Borden closed a milk processing facility in Chemung, Illinois(owned jointly by New Dairy Opco, LLC and Select Milk Producers, Inc., as a joint venture called NDSM Holdings), and a milk plant in DePere, WI in early July, 2022. Sour cream production reportedly continues in DePere.
As further background, New Dairy Opco, LLC, is the entity formed between KKR and Capitol Peak Partners, two private equity firms, to purchase Borden out of the company’s 2020 bankruptcy process.
While there is no specific information yet available, according to industry sources, somewhere between 25-30 dairy farm producers in Georgia will be affected, several in Tennessee, and an unknown number of farms in Alabama and Mississippi.
Borden products have a distribution area which covers a wide swath of the lower southeast, including the Gulf’s coastal tourist areas. The Dutch Chocolate is a favorite of milk connoisseurs, and their recent introductions of flavored milks have received great reviews.
It will take some time to sort out all of the farm related ripple effects – beginning with independent producers as well as co-op members shipping to those plants, and extended to the milk haulers delivering to those plants. Eventually, in this regional ag economy, agribusiness and suppliers will be affected as well. To what degree is unknown, until producers find new cost-feasible markets for their milk. Transportation costs in particular will be a factor in market change decisions for producers.
Beginning with the Charleston closure, and continuing through the Illinois and Wisconsin closures, there has been quite an effect on school milk contracts which had to be reorganized.
What will be the fate of Elsie, Borden’s iconic cow? That’s really hard to know at the moment, but six plants closed in 5 months time is a huge point of concern.
The southeast is quickly becoming a ‘milk desert,’ which is defined as a region of significant population with limited access to nearby farms which produce nutrient dense foods, and in this case, that’s milk.
With all of the supply chain disruptions and milk transport issues we’ve seen over the past three years, how are southeast consumers going to be served in the future with the goodness of milk’s essential nutrients? This is a big picture question which needs to be considered in the name of food security for an area with 25% of the nation’s population.
Borden Dairy, Inc. has confirmed that it will be closing two of its milk plants in the southeast, one located at Charleston, SC, and the other in Miami, FL.
Closures are anticipated to be complete by May, 2022.
Borden Dairy Company has provided the following statement:
One plant is located at Charleston, SC, and is often referred to as “the Coburg Dairy,” still referencing and going back to the plant’s founding as Coburg Dairy in 1920. The Coburg Cow is a popular regional landmark, and even has her own Facebook page.
The second plant is located at Miami, FL, and the South Florida Business Journal is reporting the property may have already been sold for $21.75 million, almost double what New Dairy Opco paid for the property it purchased through the Borden bankruptcy proceedings of 2020. Approximately 154 employees will be affected by the closure.
These closures will have a ripple effect across the southeast and beyond, as farms will likely incur additional transport costs for getting milk to other markets, and milk haulers (those who haul milk from dairy farms to processing plants) will have to adjust delivery routes.
The Borden company is known to source milk from both independently contracted farms and from milk co-ops, although it is not known how that mix was proportioned at either Charleston or Miami.
School systems and food retailers served by these plants, largely on the southeast coast and in coastal states, will have to find other sources for fresh milk on their shelves.
In the extended circle of the milk supply chain, school systems who are sourced by the Charleston plant are in the process of being notified; farmers and co-ops who supplied milk to these plants, as well as milk haulers who conveyed milk into these delivery destinations have been notified.
Borden Dairy, Inc. is headquartered at Dallas, TX. The company is led by Chairman and Chief Executive Officer Gregg Engles, a former owner of Dean Foods. Pat Boyle is the company’s President.
Borden Dairy operations nationally involve over 3000 employees, 12 milk plants, and over 90 branches in the processing and distribution of milk and dairy products. Borden’s Dutch Chocolate Whole Milk is deemed to be one of the best commercially processed chocolate milks on the market.
This is an evolving story; additional information will be posted as it becomes available.
First steps in over $2 billion package of assistance for dairy farmers
Burlington, VT, Aug. 19, 2021 — The U.S. Department of Agriculture (USDA) today announced the details of the Pandemic Market Volatility Assistance Program as part of meetings with farmers and a tour of farms with Senator Leahy. In June, Secretary Vilsack committed to providing additional pandemic assistance for dairy farmers in an exchange at a hearing with Senate Appropriations Committee Chairman Leahy. Through the program, USDA will provide about $350 million in pandemic assistance payments to dairy farmers who received a lower value for their products due to market abnormalities caused by the pandemic. The assistance is part of a larger package including permanent improvements to the Dairy Margin Coverage safety net program.
“The Pandemic Market Volatility Assistance Program is another component of our ongoing effort to get aid to producers who have been left behind and build on our progress towards economic recovery,” said Agriculture Secretary Tom Vilsack. “Family dairy farmers have been battered by the pandemic, trade issues and unpredictable weather and are the life-blood of many rural communities throughout Vermont, the Northeast and many other regions. This targeted assistance is the first step in USDA’s comprehensive approach that will total over $2 billion to help the dairy industry recover from the pandemic and be more resilient to future challenges for generations to come.”
Senator Patrick Leahy (D-Vt.), the chairman of the Senate Appropriations Committee and the senator with the most seniority on the Agriculture Committee, said: “I thank Secretary Vilsack for directing this assistance to small dairies in Vermont and across the country, just as he told me he would when we spoke earlier in the summer. This will help to make up for losses suffered by these family farms due to the pandemic and together with the positive adjustments to the Dairy Margin Coverage Program will be good news for farmers go into the fall.”
Under the Pandemic Market Volatility Assistance Program, payments will reimburse qualified dairy farmers for 80 percent of the revenue difference per month based on an annual production of up to 5 million pounds of milk marketed and on fluid milk sales from July through December 2020. The payment rate will vary by region based on the actual losses on pooled milk related to price volatility. USDA will make payments through agreements with independent handlers and cooperatives. Handlers and cooperatives will distribute the monies on the same basis July – December 2020 payments were made to their dairy farmer suppliers and a formula set by USDA. USDA will reimburse handlers and cooperatives for allowed administrative costs.
USDA will contact eligible handlers and cooperatives to notify them of the opportunity to participate in the Program. USDA will distribute payments to participating handlers within 60 days of entering into an agreement. Once funding is provided, a handler will have 30 days to distribute monies to qualifying dairy farmers. As part of the program, handlers also will provide virtual or in-person education to dairy farmers on a variety of dairy topics available from USDA or other sources. A handler will have until March 1, 2022 to directly provide educational opportunities to dairy farmers.
The program is part of $6 billion of pandemic assistance USDA announced in March to address a number of gaps and disparities in previous rounds of assistance. Other pandemic assistance to dairy farmers includes $400 million for a new Dairy Donation Program to address food insecurity and mitigate food waste and loss; and $580 million for Supplemental Dairy Margin Coverage for small and medium farms.
Outside the pandemic assistance, USDA will also make improvements to the Dairy Margin Coverage safety net program updating the feed cost formula to better reflect the actual cost dairy farmers pay for high quality alfalfa. This change will be retroactive to January 2020 and is expected to provide additional retroactive payments of about $100 million for 2020 and 2021. Unlike the pandemic assistance, this change will also be part of the permanent safety net and USDA estimates it will average about $80 million per year or approximately $800 million over ten years for dairy headed into the upcoming Farm Bill. Full details on these additional actions to support dairy farmers will be provided when regulations are published in the coming weeks. Dairy farmers should wait until these details are available to contact their local USDA Service Center for more information.
As the Southern Foods Group / Deans Foods Estate winds up its affairs in their Chapter 11 Bankruptcy proceedings, a lingering question had been “were the obligations to Producer Settlement Funds ever paid, and how would they be resolved?”
An Order entered on January 15th, 2021 at the US Bankruptcy Court for the Southern District of Texas, Houston Division, provides at least a portion of that answer. This payment will not cover pre-petition obligations (obligations incurred before the Nov. 12, 2019 filing date) of approximately $16 Million, which USDA indicates it will continue to pursue.
On January 15, 2021, the Honorable Chief Judge David R. Jones, of the United States Bankruptcy Court for the Southern District of Texas, signed and entered a Stipulation and Agreed Order (Order) between the U.S. Department of Justice (DOJ), which is serving as legal counsel of record for the United States Department of Agriculture (USDA), and Dean Foods.
The Order requires Dean Foods to pay within 30 days $29,082,182.26, which is 90 percent of its obligations to the USDA for milk marketed in April 2020 and May 2020.
On November 12, 2019, Southern Foods Group, LLC, et al., (Dean Foods) filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. At that time, Dean Foods had 43 plants regulated by the federal milk marketing order (FMMO) system. Subsequent to the filing date, Dean Foods, as the Debtor-in-Possession (Dean DIP), failed to make payments to USDA for milk marketed from April 1, 2020, through May 4, 2020, totaling $32,313,535.84. The missed payments included monies owed to the FMMO program, the National Dairy Research and Promotion Program and the National Fluid Milk Processor Promotion Program.
Upon receipt of payment, USDA will remit monies owed to FMMO-regulated handlers and the Dairy and Fluid Milk Promotion Boards. Once handlers receive payments from USDA, FMMO regulations require that the money be promptly remitted to producers.
Procedures for handler payments to producers will be communicated through the respective FMMO Market Administrators.
Dean Foods’ $16 million pre-petition debt owed to USDA is not covered by this Stipulation and Agreed Order. USDA filed timely Proofs of Claim for these pre-petition obligations and will continue to pursue payment of those claims through the bankruptcy proceeding.
Two Weeks of Furious Activity Sets Farmers, Haulers on Paths to Resolution with a Team Effort
The Background: During the week of and prior to Wednesday, November 25, former Dean Foods independent producers and milk haulers began to receive “Demand” letters from ASK, LLP, a law firm specializing in recovery of ‘preferential payments.’ In a concise definition, ‘Preferential Payments’ are often made by entities filing bankruptcy in the 90 days prior to the filing, and in bankruptcy law, it is perfectly legal for attempts to be made to recoup those monies for other purposes in bankruptcy proceedings.
NOTE: This blog post is providing information about legal events, but should not be taken as legal advice. The author is not an attorney.Qualified attorneys are cited and referenced.
When producers began receiving these letters, reactions ranged from dismay, agony, and horror, to disbelief, to scoffs such as “that money came to me as a regular payment – I’m not paying it back!,” to “We have a situation, what should we do?” With deadlines of December 19th and December 24th in those letters, the truth, the legalities, and appropriate responses had to be sorted out in a very short time frame, to make sure producers met legal requirements.
Several dairy industry and agriculture advocacy groups have, since late Wednesday, Nov. 27th, and early morning on Friday, November 27th, worked furiously and tirelessly to challenge the ASK letters, and to keep the monies where they rightfully belonged – in the hands of dairy producers and local farm communities. Through email networks, phone calls, messages via email and text, news stories, podcasts, blog posts, letters from dairy organizations, and conference calls, it has been an ‘all hands on deck’ effort to assist producers and milk haulers in a ‘defense’ to those letters. Here is a summary:
Earlier this week: Newsletters from AgriVoice (excerpts)
ACTIONS by organizations regarding ASK Letters (per Dean Estate) to Producers trying to get ‘payback’ monies from farmers, others; Resolution seems to be approaching
Over the past 10 days, a number of organizations and individuals in key positions in several states have been diligently working on behalf of producers to help determine paths for producers to challenge the ASK letters received Thanksgiving week, in order to resolve the situation with minimal legal costs and headaches to individuals farmers. American Farm Bureau, and the Pennsylvania Milk Marketing Board, courtesy of Counsel Doug Eberly, have taken these actions:
– American Farm Bureau Challenges ASK with Strongly Worded Letter (For news release & letter, please scroll)
– FORMS YOU CAN USE to reach resolution (LINK): The Pennsylvania Milk Marketing Board has been in communications with ASK, and working with that firm, has developed “Resolution Forms” which can be used by all affected farmers and/or haulers to send to ASK in order to avoid any payback:
The American Farm Bureau Federation is standing-up for hundreds of dairy farmers being targeted by predatory lawyers representing the estate of Dean Foods, which is currently undergoing bankruptcy proceedings. Almost 500 dairy farmers who once sold milk to Dean Foods received letters threatening legal action unless they refund money legitimately earned prior to the bankruptcy filing.
“Shame on these predatory lawyers for bullying dairy farmers at a time when many are struggling to keep their farms running,” said American Farm Bureau Federation President Zippy Duvall. “It’s ludicrous to suggest the meager profits from regularly scheduled and routine milk sales – sales that are heavily watched and regulated by the federal government – were outside the regular course of business. Someone needs to have the farmers’ backs and I’m proud to say AFBF is stepping-in to do just that.”
AFBF sent a letter to the law firm managing the Dean Foods estate calling for an immediate reversal of their “predatory shakedown” and threatening potential legal action if the firm fails to withdraw the letters sent to farmers. In the letter, AFBF General Counsel Ellen Steen says the letters sent to farmers “are deceptive and constitute an abuse of process that attempts to extract funds that the Debtor (Dean Foods) is not entitled to under the threat of a lawsuit. Put plainly, your letters are a predatory shakedown, written in legalese.”
Many recipients of the Debtor letters are independent farmers already struggling through difficult economic times made worse by the COVID-19 pandemic. The letters put producers in an impossible position—either pay the amounts demanded or incur the cost of legal counsel to defend against the Debtor’s allegations.
The AFBF letter outlines the legal legitimacy of the payments made to dairy farmers and admonishes the lawyers representing Dean Foods for knowingly taking advantage of farmers, saying, “Sending the Letters under these circumstances is not only deceptive, but outrageous because they threaten legal action when in fact the Producers have no legal exposure for the reasons set forth herein.”AFBF further calls upon those lawyers to retract their demands by notifying each farmer by separate letter within 10 business days; returning any funds already received; and by ceasing any litigation against farmers who did business with the company. The AFBF letter clearly states a willingness to step-in in the event that the Dean Foods estate pursues litigation against farmers.
News Release, December 9th from PA Milk Marketing Board
PMMB QUICK ACTION LEADS TO RESOLUTION OF PAYMENT DEMANDS
The Pennsylvania Milk Marketing Board, working with the Pennsylvania Attorney General’s office and ASK LLP, has developed declarations to respond to avoidance claim settlement offers received by Pennsylvania dairy farmers and milk haulers. The declarations, available on the Board’s website at https://www.mmb.pa.gov/Consumer/Pages/default.aspx, are a simple and standardized way for farmers and haulers to demonstrate that they received payments from Dean Foods in the ordinary course of their business with Dean.
Dairy farmers and milk haulers should read the explanation on the Board’s website and return the appropriate declaration to ASK. We emphasize that it is vitally important that farmers and haulers return the completed declarations to ASK as soon as possible.
In a bankruptcy, payments made by the debtor during the 90 days prior to the bankruptcy filing may be avoided and recovered under some circumstances. In the continuing aftermath of last year’s Dean Foods bankruptcy, dairy farmers and milk haulers received avoidance claim settlement offers from ASK LLP seeking to recover a portion of the payments they received during that 90-day period. However, if dairy farmers and milk haulers demonstrate that payments were received in the ordinary course of their business with Dean, those payments may not be recovered, and those farmers and haulers do not have to return those payments.
Because milk marketing is highly regulated, the Board believes that the settlement offers’ request for records spanning May 2018 through November 2019 is not necessary to demonstrate that dairy farmers and milk haulers received payments in the ordinary course of their business with Dean. ASK agreed to accept declarations in lieu of the records. After receiving and reviewing a declaration, ASK will seek authority from its client to close the file and then inform the farmer or hauler.
Board Secretary Carol Hardbarger stated that the cooperation received from not only the Attorney General’s office, but other organizations such as the Center for Dairy Excellence and the PA Farm Bureau, enabled the quick resolution of this issue. Board Chairman Robert Barley and Member Jim Van Blarcom echoed that sentiment.
The information provided is not legal advice and is not a substitute for obtaining legal advice from a licensed attorney.
_______ ADDITIONAL REFERENCES and RESOURCES ___________
A TEAM EFFORT – All will continue to work until resolution: There are many government officials, organizations and individuals both nationally, and in several states, who continue to work on this issue. Much of this work is being done behind the scenes, and there may be a few days when we don’t hear or know anything while people do the work that matters, using their resources, according to their professional processes.
In the meantime, make sure you fill out and submit your paperwork to ASK, and take care of what you can do as a farmer or hauler. All involved are aware of the pending deadlines which were noted in the packets which producers received; those deadlines vary from December 19th through December 24th. These packets also contain different names of whom to respond – make sure your ‘defense response and declaration’ is directed to the correct party.
Dean Foods Chapter 11: Quickly Evolving Events weeks of Nov. 23rd through December 4th, 2020 – a Year after filing
“WHAT SHOULD A PRODUCER DO ABOUT THE REQUESTS FROM ASK SUGGESTING FARMERS SHOULD PAYBACK MONEY?” is the question first and foremost on farmers’ minds. Most are electing to wait until more information is gathered before sending any money to this law firm, realizing some of the deadlines are pending. This situation has been and continues to be QUICKLY EVOLVING, with information changing by the minute.
NOTICE: This post contains and refers to information and reports about legal events, with some attorneys quoted and official legal notices included, but should not be considered legal advice. I am not an attorney, so any information should be considered as public information, and not taken as advice on a course of action for any individual.
LEGAL REFERENCE: Case #19-36313, US Bankruptcy Court, Southern District of Texas-Houston; Presiding Judge: David R. Jones
SUMMARY – some good news:
The good news is that producers do have recourse and options per many industry reports, although the exact course of action has yet to be determined, and it may differ for individual producers.
ADDITIONAL COURT ACTIVITY this week: On Nov. 30, Southern Foods Group, LLC / Dean Foods et.al. filed several documents outlining a “Plan of Liquidation” in the above-referenced Bankruptcy Action. (See graphic below). Some producers have received emails, or may receive letters in the mail, regarding a hearing related to this process, scheduled for Jan 11 at 2:30 pm. (Doc. 3234 at the Epiq Southern Foods Court Docket) Producers can participate in this January proceeding via audio/video if they wish.
Past Week: As many already know, there has been a lot of activity since the last week of November, 2020, concerning an attempt from ASK, LLP to reclaim a portion of funds paid to producers, and other entities doing business with Dean Foods, in the 90 days prior to the Dean Foods/Southern Foods Group Chapter 11 Bankruptcy filing on Nov. 12 of 2019.
Who all got the notices? It has been confirmed through several sources that farmers were not the only parties who got such notices: a few co-ops and other business entities, such as milk check assignees, consultants, and milk haulers, also received similar letters, and have challenged the requests in a variety of ways. The resolution of these challenges is not yet known.
Since producers began receiving letters on or about Wednesday, Nov. 25, there has been a flurry of phone calls, text messages, communication to and among agricultural advocacy organizations and dairy producer groups, and others trying to gather and assemble all pertinent information.
The main goal was to establish a producer’s rights and potential courses of action in regards to these solicitation letters from ASK, LLP, and to determine if a producer would eventually be required to pay the requested amounts at all. Just because ASK asked, does not necessarily mean they will receive.
In communications with many, most farmers have elected to wait until more information was forthcoming before they paid anything to this third party, some have engaged individual attorneys, and some have elected to wait to see if their is a ‘blanket’ recourse on a collective group of farmers.
The Beginning: How ASK, LLP got involved:
ASK, LLP is working based on contingency fees ranging from 15-27.5%, stated in a ‘letter of engagement’ on the Bankruptcy Court’s Docket. This ‘letter of engagement’ is dated July 18, 2020, and was sent to Gary Rahlfs, Chief Financial Officer, Southern Foods Group/Dean Foods. That engagement was approved by via a Court Order of Sept. 1, 2020. That Order, Document #2898, was publicly posted at the Bankruptcy website on Sept. 1, 2020, and it can be downloaded.
On Social Media? Be careful!!! By this time, social media is full of posts of dismay, indignation, and asking what to do. While these posts generally may be interesting to read, they should not be considered as valid sources of legal information or advice.
SUMMARY ARTICLES (the most complete, most accurate, and most in-context with the entire situation – all contain pertinent information):
Quote from article: “We find it extremely disappointing that hardworking dairy farm families are now put in the position of having to incur costs, either in paying the amounts demanded, or obtaining legal counsel to defend themselves against these farfetched claims.”
Document 3230: JOINT CHAPTER PLAN OF LIQUIDATION of SOUTHERN FOODS GROUP, LLC, DEAN FOODS COMPANY, and THEIR DEBTOR AFFILIATES (75 pages) with the US Bankruptcy Court for the Southern District of Texas – Houston Division, and
Document 3229 (143 pages), which is captioned: MOTION OF DEBTORS FOR ENTRY OF AN ORDER (I) APPROVING THEDISCLOSURE STATEMENT, (II) ESTABLISHING PROCEDURES FOR THESOLICITATION AND TABULATION OF VOTES TO ACCEPT OR REJECT THEPLAN, (III)APPROVING THE FORMS OF BALLOTS AND SOLICITATIONMATERIALS, (IV) ESTABLISHING THE VOTING RECORD DATE, (V) FIXINGTHE DATE, TIME, AND PLACE FOR THE CONFIRMATION HEARING ANDTHE DEADLINE FOR FILING OBJECTIONS THERETO, (VI) APPROVINGRELATED NOTICE PROCEDURES, AND (VII) GRANTING RELATED RELIEF
CONFERENCE CALL NEXT THURSDAY – via PA Center for Dairy Excellence
The PA Center for Dairy Excellence is graciously inviting those affected by this Dean Foods event to participate in a Conference Call on Thursday, Dec. 10, 2010. The Dean situation is only one to be discussed – Rob Barley and Doug Eberly, Counsel for the PA Milk Marketing Board, will address the letters and how they affect farmers.
QUICKLY MOVING, EVOLVING SITUATION – Stay Tuned
It is expected there are other significant actions and news to be shared in the next few days, since this is a quickly moving event with pending response deadlines as early as Dec. 19th. Rest assured that many individuals, information networks, and advocacy organizations are trying to get answers and information to folks as quickly as they can.
Via an email announcement from Glen Easter, the President of The Dairy Alliance, the southeast dairy organization has named Geri Berdak, as their new CEO.
She has previously worked with the St Louis Dairy Council, and was with the Dairy Innovation Center at DMI from 2012-15.
Following is the complete announcement:
“We are pleased to announce that after a nationwide search by Fred Pabst with the search firm Herd Freed Hartz, The Dairy Alliance board has selected a new CEO, Geri Berdak, who will be starting September 1, 2020.
“Geri is an executive known for delivering strategic growth for non-profit organizations, CPG and ingredient companies in the wellness marketplace. She holds unique combination of nutrition, marketing and business aptitude and a genuine passion improving people’s lives. Her professional experience in the dairy industry started with her position as a nutritionist and educator for the St. Louis Dairy Council.
She has extensive knowledge in the food and beverage industry holding positions with PepsiCo, Kerry’s, Isagenix, and served as Senior VP, Nutrition Strategy and Business Development with the U.S. Dairy Innovation Center at DMI from 2012-2015. Most recently she created the Cloverquest Group LLC, a marketing consulting group in Chandler, AZ.
Geri has an Master’s of Business Administration from New York Institute of Technology and a Bachelor of Science in Food & Nutrition from Missouri State University.
Our interim CEO, Molly Szymanski, will work closely with Geri to ensure a smooth transition.”
The Dairy Alliance is a dairy promotion organization based in Atlanta, Georgia. The organization is funded by checkoff monies which are deducted from the milk checks of dairy farmers.
Ms. Berdak can be found on Twitter with the handle of @nutriagirl.
Changes are happening in Dollar General dairy cases. In the southeast, this means that there will be visible changes in brands on the cooler shelves. In some cases, depending on location, this means that familiar ‘local’ brands, which supported farms in the immediate local area, will no longer be available to consumers in at their community Dollar General.
In late 2018, Dollar General announced plans for a new “DG Fresh” Distribution plan, and opened their first regional distribution center for perishable goods in Pottsville, Pennsylvania. During 2019, 4 more regional warehouses were built, with several of those coming on-line in late 2019 and early 2020.
Part of this plan included the expansion of the Dollar General’s in-house Clover Valley brand onto milk cartons sold in the regular DG stores, whereby Dollar General would further utilize its own private label. For a few years, Clover Valley branded milk has been available in the Dollar General Markets (the grocery format DG, but without a huge footprint like the stores you see every 5-6 miles).
Affecting the lower Southeast milkshed most directly are two of those warehouses, one in Atlanta, GA, and another in Montgomery, AL. In some regions, this means that familiar local brands will no longer appear on the shelves of their local Dollar General stores.
Perhaps the most affected region will be East Tennessee. Beginning in the second week of June, 2020, local dairy farmers and their families, following their habits, went into Dollar Generals specifically to purchase Mayfield brands (Mayfield in the yellow carton and Fieldcrest in a translucent carton), but were startled to see they were no longer available. Instead, they saw Clover Valley private labels and PET branded milks.
For several years, local consumers in East TN could rest assured they would be supporting their local dairy farm neighbors by purchasing either Mayfield or Fieldcrest brands at a Dollar General store. Many dairy farm families and their friends and neighbors shopped at Dollar General because they knew the chain supported their farms. This grass-roots promotion by the farmers themselves, who knew retail brands were a means of connecting their farms with a consumer sale, sent many customers to Dollar General. Those farmers will now be sending those consumers to other retailers.
This Dollar General move ultimately means local milk from East Tennessee dairy farms, processed at the Mayfield Dairy plant in Athens, has lost a significant amount of retail shelf space in the immediate area. Sources, who asked not to be identified, said the milk will still have a Dollar General home, but will be processed and packaged in Athens, then hauled to a warehouse in the Montgomery, AL area, for distribution in the coastal southeast.
Dollar General has now built 5 of a projected 17 regional distribution centers for refrigerated and fresh products. Those distribution warehouses will serve as hubs in which Dollar General will supply their own stores, instead of relying on Direct Store Delivery (DSD) from various vendors and other regional food distributors.
Atlanta DG Fresh Warehouse will serve East TN: Up until now, Dollar Generals in East Tn, North Georgia, and SW Virginia had received their milk deliveries directly from Mayfield trucks, arriving 2-3x a week. Beginning this June 2020, they will receive milk from a DG Fresh warehouse located in the Atlanta area. That warehouse will receive packaged milk from the Pet Dairy Plant at Spartanburg, SC, which does buy milk from southeast farms, just generally not Tennessee farms.
Change was underway before the Dean Foods bankruptcy: Both Pet and Mayfield were previously owned by Dean Foods, but as of May 1st, are now owned by Dairy Farmers of America, Inc, the nation’s largest milk cooperative. The Dollar General plan was initiated in the latter half of 2018, and was well underway before the Dean Foods / Southern Foods Group, LLC Chapter 11 bankruptcy was filed in November of 2019, and long before the DFA purchase of Mayfield, Pet and other Dean Foods operations.
So, what’s in store for Dollar General dairy cases? Here’s a sampling of what’s being seen thus far (as of June 19, 2020). The changeover isn’t quite complete, and it hasn’t been determined how wide a geographic area this will affect. At this time, it’s unknown how Dollar Generals in the middle TN area, which has been served by Purity and its private Dairy Belle label, will be affected.
Point of Pride now gone for East Tn Farmers: Many dairy farmers in East TN were very happy that Dollar General carried the Mayfield and Fieldcrest brands, and many shopped at Dollar General for that very reason. After all, it was a Tennessee-based company carrying a highly nutritious product that was produced on Tennessee farms. And that milk not only affected dairy farms, it was a means of connection for other farms who grew grains and hay that went to feed those Mayfield cows. That intense in-state connection has now been broken by a Dollar General corporate decision for ‘efficiency’ for Dollar General. Farmers may understand it, but it doesn’t make it any less painful for them to not be able to make that connection with a product on a shelf.
The ‘short-description’ of the new ‘milk domino game’ type of distribution:
Milk, largely from farms in the Carolinas and NW Georgia, will be processed at the PET plant in Spartanburg, SC, then shipped to a DG Warehouse in Atlanta, for distribution to DG stores in GA, East TN, and as far west as Birmingham AL. (there might be slight variations in the distribution territory).
Milk from East TN and North Georgia farms will be processed at Athens, TN, packaged in cartons wearing the Mayfield and Clover Valley brands, then shipped to Montgomery, AL for distribution in the Coastal South.
It’s not yet known how this switch will affect FL, VA, and KY and areas farther west.
Observation: As Covid-19 panic buying ensued in March and April, Dollar General stores in the southeast experienced milk shortages like grocery stores. However, some of the shortages in DG were also likely due to DG personnel getting adjusted to this new distribution schematic. Even this week, there have been some very empty Dollar General coolers, particularly a couple of days after a delivery.
But above all, Dairy Farmers in the South do appreciate everyone who buys any of these southeast brands, and we appreciate Dollar General for buying milk from southeast farms!
Photos tell the story:
The Changes in Chugs in East TN (the ‘drop in and get it to go cause it’s local’ size):
GALLONS: Some Comparisons of the new and previous in East TN:
PLANT CODES: How we know where the milk was processed (most farms in the southeast know where the farms are) along with a note about the “Best By” date:
History of DG Fresh Implementation, and Background:
Dollar General has over 16,000 stores, and approximately 5,000 are now receiving goods from their DG Fresh Perishable Goods warehouses. The company hopes to be nationwide with this effort within 3-4 years. Here’s a progression:
The effort began in very early 2019 with 300 stores in the Northeast, distribution facility located in Pottsville, PA
CEO Todd Vasos said “DG Fresh will allow us to control our own destiny in fresh foods.”
Vasos: “In addition, self-distribution will allow us to offer a wider selection of our own private brands to provide our customers with even more compelling value. Overall, we expect DG Fresh to allow us to do a better job of tailoring our product selection to fit the needs of our customers, particularly in rural areas.”
Engles, (Capitol Peak, Previous Dean CEO) partners with KKR & Co. for Successful Bid
Borden Dairy, and its beloved icon, Elsie, have new owners.
Early on the afternoon of June 15, 2020, New Dairy Opco, LLC, was announced as the winning bidder for Borden Dairy Company and its assets, 5 months after Chapter 11 was filed on January 5, 2020. A notice was posted on the website filing the Borden Chapter 11 Documents for the US Bankruptcy Court of Delaware, and is included below.
A Sale Hearing has been scheduled for Thursday, June 18, 2020 by the Bankruptcy Court. A series of hearings and court activity, dictated by Rules of Federal Court, will take place in the following weeks before a sale is final.
In the late stages of the Dean Foods Chapter 11 process, KKR and Borden, along with some other financial entities, offered an alternative plan to the sale of Dean Foods to Dairy Farmers of America (DFA).
The Bloomberg story in its entirety, as first published at 2:20 pm on June 15th (the story has since been updated – see link above):
Background & Additional Resources:
General: Borden Fact Sheet – Summary: Borden has 12 plants, 91 branches, has 3,300 employees. The plants operate mostly in the southeast, somewhat in a crescent from Charleston, SC to Florida to Texas. The Fact Sheet also lists plants in Cleveland, OH, and London, KY.