The news is mixed as a deadline looms for dairy farmers facing the loss of their milk markets on June 1.
Dean Foods sent letters to about 100 dairy farms across eight states in late February, notifying them milk supply contracts would be terminated on May 31.
A total of 42 Pennsylvania farms were affected. As of mid-May, 22 of 26 dairy farms in eastern Pennsylvania had found new markets for their milk, according to Jayne Sebright, executive director of Pennsylvania’s Center for Dairy Excellence (CDE). Four other farms decided to exit the business, in part due to the loss of their milk market and ongoing economic challenges in the dairy industry.
With many co-ops already at milk intake capacity and restricted from taking new members’ milk, replacement markets were harder to find in the western part of the state. As of mid-May, all affected farms had been offered a market for their milk, although some of those were offered “Grade B” markets, with the likelihood of lower milk prices.
“All the farms have been offered a market, so they have a path forward if they want it,” Sebright said. “Lower prices will be a factor in some deciding to exit the business.”
Sebright said the primary role of CDE was coordination, linking farmers and potential milk outlets. Because Dean is a private company, the names of farmers affected by the contract terminations were not disclosed. Initial efforts were to identify affected farmers and then serve as a conduit for farmers and other milk buyers to communicate with each other. CDE also offered various financial and other business management resources if necessary.
“The industry really came together to find homes for as many farms as possible,” she said. “Considering the market environment, and how challenging it is out there, we were fortunate that so many found a home.”
Despite finding markets for most of the milk, Sebright stressed that the situation has not resulted in the creation of “new” milk markets.
“In Pennsylvania, we’ve always been fortunate to have several different options for milk markets,” she said. “Right now, we’re very tight, and there are far fewer options than ever before. Pennsylvania will have to get used to the challenge of market access.”
“The 42 farms losing their market could be labeled as a ‘crisis’ for Pennsylvania,” Sebright said. “It was a wake-up call, [creating awareness that] we need to make a more concerted effort to ensure our dairy industry is here for the long term.”
If there was a silver lining in the situation, it was the amount of concern for those farms and the broader dairy community. Public forums and media attention picked up momentum about making sure local dairy farmers are supported. That evolved into “buying local” efforts and focusing greater attention on state government policies to protect the dairy industry.
“Pennsylvania has been incredibly fortunate, and it’s a testament to a lot of people,” Sebright said. “It’s overwhelming, and as frustrating as it was, farmers should feel good about how many people care.”
The situation also drew attention to the need for more unity within the dairy industry. “We have to figure out how to work together,” Sebright said. “We need to make sure our markets are strong and tell our stories.”
While the immediate crisis may have dissipated in Pennsylvania, future challenges remain. “There’s a lot of fear among our farms about what’s next,” she said.
This week, published reports said employees at Meadow Brook Dairy were notified of the plant closing at Erie, Pennsylvania. Dean Foods is Meadow Brook’s parent company, and some dairy farmers supplying milk to the plant were among those receiving Dean notices in late February.
Last year, a study released by dairy economists Chuck Nicholson, Mark Stephenson and Andrew Novakovic documented opportunities for expanding dairy processing in Pennsylvania. While some conversations in that area are underway, the future remains uncertain.
Indiana, Ohio and Kentucky updates
Doug Leman, executive director of the Indiana Dairy Producers Association, said about 25 Indiana dairy farms had received Dean notices. A few dispersed their herds almost immediately, and one farm is exploring on-farm processing of their own milk. Almost all others have received offers for a market for their milk, and most have accepted those offers, Leman said.
However, two small Indiana farms wanting to continue dairying had not found anyone to pick up their milk as of May 22. “It’s a personal disappointment that someone has to leave the business, and it isn’t under their control,” Leman said.
Like Sebright, Leman said the heartening thing about the situation is how Indiana dairy producers came together to try to support each other, including trying to help affected farmers find a home for their milk, Leman said. Dairy farmers were also fully aware the situation arose from the imbalance in supply and demand, and did not place blame on specific processing companies for the situation.
Messages with the Ohio Dairy Producers Association had not been returned at Progressive Dairyman’s deadline. Previously published comments indicated 10 or 12 farms had found a milk market.
The news appears far worse in Kentucky. Although talks are ongoing with other milk processors in the area, not one of 14 dairy farmers receiving Dean termination letters had found a home for their milk as of mid-May, said Maury Cox, executive director of the Kentucky Dairy Development Council. In addition, a Prairie Farms fluid milk processing plant in Fulton, Kentucky, is scheduled for closure by June 30.
And, Cox said, one farmer – with a milk supply contract with a different buyer – who recently built a separate eight-robot setup under one roof, had been informed milk from the new facility would not be accepted. 
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Dave Natzke
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