[S]T. ALBANS – Members of the St. Albans Cooperative Creamery overwhelmingly voted to approve a merger with national Dairy Farmers of America on Thursday, in a move to secure access to larger markets in a struggling industry.
The co-op’s board voted unanimously in June to recommend the merger to its approximately 350 members, most of whom are based in Vermont, New York and New Hampshire.
Kansas-based Dairy Farmers of America has 14,000 farmers and 46 plants nationwide, and will invest in the co-op’s assets in St. Albans. The merger is effective Aug. 1, and the co-op will be known as St. Albans Creamery LLC, a wholly owned subsidiary of DFA.
Co-op leaders say the move will provide long-term financial security through providing access to more capital, larger markets and greater economies of scale.
“In many ways, this merger is a continuation of the strategic goals, values and mission of St. Albans Cooperative Creamery,” said Leon Berthiaume, chief executive officer, in a press release.
A few hundred dairy farmers from across the region packed into the American Legion Post in St. Albans for a special three-hour meeting and vote on the merger.
Harold Howrigan III, a Fairfield farmer, said he supported the move, while walking into the vote.
“I think it’s a great opportunity for the co-op to increase their market share,” he said.
Brad Callan, who owns Sunnybrook Farm in Fairfield, said he feels a bit sad about the merger, but supports it given the challenging state of the dairy industry.
“Times are hard, money is short,” Callan said.
Dairy farms nationwide have struggled in recent years, faced with a long run of low milk prices and oversupply challenges. Vermont lost more than 400 dairy farms in the last decade.
As part of the merger, DFA will take ownership of McDermotts, a hauling company owned by the co-op, as well as the creamery plant and the co-op store.
DFA already has 114 member farms in Vermont and has worked with St. Albans Co-op in a limited capacity since 2003. The two organizations have collaborated on marketing and to create efficiency within the milk distribution system.
The merger was approved by a vote of 99-9, with 108 people – about a third of membership – weighing in on the decision.
Berthiaume said during a conference call with reporters on Monday afternoon that farmers of all areas of the membership region turned out at the meeting to support joining DFA .
Harold Howringan Jr., a Sheldon dairy farmer and board chairman, said concerns were raised about investments in the plant and infrastructure, and representation within the much larger DFA.
“The farmers still will have a voice in a very strong grassroots system within the organization. Vermont,” he said.
The board of directors of the co-op will continue to represent farmers’ interests as part of DFA’s Northeast Area Council, and a St. Albans Co-op member will be on the corporate board.
With the merger, co-op members will gain access to DFA member services aimed to help make farms more profitable, including insurance, buying programs for feed and technical supplies, and support with risk management.
The DFA engineering team will be meeting with the co-op in coming months to look at the overall needs for upgrades and investment in the St. Albans plant.
“I think some of the investments you’re going to see could happen almost immediately,” said Brad Keating, DFA’s chief operating officer for the Northeast region.
Berthiaume said at times the milk processing plant can be stressed due to lack of storage for milk product on site, especially on weekends and other periods of high demand.
“The intent I think with time is to be able to increase more of that storage capacity to provide us with more flexibility and continue to meet the demands of our customers,” he said.
Operations at the St. Albans Co-op will not change when the merger takes effect on Aug. 1. Officials expect conversations to take place around how the co-op will use the DFA name and branding in the future.
Leon said the core of farmers’ monthly milk checks will continue to be tied to global market prices.
“It gives us assurances of the markets we are currently serving, and gives us the flexibility as we continue to see many of our markets changes, as processors change, as processors consolidate,” he said of the merger. “So being part of this larger system provides those additional assurances.”
Outside of the meeting in St. Albans, Kevin Howrigan, of Patrick Howrigan Family Farm in Sheldon, was feeling bittersweet about the merger.
“I don’t want to be like these co-ops you read about, that go bankrupt with nowhere to go with their milk,” he said.
Steve Dodd, who has about 300 cows on his Sheldon dairy farm, said he felt the co-op doesn’t have many other options.
“We’ve seen it coming, it’s been coming for the past five, six years,” he said.
James Normandin, who owns Cartersdale Farm in Ellenberg, New York, said he’s been a member of the co-op for 30 years and has seen membership drop by a few hundred. He wishes the co-op didn’t need to merge with Dairy Farmers of America.
“We’re stuck having to be bailed out pretty much by DFA, I don’t really see much of a choice,” Normandin said. “I don’t believe the co-op could survive without it.”
