Dean Foods to close 7 plants in 2018; No additional producer letters expected soon

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(NOTE:  This is an evolving story affecting Dean Plants across the country.  Sources are a variety of public information and anonymous sources.  Updates will be made as warranted).

Dean Foods will be closing 7 processing plants in seven states in the next months, with the plants located in Kentucky, Georgia, Pennsylvania, Massachusetts, Illinois, Michigan and Minnesota.

News of the plant closings began to emerge through local news outlets in some of the cities involved through the day Tuesday, May 22nd, yet, at this posting, there are yet no official statements from Dean Foods corporate officials.

This announcement follows the jolting announcement in early March that over 100 farmers in 8 states, marketing milk as Dean Dairy Direct (independent producers, meaning not members of a co-op or marketing agency) producers, would have their contracts terminated as of May 31, 2018.  At this point, many of those farmers have found new markets, several elected to disperse their herds, with several still struggling to find a market and income source for their farm’s milk.

The navigation of stormy, wind-tossed oceans of milk in the overflowing worldwide dairy milkshed has led to the announcement that these processing plants will be shutting their doors during the late summer and fall.   Intense competition to find a processing market/plant for milk, exacerbated by declining milk consumption the world over, has converged in a perfect storm of farmers getting caught in the crosshairs with no markets for their milk, along with employees in processing plants losing their jobs as well.

Competition for the prime retail real estate of grocery store shelf space is also a factor in these events.

In the southeast, the two Dean Foods plant closures at Braselton, GA and Louisville, KY follow the early May announcement of the closure of a Fulton, Ky plant, owned by Prairie Farms.  In that event, processing operations will cease, but the facility will remain a distribution center, with 12 of 52 employees remaining.

An anonymous Dean Foods source says that “no more farmer/producer contract terminations via letters from Dean Foods are expected in the near future.”  However, we all know that increasing consumption of fluid milk is the quickest way to stabilize the future of all dairy farms across America.

The Dean plants said to be closed are:

  1. (News report: not initially confirmed by Deans)
  2. (News report: Member of founding family not bitter) 
  3. News report:  (Processes gallons & half-gallons, 120 employees)
  • Braselton, GA [Mayfield brand]   (2015 Dean’s CEO Quality Award Recipient)    (Visitors Center closed in 2014, reopened, Over 1 million folks a year to learn) (Reports from anonymous employees who received notices)
  • Louisville, KY    [Dean’s brand] News report link to WKYT) “That loss will cut production at the company’s Louisville plant, which will shut down.”

This announcement is only one in a series of cost-cutting measures Dean Foods has taken over the past several years.  A PET milk plant in Richmond, VA was closed in the fall of 2017.   In a Food Business News report of March 1, 2018, phrases such as “increasing competition,’ ‘6% decline in volume,’ and ‘reset cost structure,’  were signals more changes are to come.

The Louisville plant closure comes as no surprise, due to its distribution overlap into Indiana of retail centers to be served from the new Walmart milk processing plant opening in Fort Wayne, IN.  However, the opening of that Walmart plant has now been pushed to late summer, for a variety of reasons.  A recent report by Sherry Bunting, which appeared in the Farmers Exchange, features an interview with a Walmart spokesperson on that project’s status.

The closure of the Braselton, GA, Mayfield plant, may have come as a bit of surprise to some folks.  In 2016, this display in the Visitor’s Center relayed some stats which were current at that time, however, today’s employee count is closer to 150.  It is not known if this includes distribution networks.

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Dean Foods, as of an annual Dairy Foods (magazine) report, last published in the August 2017 edition, is the United States second largest milk processor, with Nestle being #1.

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As is common with any company treading in difficult waters, reports of a sale of the company, or of a merger and acquisition, are commonplace.  Sometimes they prove to be nothing, sometimes they prove to be true, and only time will tell which is the case with Dean’s.  It truly will be in the best interest of the United States dairy industry for the company to stabilize, due to the number of farms for which it provides a market, and for the number of employees in plants across the country.

The hardest truth of all of this is that ultimately, farmers in local regions, the rural economies that depend on a viable market for those farmers, and employees at plants, are the ones suffering the most from battles at all levels of the worldwide milkshed. 

Updates, and corrections if needed, will occur as more news becomes available.

 

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Multiple Component Pricing for FMMOs 5 & 7; A Meeting, Action Plan, Information

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Will Multiple Component Pricing be implemented in the Appalachian (FMMO 5)  and Southeast (FMMO 7) Milk Orders?
Multiple Component Pricing, a way to value milk at the farm level based on components found in milk (protein, butterfat, and other non-fat solids),  rather than the skim/butterfat pricing currently implemented, is on the table for the two geographically largest milk orders in the Southeast United States.
Florida and Arizona do not price milk based on MPC, and those areas are not included in this current request for change.
An April 2nd request for a hearing to evaluate the implementation of Multiple Component Pricing for Federal Milk Marketing Order 5 (Appalachian) and FMMO 7 (Southeast) was filed with USDA-AMS by National All-Jersey, Inc.  The 86-page document can be reviewed here.
A great article concisely summing up the request and important factors has been written by Dave Natzke of Progressive Dairyman; read his perspective at this link.
The Tennessee and Kentucky Farm Bureaus have joined together to host an information meeting before the request for Multiple Component Pricing is fully evaluated; A Federal Order Hearing on the matter is tentatively scheduled for July 30, 2018
This May 16th meeting provides producers with a means of direct contact with FMMO officials who can explain not only the MCP proposal, but milk market pricing in detail, and how producers’ milk checks are affected by various market factors.
The details about this FB Information meeting, scheduled for May 16th in Knoxville, TN, are:
What:  Meeting with Dana Coale, Deputy Administrator for USDA -AMS Dairy Programs, along with several officials of Market Administrator Offices in Federal Orders 5 & 7
For:  Any dairy farmer in Federal Milk Marketing Orders 5 & 7
Organizers:  Meeting has been organized by TN and KY Farm Bureau organizations
Several state Farm Bureaus have been involved in dairy farm matters in the past few months – please give them a THANK YOU!)
Date: Wednesday, May 16, Knoxville TN  11:00 am
Time:  Sandwich Lunch @ 11 am; Lunch begins promptly at Noon EDT
Where: University of TN Ag Campus, Hollingsworth Auditorium. Plant Sciences Bldg.
             2505 East J. Chapman Drive; Knoxville, TN  37996
For:  Any dairy farmer in Federal Milk Marketing Orders 5 & 7
Purpose:  To discuss current market procedures and proposed market changes
RSVP / Register by May 11th: 
        Roxann Sanders – Email at rsanders@tfbf.com – OR
                                      Phone at 931-388-7872, ext 2231

The Invitation Letter and Announcement:

Jeff Aiken, TN Farm Bureau President, and Mark Haney, Kentucky Farm Bureau President, co-authored this meeting invite, which was also mailed to dairy producers:
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The Meeting’s suggested agenda:

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Following the announcement of these Knoxville, TN meetings, USDA-AMS has posted an “Action Plan” with a proposed calendar of activity related to Multiple Component Pricing.  Please note additional proposals can be accepted until June 1st!
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Resources for Additional Consideration  (Highly suggested reading!!!):

Multiple Component Pricing (MCP) first began taking place in the Federal Order System in the Great Basin Milk Marketing Order in 1988.  [The Great Basin Order is referenced in this 2002 testimony to a Western Milk Marketing Order Hearing.]
Since that time, several orders have consolidated, but the great majority of the United States dairy producers are paid on a MCP basis.  At this time, this map generally defines the geographic locations of FMMOs across the United States, however, California was conducting a producer referendum, in which voting ended on May 5th to finalize entry into the Federal Order System:
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Producer groups in the southeast, including the Kentucky Dairy Development Council, the Georgia Milk Producers Association, and the North Carolina Dairy Producers, have endorsed a Multiple Component Pricing structure.  The Tennessee Dairy Producers Association is currently opposed (as of May 10th).
Each and every producer should take the time (and it may take a few hours) to evaluate Component Pricing and how it will affect your farm’s income in the future!  Isn’t your farm’s future worth that time?
AND – each producer is highly encouraged to attend the May 16th meeting in Knoxville to have a chance to ask direct questions to USDA-AMS officials.
Your future income depends on accurate information – please make the most of this meeting opportunity!
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3 Southeast Dairy Events: Networks Working Together to Find Solutions

A Compilation of stories and news about 3 challenges affecting Southeast Dairy Producers:  Dean Foods, Maryland-Virginia and Piedmont

 Southeast Dairy:  In the News. Pushing Forward.
 
Introduction:
In the past two weeks, in a time of already depressed milk prices, there has been a three-fold challenge to dairy farms in the southeast.  Tennessee, Kentucky, Virginia, and North Carolina all have farmers affected, with varying degrees of uncertainty about their milk buyer futures.
To say these past days have been painful and a flurry of concern, high emotions, and rumor mills have resulted is an understatement, but yet, as the dust settles, some activity has encouraged some hope, and herd owners are beginning to look forward. Many are making decisions based on faith, and in a calm fashion based on what they believe best for their farm. Some of those farms are being public, while others are remaining cautious and quietly seeking answers behind the scenes.
Bright Spot? Yes!   One farmer asked if there was going to be any good news to share about this whole mess, and yes, actually, there are two:
First, phone calls, texts, and Social Media outcries have indicated loudly and clearly that consumers, government officials, fellow farm organizations, and economic development personnel are indeed concerned about preserving ‘local’ or ‘regional’ milk in their areas, and appear to be eager to learn how they can help accomplish that.
Hopefully, this newfound energy can be channeled for long-term purchases of local milk, from local farms.  Time will tell. Consumer outreach is going to have to continue.
The second is this:  We still have upwards of 40 herds (at least in TN) shipping to Dean. The company is still the largest volume buyer of ‘local’ milk in TN at its three plants.  Putting that in perspective, every Dean Direct herd in Indiana,  with the exception of one, received letters of notice. Several were herds well over 1000 cows.
Background:  The three part challenge:
1.) Dean Foods:  On Friday, March 2, news broke of upwards of 115 (tallies still underway) farmers in 8 states receiving 90-day termination notices of their supply agreements to Dean Foods plants.  10 Tennessee herds and 22-25 Kentucky herds were affected, with 25-27  in Indiana, 42 in Pennsylvania, 6 in the Carolinas, and a yet unknown number in New York.  Three plants in our area – at Athens, TN, Spartanburg, SC, and Louisville, KY are involved in the contract termination decisions.   Herd sizes in all states range from under 100 to 1000 cows; 20 Million pounds of Indiana milk will need to find a new home, or be removed from the already overabundant nationwide supply.
The herds involved were Dean Direct producers, meaning the farm itself had a purchase agreement with Dean Foods plants, instead of gaining access to the plant through a milk co-op. Farmers who were members of co-ops did not receive these termination letters.  All of this activity followed a Dean Foods Earnings Announcement on Monday, Feb. 26 in which the phrases such as ‘rescaling the supply line’ foretold of company wide cuts to come.
2.)  During:  the week prior to the Dean Foods announcement, rumors began to circulate that Piedmont Milk Producers, based in Blountville, TN and serving farms in TN, VA, and NC,  was restructuring their business. (Story below with a video link)
3.)  MD-VA Milk Cooperative with 1,500 members from Pennsylvania to Florida, and some in Kentucky and Tennessee, sent a Feb. 27th letter to all of its members that their advance milk payment checks, expected at the end of the month, would fall to levels of $12.62 cwt in FO 5 & 7, and $10 in FO 1 and $33. The company said it was working on financial restructuring and was renegotiating credit facilities. Over the weekend, sources have begun to indicate that the problems may have been resolved to some degree, but the company has not made any official announcements. With settlement checks expected within a couple of days, some direction will be known.
In the days since, there has been a flurry of activity following the first notices: meetings of  farmers, meetings of farmers and agribusiness personnel, meetings of dairy organizations, and frequent phone calls between many parties in positions to help chart a future course.  AgCentral has been busy assisting producers in a variety of ways in a three-state area. While we have yet to have a formal working group to address what can be done and how to approach a dairy future, a tremendous amount of contacts have been made information gathered.
Following is a “Digest” of some the best information available, in no particular order – stories mentioned include stories of the Watsons and the Stooksburys, as well as a couple of stories from Ohio which further outline the far-reaching affects of the Dean announcements:
1.) Dave Natzke, an experienced and respected dairy industry reporter, now with Progressive Dairyman, published a broad perspective view of the Dean Foods story, and puts it in context with the dairy industry and events across the country. In his article, Dave reports that the Walmart plant was originally announced as a $165 Million Dollar venture, and provides a glimpse into how the Walmart plant may source their milk.
2.) Sherry Bunting, Farmshine, reports with a focus on PA, where 42 herds lost Dean contractsShe notes hauling routes were a factor in terminated Pennsylvania herds, and reports the loss of a Food Lion contract, which was a factor which triggered a decision regarding 5 TN herds in Greene and Hamblen Counties.
From the article: “This affects all size herds and is not a large or small farm thing,” said [Reace] Smith, [of Dean Foods Corporate Communications.]  While she was unable to supply specific information about the farms that were terminated, she said the widespread volume adjustments at multiple plants across four Federal Orders was necessary do to the new Class I plant (Walmart) coming online this month and the loss of a contract through a competitive bidding process. (Food Lion).” 
It is the loss of that Food Lion contract, previously filled largely through a Carolina plant(s), which created a shift in milk hauling from plant to plant, and created an excess at the Dean/Pet plant at Spartanburg, SC, which had to be eliminated.  The milk from five (5) producers in Hamblen and Greene Counties in TN was being hauled to Spartanburg. Those producers are now searching for new markets or making decisions to sell cows.
Dewey Morgan, of the Daily Post-Athenian, in the hometown of the Mayfield plant,  cites these significant stats:
Regarding declining consumption and increased production: “Americans are drinking about 3 gallons less per person since 2010, and 11 gallons less than 1975, while every year, 350 Million more gallons of milk are produced than the year before.”
Amount of local milk: The Dean Foods plant in Athens ‘still sources 90% of our milk from Tennessee.’
The Watson Family: their stories on WVLT-TV and on the Knoxville News-Sentinel website:
The Watsons, who farm near Sweetwater, TN, were one of the southeast TN farms who received 90-day notices.  The senior generation is Robert and Rosemary Watson (mom and dad), who farm with their sons Josh and Caleb.  The family is known for being extremely generous members of their community.  Both Josh and Caleb have been featured in news stories in Knoxville, TN media:
  •  Josh: From WVLT-TV, a story and video clip: Josh states that he doesn’t entirely blame Dean Foods. He adds: “there’s a lot of jobs that revolve around the dairy – it will hurt them.”
  • Caleb: Both a video and a photo album have been posted at the Knoxville Sentinel website. Caleb notes the family will continue to look for a milk buyer, and will look at other options to diversify, he says they will survive.
  • Front Page: The Knoxville News Sentinel published a front page story featuring Caleb on Tuesday, March 13.
Piedmont considering new business structure and how the company operates: story on Knoxville WBIR-TV
  • Brant Stooksbury, and his father Brian in Jefferson County, currently ship their milk through Piedmont Milk Sales, with offices at Blountville, TN. Piedmont, who represents farms in Northeast TN, Virginia, and North Carolina (the great majority are in NC) is making business changes.
 
Farm & Dairy:  Provides additional details on  WalMart distibution
WKBN-TN at Waynesboro, Pennsylvania – a video story describing some of the trickle down effects.
Ongoing:  This story will continue to evolve over the next few weeks, and spring crop work is already cranking up.  We know this challenge is great, but this region has overcome challenges before: at this time 25 years ago, many of us were digging out from a record blizzard, and some went without power for days. 27 years ago, in February of 1991, 400 herds received notices of a Pet bankruptcy, and lost a month’s worth of milk payments, along with having to scramble to find new milk handlers – there were no 90-day notices.
No doubt, our dairy industry is changing, but we have proven we can survive.
P.S.   Rod Carmichael has scheduled a complete herd dispersal for April 27.  Please mark that date on your calendars and keep Rod and Donna in your thoughts.

 

 

The Faith of Billy Graham: Sowing Seeds in Fertile Soil for Everlasting Life

William Franklin (Billy) Graham. Son of a Dairy Farmer.

Man of God. Seeds of Life.

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This past week, the world learned of the HomeGoing of the much beloved Reverend Billy Graham. His impact on humanity is much lauded, yet he, the man, remained humble, with all credit to his Heavenly Father for any of his success.

The impactful evangelist has proclaimed for several decades that faith and the Grace of God would lead him, and anyone who accepted Jesus Christ as their Savior, to a Heavenly home. He himself explained it this way:

“Someday you will read or hear that Billy Graham is dead. Don’t you believe a word of it. I shall be more alive than I am now. I will just have changed my address. I will have gone into the presence of God.”

Graham, oft-described as the most influential religious leader of the 20th century, illustrated that while devout and fiercely true to his own faith, he could treat people of all religions with respect and kindness and sow seeds of peace and hope.

The Reverend Graham began life as the son of dairy farmer near Charlotte, NC.  And from the minute one steps on the grounds, The Billy Graham Library, only a few miles from the original Graham Brothers Farm, honors those agrarian roots.

An engaging display with animatronic cows immediately captures the attention of any visitor.   The ‘boss cow’ tells us that a young Billy Graham perfected his oratory skills by preaching to the cows while they were in the milk barn!  From that point on the Library is a walk through modern history, with exhibits devoted to how “America’s Pastor” was witness and influencer on world events of the 20th Century.

Favorite verses and parables, such as Phillipians 2:3, are on display throughout the Library on walls, and in exhibits.

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The Parable of the Sower – Luke 8, NIV

The Parable of the Sower, one of the most often quoted of the Parables of Jesus Christ, inspired a breathtaking bronze statue which is the centerpiece of the main exhibit hall at the Library.  As the Library was being completed, Franklin Graham believed this parable illustrated his father’s ministry better than any other.  The design was brought to life by sculptor Tom White.

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The Parable itself was considered so important to the Christian faith, it is found in three different Gospels:  Matthew 13: 1-23, Mark 4: 1-20, and Luke’s version, found in the NIV Bible, Chapter 8: verses 1-15 (also shared below:),

“After this, Jesus traveled about from one town and village to another, proclaiming the good news of the kingdom of God. The Twelve were with him,and also some women who had been cured of evil spirits and diseases: Mary (called Magdalene) from whom seven demons had come out; Joanna the wife of Chuza, the manager of Herod’s household; Susanna; and many others. These women were helping to support them out of their own means.

While a large crowd was gathering and people were coming to Jesus from town after town, he told this parable:

“A farmer went out to sow his seed. As he was scattering the seed, some fell along the path; it was trampled on, and the birds ate it up. Some fell on rocky ground, and when it came up, the plants withered because they had no moisture. Other seed fell among thorns, which grew up with it and choked the plants.

Still other seed fell on good soil. It came up and yielded a crop, a hundred times more than was sown.”

When he said this, he called out, “Whoever has ears to hear, let them hear.”

His disciples asked him what this parable meant. 10 He said, “The knowledge of the secrets of the kingdom of God has been given to you, but to others I speak in parables, so that,

“‘though seeing, they may not see;
    though hearing, they may not understand.’

11 “This is the meaning of the parable: The seed is the word of God. 

12 Those along the path are the ones who hear, and then the devil comes and takes away the word from their hearts, so that they may not believe and be saved. 13 Those on the rocky ground are the ones who receive the word with joy when they hear it, but they have no root. They believe for a while, but in the time of testing they fall away. 14 The seed that fell among thorns stands for those who hear, but as they go on their way they are choked by life’s worries, riches and pleasures, and they do not mature.

15 But the seed on good soil stands for those with a noble and good heart, who hear the word, retain it, and by persevering produce a crop.

How will WE live the Parable of the Sower?

It is up to us to determine the seeds we will sow as our legacies, and it is up to us to help cultivate fertile soil which will receive those seeds.  James 2: 14-17 is summed up with the last verse, “Thus also faith by itself, if it does not have works, is dead.”  

Therefore, these thoughts to contemplate:

If your own life, or your farm, or even your business or means of earning income is the place seeds are to grow, will it be a dirt path, rocky ground, thorns, or the good soil?

It takes both wonderful seeds and productive, fertile soil for a bountiful crop to grow – a healthy crop which nurtures mankind.

Will this year’s seeds be seeds of hope, or seeds which lead to destruction? In times of trouble, will your seeds be ones that still grow the Kingdom of Christ, and let your faith shine through?

Will this year’s seeds be seeds that lift others up, help others through hard times, or seeds that beat others down?

If they are good seeds, will they fall on fertile soil, or on unproductive dirt along the path, among thorns, or on rocky ground?

And if the word of God isn’t the foundation of actions by your conduct, or your farm, are you building a long-lasting foundation or one that will crumble?

Will your farm,  and your life, be a farm which hears the Word, understands it, and practices its teachings by example?

Will your farm, and your life, be an example that sows the milk of human kindness, and places your faith in an everlasting God, even in times of trials?

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In this springtime of 2018, many seeds will be planted.  In this world of agriculture, there are many uncertainties, and in fact, much fear about “whose farm will be next to get heart breaking news?”   The agriculture consensus is that many farming operations may not make it through the year, and there is a dark undercurrent of  ‘who will survive?’

However, the Bible is the Book of Hope, and tells us in John 24 that even when something dies, a seed remains whose destiny is to grow  and create new hope, new fruit, new beginnings, and new life:

Truly, truly, I say to you, unless a grain of wheat falls into the earth and dies, it remains alone; but if it dies, it bears much fruit.

We in agriculture on farms of all sizes are going to have to dig deep in our faith, and in our actions, if we are to survive the rough waters ahead.

Billy Graham, the son of a humble dairy farmer, went on to be one of the Greatest Faith Leaders in recent centuries, with some even comparing him to the Apostle Paul.  In order to become that incredulous leader, he had to leave his dairy farm beginnings, and he had to trust and follow the call of God to do that.  The Bible, in Joshua 1:9,  tells us we too, can ‘be strong and courageous,’ and do that, even in the darkest of times.

Billy Graham’s faith roots began growth on a dairy farm. However, his seeds flourished only when they reached out to a faith-starved world.  May we see the Word he spoke of, and may we Hear the Word he proclaimed!

My prayers are that the world of agriculture, and indeed, the entire world, finds fortitude, hope, grace, and comfort in a Boundless Faith taught by Billy Graham. Son of a Dairy Farmer. A Giant Man of God, who sowed Seeds for an Everlasting Life.

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Postscript: The author of this blog, a former dairy farmer, was blessed beyond measure to experience a profound visit to the Billy Graham Library a few summers ago.  She was accompanied by a wonderful friend, the wife of a current dairy farmer.   A visit to the Billy Graham Library is highly recommended to anyone who loves history, is of an agricultural background, or who is on their own faith journey.  Billy Graham was Christian, but his life’s message can be a bridge to all in search of deeper meaning of any faith.  

Dairy Needs to Develop Wisdom – 1 gallon at a time!

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Go Time: National Milk Day 2018 – Change can begin: 1 gallon at a time.

On this National Milk Day 2018, the dairy industry needs wisdom more than it ever has, at any given time in history.
(Note – this is revised from an original posting late night on National Milk Day 2018.]

There’s one official #NationalMilkDay, but for many of us at the grassroots level of dairy, everyday is #MilkDay!  Some of us operate dairy farms, some are nutritionists for dairy farms, some service equipment and provide other supplies for dairy farms, some of us communicate about and with dairy farms. We Live Dairy, #WeLiveMilk, and we work long hours, because a cow’s clock never shuts off, and first and foremost, we take care of those cows, because they take care of us!

But right now, this dairy industry – beloved by many,  revered by some, and often illustrated with warm and fuzzy memes and pictures on social media –  is hurting badly.  With the warm and fuzzy memes, perhaps farmers ourselves are trying to convince each other it’s ‘not that bad.’
But it is.  It is really ‘that bad.’ The dairy industry – that ‘family farm’ dairy industry that sustains a lot of rural economies from the east to the west coast  – is threatened like never before.   Calm, sane, salt-of-the earth, they-would-do-anything-for-you folks are indicating an undercurrent of despair and concern  at a level greater than the 2008-2009 price crisis.  And if those farms are threatened – the industries that serve them in local ag economies – are threatened as well.
To get to a solution, the collective industry, along with consumers, is going to have to do two basic things:
a.)  First – admit that “IT REALLY IS THAT BAD,” and then
b.)  Each layer of this industry –  from farmers, to service personnel (nutritionists, agribusiness, etc),  to milk buyers (including co-ops), to processors (some independents, some owned by co-ops), to distributors, to retailers – is going to have to set aside the ‘me’ factor.  And when the ‘me factor’ is set aside, then each individual person in each layer is going to have to begin to ask itself – ‘what can I do to stop the bleeding, and then right the ship?’
And then the big thing – each individual is going to have to take action. A lot of action. Likely with some sacrifice. We’ll get to that, although it may take a few blog posts to get there. (Patience, please!)
Many farms are operating at unsustainable financial levels, and it’s only a matter of time before the equity runs out, the loans quit coming, the market improves, or they are forced to go out of business.  It is, very unfortunately, a race to the empty barns. Many local and regional industry participants are predicting there’s going to be a massive exit of ‘family’ farms (for the purposes of this post,  I’m speaking of of 200 cows or less, and I will even include 500-700 cow herds in that mix) in the next 6-8 months.
Pride prevents many farmers from talking about how bad it really is at the farm level, but make no mistake – there are more hurting than are doing well at the moment. And most are too busy taking care of cows to do anything about the huge problem.
For every type of occupation or career with ‘dairy,’  jobs or farm businesses and ways of life are threatened by a myriad of factors right now, with these two factors the main ones
(in a very simplified description):

1.) There’s a world-wide glut of inventories of milk powder and cheese, compounded by overproduction as each individual farm around the world tries to generate enough milk to help pay bills in any given week.  Dairy is a supply-and-demand business first and foremost, and there’s a world oversupply, which reduces prices received by farmers around the world.

While we often are seen as ‘feeding the world,’ the ‘world’ is eating a lot of local farm finances, and farm futures, more than at any other time in history. 
To get rid of inventories, sellers on the big world markets are undercutting each other every day, frequently with prices at unsustainable levels as they make their way back to the farmer. Again, it’s a global marketplace – a very competitive, very cutthroat marketplace.
The general thought in this big-picture world of supply and demand is that ‘making no money’ would encourage folks to sell out, get milk and cows off the market, and exit the dairy business.  But again, dairy farmers historically have an infamous internal grittiness that allows them to withstand situations, sometime to the point of financial extremes.  I’m not saying that’s smart, I’m saying that’s the grittiness of a dairy farmer.
b.) Costs such as equipment and labor are continually going up, and farms are difficult, if not impossible, to operate without either.   Even ‘family’ labor needs to pay itself. Thus, the squeeze – the squeeze that’s sucking the life out of local farms, and the local, rural communities in which they are located.
Each of these two factors are complicated with a number of other intertwined layers, but those are the highpoints right now. I’ll stop there, because otherwise, a book as long as War and Peace could be written.
The problem of ‘hurt’ is compounded by plant-beverage marketers belittling real milk and presenting false info to an urban social media audience who seemingly would rather drink in the questionable misinfo and half-truths presented by 99% of ‘faux milk’ companies. Gullible consumers have sucked up that fearmongering and misinfo.  I have no answer for that at the moment.
However, that plant-based market is said to be worth over $16 Billion in the coming year. If 75% of that used to be dollars received by dairy farmers, then that’s $12 Billion (a guesstimate) that has been pulled from dairy farmer pockets. Along with that, think about the miles of retail shelf space  that used to be occupied by Real Milk, and which consumers would pull that milk because it was there.
A solution starts with a very simple action: 
Buy fluid milk.
Real Milk, from Real Cows.
NOT faux milk.
NOT nut beverages.
NOT plant extract milk.
But REAL MILK, from REAL COWS.
WHOLE MILK is BETTER.
You can drink it yourself, you can donate it to a food pantry, you can feed it to your cats, or take a milk bath. (10 gallons of milk for silky skin – now there’s a thought!)
Those of you who follow me on Twitter (@foodsheds) and Facebook know that I often post about drinking real milk, and a lot of times from local farms that I know. After all, they’re the ones in my local agri-economy, and just as much I want my own family’s farm to survive, it is critical for others in my local agri-economy to survive, too.
Why, you may ask? I would really like for consumers to learn about milk brands and dairy products that support farmers in each’s own ‘local’ area, and then help neighbors in each local area, first. Getting local milk off of local shelves can be a demand-increaser and supply-mover in your area.
That’s a market signal, and that drives milk sales. If you support your local farming communities, you help support your own local ag economies, and help protect the means for food security, close to you.  A sea-change of items will have to occur, but legislation and innovative new markets each take a lot of time, and we are running out of time.  A market signal such as milk flying off shelves is the quickest way to begin sending money back into farmer’s products.
Most farmers worth their salt don’t want something handed to them, but rather, they want to earn it – EF Hutton style. Each succeeding farm generation should feel this way, too.
Farmers in general kind of like the risk and the challenge, (or else they wouldn’t be farming at all), but they prefer risk that’s on a bit more of a manageable level than the farm economy is at the moment. Rather than comfort, they would like comfortable risk. (granted, a bit of an oxymoron)
Why should a consumer care about dairy farmers – or farms at all – on National Milk Day, and on any of the other 364 days in a year?
I’ll tackle that on a deeper level in the future (another War and Peace length piece), but for right now, here’s the short version: those nearby local farms are your children’s and grandchildren’s best bet for food security 50 and 75 years from now. That food security will serve society best when it’s in the hands of a a multitude of local farms, instead of huge Amazon-style corporate farms far, far away.
And if something doesn’t change, your ‘local’ farms will be a thing of the past, in the not-too-distant future, and those Amazon-size and Amazon-style farms will prevail.  A lot of flavor we treasure in local cultures will dry up.  Milk (or any other foodstuff), may or may not be ‘cheaper,’ but at what cost to society as we lose local rural communities?
Make no mistake – that’s the path we’re on. And a war to save local family farms has got to start. Now.  Absorb that for a bit (or a few days).
That said, I’m going to have myself a glass of local milk for a nightcap. Mayfield, Weigel’s, and Laura Lynn (bottled by Ingle’s)  are all in my fridge at the moment – it will be one of those! Borden and Sealtest (also bottled by Ingle’s)  could also be considered local for me (farms in a 150-175 mile range of my East TN location.)
In the upper southeast – Prairie Farms counts for local, but it’s very local in the upper midwest (Indiana to Iowa, up into WI).  As you approach the Gulf, look for Publix, and some Kroger milk in Georgia area Kroger stores. Through the Carolinas up into Maryland,  Maola and Pet are good bets. As you head up the East Coast and into NY and Pennsylvania, the brands will differ – we’ll try to work with some other dairy folks, find those brands,  and list them in the future.
The brands of ‘local’ will again be different where you live in the midwest or west coast or  make a point to ask ‘where the farms are?” that are found in a carton or wrapper of any dairy product.  And be warned – many national retail chains use the word ‘local’ in a very loosey-goosey fashion.  “Local”  to where, and “Local”  ‘how?’ is never defined, and is meaningless, particularly when it comes to dairy. Don’t take their word for it.
Please join me in prayers for Providential Wisdom for the Dairy Industry.  This is originally posted as National Milk Day approaches midnight,and the verse Matthew 25:40 keeps repeating itself:  “Whatever you did for the least of these brothers and sisters of mine, you did for me.”   If we as a society are judged by how we treat the smaller and mid-size farms, how will we measure up?
I have no answers for the long term, and indeed there are many answers, but we can start with ‘one’ – one neighbor in a city to one neighbor on a local farm, and a purchase of one (or two!) gallons of milk. Pray with me. Drink Milk with me. Develop in Milk Wisdom with me!
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Pumpkins For Sale in East Tennessee!

Got pumpkins?  Well, this farm does!  And they are for sale!

This year, Grahaven: The Graham Farm, located in the foothills of the Smoky Mountains near Newport, Tennessee, has grown pumpkins.  Traditionally, this has been a row-crop operation growing corn and soybeans, but this pumpkin project is a means to diversify our crop mix a bit.

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To get started, we’ve kept it simple:  two varieties of Jack-O-Lantern Style, Aladdin and Kratos, and Big Macs, the larger, decorative pumpkins which make a big splash in yards, on porches, and in those beautiful fall displays that just make folks happy!

We’ve enjoyed watching them grow, and seeing lovely scenes like this:

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But the time has come for these lovely orange bright spots of happy glowing orange to find new homes in yards and on porches everywhere!  So – we’re hoping you give us a try!

These pumpkins are available in WHOLESALE lots:

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QUALITY?  We’ve been testing their quality a bit, and we know some of the first ones pulled (first week of September) are good three weeks plus later!  (this posted on Sept. 26, 2017).  They’ve been out in the sun, on a glass-top patio table, and have yet to show any wear at all!

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The pumpkins have been grown under the watchful eye of farm personnel, along with frequent visits by qualified agronomists providing advice on pumpkin fertilization and stewardship.

In addition to the Jack-style pumpkins, we’ve got some of those lovely large Big Macs – just thing for huge yard or business displays!  These are great for pumpkin-scaping everywhere!

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As time goes on, we’ll share more about the pumpkin project and how it has evolved.  We are evaluating if this will be on ongoing crop, or a short termer – many factors will play into that decision.

There might (notice the ‘might’) be an on-farm pick-your-own event a bit later in October.  [October 21st, likely, if it happens – so ‘sort of’ save that date!].

In the meantime, for current updates, please follow us at our Facebook page!

You’ll know you’ve found us when you see this Facebook PROFILE Pic:

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And this is our Facebook Cover page:

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And lastly, a BIG THANK YOU to the many family members, friends, neighbors, farm associates, agronomists, and customers who have helped pick pumpkins and get this thing started!  (You’ll hear more about them later, too!)

Most of these posts on this blog deal with issues or event related to the worldwide Milkshed, but since my personal milkshed began with a family dairy farm, and the family farm is now growing pumpkins, and since pumpkin season is now upon us – well you get the picture!

Please – share the word there’s some pretty decent pumpkins that can be bought in East Tennessee!   Wholesale price lists are available on request.  Please call 423-797-1853 for more information.  Please come by!

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Dean Foods Earnings Report Q2 2017 – A Grassroots Perspective: Staying Calm, Placing in Context

Markets have Ups, and Markets have Downs. This challenging Dairy Industry climate led to an expected ‘down’ report for Dean Foods.  Stay Calm.

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On Tuesday, August 8, 2017, Dean Foods hosted their Earnings Call for the 2nd Quarter of their 2017 Fiscal Year.  This Call came in conjunction with the release of their Earnings Report for Q2 2017, and provided additional comments and insight into the numbers provided on the Financial Balance sheets, found in the Earnings Report.

Since then, a number of media reports have followed, some acknowledging that Dean is only one of several dairy focused businesses experiencing tough times in the overall dairy climate from farm to retail, while others are shouting ‘gloom and doom.’  The truth is somewhere in between all of that – each commentator brings their own perspective, and many of the widely available public reports are compiled from a financial sector view looking at numbers only, with few having a working knowledge of the complete dairy industry.  Because they deal with ‘big markets,’ a  lot of fortunes are made or lost on innuendo and incomplete information and rumors – emotions drive those markets up, and they drive those markets down.

Dean Foods Earnings Reports are of extreme importance to dairy farming communities across the United States –  Dean processing plants are the income source for farms in those areas because they buy milk from those farmers, and the plants provide a significant amount of jobs in those local economies.

My perspective is that of one who is involved in agribusiness and farming on this basic grass roots level.  Added to that, on one bleak February several years ago, I (and many other regional farm neighbors) was told my milk company had filed bankruptcy, and there would be no more checks from them.  My colleagues and I live, work and operate farms in the communities who benefit from the success of Dean Foods. We might stress a bit at times like this, but we don’t ‘freak out and panic.”   I know farms of all sizes who sell their milk to Dean Foods plants, I have friends whose jobs are at Dean Foods plants.  We have seen Dean Foods (and some of its predecessors) experience good times and bad, and we know there will be those market ups and downs.

Because of that grass-roots perspective and life experience, I often listen to those Earnings Calls.  Because I listened to the call the other day, as well reviewed the financial reports, and because I keep up with Dean news on a regular basis,  I would say “Stay Calm, let the flurry settle. Look at the entire matter in a complete context.”   Here’s why:

No doubt, the Dean Foods report was disappointing – the net profit dropped 45% from the same quarter as last year, resulting in lowered earnings per share that will be paid to stockholders.  Repeat – dividends will still be paid, there is not a loss, only the amount of dividend paid to shareholders will not be as much.

In today’s downright brutally competitive climate of the dairy industry from farmgate to retail shelf, those results were not entirely unexpected.  Stock prices went down 20% from the $15 level on the day before, and are currently trading in the $11.50 – $12.25 range (August 10).   These prices are nowhere near the 2010 lows, when Dean stock traded as low as $7 as another price war / oversupply situation taking place, albeit for different reasons.

In fact, just a couple of days before the call, and in anticipation of lowered earnings reports, one analyst suggested this was a cycle of “Contrarian Opportunity,” and could indeed be a time to consider buying Dean Stock.  This analyst continues:  “Milk will always be a staple of the U.S. consumer.  The fact that these concerns really only exist  [price wars, market variables] in the short term are reason enough to believe that demand for Dean Foods’ products is sustainable long term.”

Ralph Scozzafava, Dean Foods CEO,  was forthright with his assessment:  “We are not satisfied with our performance, and we are determined to improve our execution,” he said on the call.

Indeed, there is one positive spot already glimmering:  on the call, Chris Bellairs, Chief Financial Officer, revealed that a major private-label contract has been recently signed, but that results from those sales would not show up until a future Earnings Reports, said to be in 2018.  The new contract was not identified by name.

Dairy Reporter offered this balanced evaluation – not sensationalistic, but realistic and factual.

The real truth of the situation is somewhere in between the positives and negatives, and perspective and balance must be kept.  The ultimate focus should be on those who depend most closely on a sound Dean Foods: the farms and dairy farm families who supply Dean with raw milk, and the communities where Dean processing plants and jobs are located.

The extended multiplier effect of financial loss in those communities could be comparable to an area losing a large brick-and-mortar industrial plant, however, because the individuals and farms are so scattered, there is not quite the uproar as when a singular factory closes.  To prevent the potential (note – POTENTIAL) closing of some of those milk plants, it would be helpful if regional retailers decide that community neighbors are as important as ‘cheap’ milk, and make sure private label milks stay in the Dean plants.  Some might, some won’t.

Ultimately, behind every milk carton, there are the faces of farm families, generational farms, and local communities who produce that product.  The way  a consumer spends dollars affects those farms and processing plant jobs – some of them may be your neighbors.

From the Southeast to the Northeast to the West Coast, there are dairy farm communities and local ag economies who are far better served when Dean Foods is financially healthy.    Oh, and there are those stockholders, who do expect a return for their ownership shares – they will have a say as well.

Phil Lempert, also known as ‘The Supermarket Guru,’ penned an article for Forbes entitled “Walmart Moves into the Dairy Business Even as Milk Consumption Drops.”  When you get into the text of the piece, Lempert uses the Dean report to discuss not only the Walmart milk plant currently under construction, but the challenges facing the dairy industry as a whole.  This article has been shared widely on the internet and social media.

However, ‘there’s more to the story’ than the information in Lempert’s article:

Lempert asks the right questions about Walmart – but Dean Foods will be far from the only one affected. I generally like the Guru and his food news, but in my opinion, his observations in this piece are a bit shortsighted, and fail to provide a complete picture or broader perspective on Dean activity in the past several months. To wit:

When the Walmart plans for a plant were announced in 2016, Dean began making adjustments then to allow for that.  It was revealed on the call that when the Walmart plant begins operations, milk currently being processed at Dean-owned plants for Wal-Mart will decrease by 90-95 million pounds of milk over 2018 and 2019.  To make up for that loss,  they have been broadening their product portfolio, acquiring companies who are not as dependent on fluid milk.  As a large corporation, doing BIG business, it takes time to make for those adjustments, which has occurred and is occurring since that announcement.

As noted earlier, there was the announcement that Dean has  just signed that major private label contract (no name provided).  And just because it happens all the time with any milk company, no doubt Dean will be trying to gain business from other milk labels as well.

There is still a $45 million profit for the quarter (the way those numbers are computed by huge corporations, and in keeping with SEC accounting standards).  And while not as much as last year’s comparisons for the same quarter, profits still occurred in the form of  “adjusted diluted earnings per share.”  Additionally, there was still ‘net cash’ and not ‘LOSS of cash.’

Dean stated last winter, in another earnings report situation, when asked directly about how they would deal with a Walmart plant, that they had already withstood the challenge of losing some Walmart business, so they were a bit more prepared to deal with this occurrence, therefore they have been taking the actions mentioned above.

With all that said, these realities remain: Dean Foods is still one of the largest supporters of LOCAL dairy communities because they do generally source from farmers within a 200 mile radius of their plants. Dean Foods sources that milk through both independent producers and co-ops, bringing on this question: WHAT is each and every handler doing to stabilize and protect the financial integrity of the farms it represents?

No doubt, some of those handlers or co-ops may be evaluating and seeking contracts with the Walmart plant, but with Walmart’s known predatory practice of enticing vendors and then squeezing the crap out of them, how will that be good for any producer in the long term?

And on the flip side – how many of us continually shop in a Walmart with big-spending shopping trips, when by doing so, we are feeding that very greedy, corporate pig which has sucked the life out of our small downtowns and communities, and is now headed on a path to do that to family farms? [Keep in mind – those farms are our future food bank or food savings account – what happens to your children in 75 years when they are gone?}

‘Wally World’ is going to take on new meaning, and will exist far beyond the walls of any singular Walmart brick-and-mortar retail box.

What next?  As for me, I’m headed to get some Trumoo Whole Chocolate Milk (NOT at a Walmart), and plan on buying some Dean stock in the next couple of days.

 

Additional information can be found at:

USA Today article: 

“As milk production continues to grow across many areas of the country, we’re seeing surplus volume . . . and aggressive pricing that we believe just isn’t sustainable long term.”  a quote from Ralph Scozzafava, Dean Foods CEO.

“Dean Foods also will focus more on expanding in food categories that deliver higher profit margins than milk, such as ice cream.”

Benzinga article:  (published a week prior to earnings report):

[Dean Food’s Caught in Crossfire of Walmart, Kroger’s ‘Price War’]  Milk is being used as a loss leader in many locations, compounding price wars.

From “Food Dive”: Notes These factors: the use of milk as a loss leader in some retailers, the competition from plant-based beverages, but yet notes that Dean’s volume loss mirrored USDA figures.

Earnings Report and Recording of Call:  For readers who wish to read the earnings report in its entirety, as well as take an hour to listen to a recording of the Earnings call, you can find links at the “Investor Relations” page of the Dean Foods website.

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