Home Indiana Agriculture News Dean Foods Terminating Milk Contracts May 31

Dean Foods Terminating Milk Contracts May 31

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Another round of letters notifying dairy farmers they are losing a milk market arrived in mailboxes, this time in Indiana, Kentucky and surrounding states. In a letter dated Feb. 26, Brent Bunce, director of Dairy Direct Operations, said Dean Foods would cease buying milk from affected dairy farmers, effective May 31.

The total number of farms whose milk marketing contracts have been terminated is unknown. According to some sources, it involves farmers in Indiana, Kentucky, North Carolina, Ohio, Pennsylvania, South Carolina and Tennessee.

In Kentucky, an estimated 22 to 25 producers are affected. About 30 dairy farmers are impacted in Indiana, including Joe Kelsay and Ken Hoeing, members of the Indiana Dairy Producers Association.

Kelsay farms in partnership with his brother, Russ, near Whiteland, south of Indianapolis, Indiana. The farm has been in the family since 1835, with dairy the primary enterprise over the last four decades.

At one time milking 500 cows, the Kelsays cut back to 400 cows about a year ago due to shrinking milk income margins. They milk 3X per day in a double-16 herringbone parlor.

“We’re trying to weather the storm, but the storm just got a little rougher,” Joe Kelsay said.

The Kelsays have shipped to Dean Foods since the early 1990s, with their milk going to a fluid plant in Louisville, Kentucky. Its customers include the Jefferson County [Kentucky] school system, the largest in the state.

“It’s been a great relationship through the highs and lows and goods and bads,” he said. “They’ve been a good company to work with, and I don’t have any complaints. As frustrating as this is, they have to run their business, and I can’t throw them under the bus.”

Kelsay serves on the National Dairy Promotion and Research Board. He’s worked closely with the American Dairy Association of Indiana, and said Dean has been a valuable partner on regional dairy promotion efforts.

“It doesn’t take away from the fact this is a jolt to our business plan and finding a market will not be easy in the coming weeks,” Kelsay said.

Due to the long-standing milk marketing relationship, Kelsay has not actively investigated alternative markets in the past. That’s now changed.

“It’s still early in the process and will take some discovery on our part,” he said. “We’re trying to get information and make phone calls.”

While not entirely surprising, Kelsay said the letter from Dean was “impactful” not only to dairy farmers in the region, but also to the entire dairy industry. “The producers got the letters, but the cooperatives and other markets will also be impacted,” he said.

Three large cooperatives cover the area: Foremost Farms, Prairie Farms and Dairy Farmers of America. Fort Wayne, the location of a new Walmart milk processing plant set to open this summer, is about two hours northeast of the Kelsay farm.

Source: Progressive Dairyman