State vows to privatize Mat Maid

August 28, 2007

By Greg Johnson

Frontiersman

MAT-SU - Alaska may be near to milking its last cow.

The state Board of Agriculture and Conservation decided Monday to privatize Matanuska Maid Dairy and get the state out of the dairy business.

Privatizing Mat Maid has “been the conclusion of every [study about Mat Maid], and our own task force, said Kristin Cole, a member of the board. “It was never intended that the state be the owner of this asset long-term.”

Mat Maid has been producing Alaska-grown milk for 71 years and was a private cooperative until 1985, when financial pressures prompted the state to buy the dairy out of bankruptcy.

Even then, it was never intended for the state to run Mat Maid indefinitely, Cole said.

“It should've been privatized a long time ago,” she said, adding the board considered a lot of information and other options before deciding privatizing was best for the dairy and the state.

“Our governor [Sarah Palin] asked us to look at [the Mat Maid situation] and we were happy to do it,” Cole said. “We reviewed all the information that was available.”

The board also considered that Mat Maid could reorganize and focus on a smaller niche market or consider producing an all-Alaska produce, Cole said.

“Even though those options may be very good, very viable and may be the best thing for today's current environment ... it should be done by the private sector and not state government,” she said.

Cole is part of an agriculture and conservation board appointed by Gov. Palin in June to seek out ways to find an alternative to closing the financially struggling dairy. Over the past two years, Mat Main has lost about $700,000. Under the new board, which as cut costs and reorganized management, Mat Maid has shown a small profit in June and July.

Although the state is actively pursuing a plan to privatize Mat Maid, the goal is for the dairy to remain a working facility buying locally produced milk, Cole said. The board has already had inquiries from other companies on interest about buying the dairy, including one in writing.

The best scenario would be for a large company, like Kroger, which owns Fred Meyer, or Safeway, which owns Carrs, to purchase Mat Maid to produce their own local milk.

“If we can have the best of all worlds, that would be a win-win for the state and win-win for the producer,” she said, adding that most local dairy farmers “would agree it's best when run in private hands.”

Market factors are also pressing the ag board to sell Mat Maid. When the board was appointed in June the price of milk was $21 per 100 pounds,” Cole said. In less than three months that has skyrocketed to $30 per 100 pounds. Although Mat Maid buys milk from state dairy farmers, it also purchases Outside milk to meet its demand.

While the decision to sell Mat Maid has been made, how much the dairy is worth is still being determined, Cole said, adding there are no plans to close the dairy while privatization efforts are underway.

“We are actively seeking to privatize it and in the mean time, keeping our eye on the ball,” she said.

Contact Greg Johnson at 352-2268 or greg.johnson@frontiersman.com.