appreciate any prayers,” Gayle added.

Mitch Hill Dairy Farm has 70 milk cows that produce more than 100,000 gallons annually.

For Lance Mitchell, it’s a job that begins every day at 4:00 a.m. and ends at 8:00 p.m.

They started the farm in 1995.

They were working toward bottling their own milk, but a combination of government red tape and big business has scuttled that plan for now.

“Our plans were to bottle our milk and sell it,” Gayle said. “We had loans and grants set up to do that, but the government refused to release a lien on our farm about 18 months ago, and it stopped us from doing what we planned to do.”

A pasteurizer, used to process raw milk for consumption, costs $125,000.00, and with liens by their bank and government, they couldn’t get the additional money to move forward.

When the Mitchells got into farming, they had nothing, and they got government loans to get the necessary equipment.

“The problem occurred when they changed the rules on how cash flow is calculated,” Gayle said. “Because the dairy business can be so volatile, the government looked at your cash flow on a three-year period.”

“But, then they only looked at your cash flow for the worst year of a three-year period while still looking at your expenses for three years, and after those calculations, they wouldn’t release our lien,” Gayle added.

While the Mitchells hold out hope, it doesn’t appear there is much help coming for an industry that has been so volatile for so many years.

“There are no breaks from the cows,” Gayle said. “They need taken care every day, you can’t just walk away.”

Dairy Farmers of America is a dairy marketing cooperative that is owned by nearly 14,000 dairy farmers and is one of the most diversified manufacturers of dairy products.

However, in a March 6 story on milkbusiness.com, DFA said it wouldn’t be able to rescue those milk producers.

“We are sympathetic to the farmers who have been impacted by this decision and realize it has created a tough situation for them,” says Monica Massey senior vice president and chief of staff at DFA. “We currently face difficult marketing environments, particularly in areas of the Northeast and Mideast, and unfortunately, don’t have a market for their milk at this time.”

A new Walmart milk plant in Indiana is a big part of the problem for smaller dairy farms.

Dean Foods had a private label contract with Walmart for several decades for its Great Value brand milk.  But, the new Walmart plant in the region where many local farms sell their milk is not good for the small farmer.

“The introduction of new plants at a time when there is an industry-wide surplus of fluid milk processing capacity” and losing milk volume at “higher levels than anticipated” during a time of increased volume competition as reasons for terminating producer contracts,” according to a Dean Foods statement.

Another ripple effect could be coming from McDonald’s, which announced in February that it will no longer offer cheeseburgers and chocolate milk with its Happy Meals.

The hamburger chain said it wants its Happy Meal options to have 600 calories or fewer and have less than 650 milligrams of sodium. It also wants less than 10 percent of the meal’s calories to come from saturated fat and added sugar.

The cheeseburger and chocolate milk didn’t meet those new standards, the company said. It is, however, working to cut sugar from the chocolate milk and believes it’ll be back on the Happy Meal menu eventually — but doesn’t know when that will happen.

Another domino that fell for small dairy farmers is former First Lady Michelle Obama’s initiative to replace whole milk in school lunches with skim milk.

“It doesn’t taste good, and the kids won’t drink it, so that drives down the need for milk, too,” Gayle said.


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