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Another $200K for creamery

BY TODD L. DISHER
Frontiersman
Published on Saturday, March 6, 2010 8:00 PM AKST

PALMER — The Matanuska Creamery received another $200,000 loan from the state Board of Agriculture and Conservation this week despite a report questioning the group’s collateral.

Valley Dairy Inc., the company behind the local creamery, was established in 2008 to give local farmers an outlet for dairy products. In October of that year, the company approached the ag board for two loans from the Agricultural Revolving Loan Fund. In November 2008, the board approved both loans, a short-term “S” loan for $200,000 and a long-term “F” loan for $430,000.

At the request of then-Alaska Rep. Ralph Samuels, the Legislative Budget and Audit Committee looked into the loans. The informal memorandum, issued in February 2009, stated the long-term loan was under-collateralized.

ROBERT DeBERRY/Frontiersman Gallon milk jugs are placed onto a conveyor at Matanuska Creamery. The creamery received another $200,000 loan from the state Board of Agriculture and Conservation this week

“We looked at what the ag board had done in the past,” said Pat Davidson, the legislative auditor who wrote the report. “Did the collateral meet the 75 percent value of the loan they typically use as a standard?”

Davidson said the Matanuska Maid dairy had recently closed and auctioned off much of its equipment. Based on those sales, Davidson said the equipment used by Valley Dairy Inc. as collateral would not cover 75 percent of the $430,000.

Karen Olson, the CEO and CFO of Valley Dairy Inc., disagrees. She said the company has put more than $900,000 into improvements in the equipment at the creamery, and it is now worth double the amount the of the long-term loan.

Now, a year later after receiving the first two loans, Valley Dairy Inc. has received another. Olson said the creamery has paid off a third of the first short-term loan, and the new influx of $200,000 will allow it to pay off the remaining balance of the first short-term loan and bring them back up the upper limit, she said.

The money is going to pay the dairy producers, Olson said. This time of year, it is crucial for farmers to collect the payments they are due, she said. Now is when they start buying fertilizer and feed for the coming season. As part of a deal Valley Dairy Inc. made to receive a grant from the federal government, the creamery is mandated to pay the suppliers a “sustainable rate,” Olson said. This rate is $28 per hundred weight of milk, less their delivery and pick-up fees, she said. This is compared to the $12 to $14 per hundred weight price of milk as traded on the open commodities futures market.

Without the new loan, Olson said they would have been further behind on their payments to the producers. As the Matanuska Creamery is the only local outlet for these producers, these payments are of “primary importance” for the Mat-Su Valley dairy sector, Olson said.

Contact Todd L. Disher at todd.disher@frontiersman.com or 352-2252.

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55 comment(s)

JustAMatterofTime wrote on Mar 23, 2010 11:19 PM:

" To JJ: Actually at a recent event at Midnight sun Brewery, they featured a cheddar cheese soup mat with Mat Creamery cheese. Only the people who had eaten that soup got very ill with intestinal issues.

So my question to the DEC person is this...was the Listeria/Salmonella cheese they made last year properly disposed of? I heard on TV that they now have two year aged cheese. This is from the period when they made the tainted cheese. Are they trying to SELL it now? "

Please Look into wrote on Mar 21, 2010 8:07 PM:

" 18.AAC32.990'38" Defines milk product & cheese is part of that definition. This state has regulations they are held to by this code you will see in the Grade "A" Pasteurized Milk Ordinance U.S. Department of Health and Human Services Public Health Service Food and Drug Administration. Cheese is regulated under Milk Products! Also if you have a permit (farmers) they have rules. Most people may not understand but because I was trained by the Creamery so well I can help the people get the info and read for them selves. No cover ups! "

jj wrote on Mar 21, 2010 5:05 PM:

" You're lucky no one has died yet from your Alaskan milk and cheese, yet!!!! It's probably coming!!!! "

former US Military Member wrote on Mar 19, 2010 1:31 PM:

" Do you see where her left and is? Yes it's on top of a milk jug. I've been in the room's and it does happen. The radio above her is more of a concern I would have. But the fact is what you see is what you get. You can see for your self weather you want to risk getting sick. You see things being taken off the shelves at the store and this would be a reason of many why it happens. Our problem is that we have having to fund it! "

Paste Tech 2008 wrote on Mar 18, 2010 8:48 AM:

" Looking at ch 2 news video of the Creamery they are not using gloves, beard hair net's, and the outer Garment's used in and out of rooms with door's being full open. Cherie Lowry is the state DEC inspector for the Creamery and this is over and over the same violations. They have big viewing windows and yet don't seem to show the Alaska people how they are used. Is someone putting pressure on Lowry not letting her do her job? I have the wright up's that are the same in 2008. "

Past Tech wrote on Mar 17, 2010 7:58 PM:

" Your mistake. Tonight on ch 2 New's you all saw a man with no Beard Cover, and also another one of them making Cheese with no gloves on, and the Red shirt outer Garments going in and out of the processing rooms. Just what does Cherie L. Loury think when see's this or is told? Cherie is a DEC inspector that goes to the Creamery to inspect. I gotta send this to the lower 48 head food Pro Inspec case someone is going to get sick or even die. They need help! "

Hang in wrote on Mar 17, 2010 3:57 PM:

" 2nd loan was given Dec 2009 an with in that time the creamery did not have enough money to pay every vender back what they owed. Then were did it go? All they had was income to pay on the loan and not the farmers in that same time frame as well as loan payments they asked for en extension to start paying in Jan 2009. Oh boy this is a mess. "

Please think about it wrote on Mar 17, 2010 3:22 PM:

" If you have worked at the creamery and know Grade "A" Pasteurized Milk Ordinance by U.S. Department of Health and Human Services you will have the understanding I have. So un till you do please think about it! I understand you only know what you are told and how you want to help but please understand I wanted the same too! I just happen to work for them and this was my job! You have a good heart. I just want you / everyone healthy is all. No bad feelings please. "

SUPPORT LOCAL PRODUCTS wrote on Mar 17, 2010 12:01 AM:

" Please think about it wrote on Mar 16, 2010 8:59 AM:

"If we had a problem with the boats we can get it by air."

YEAH RIGHT! I hope you like very expensive powdered milk, because that's what you are going to get if they start bringing mass quantities of food to AK by air. "

Please think about it wrote on Mar 16, 2010 1:17 PM:

" Correction
First Violation was 09/10/08. Second Violation News paper date 5/05/2009 That I can prove 100% photo and document from the state write up. I just pray to God someone steps in to help the farmers get away from a disaster. Alaska please wake up! Your worried about enough milk in a disaster. I'm more worried about the health first. The truth shall set you free! "

Please think about it wrote on Mar 16, 2010 12:58 PM:

" I worked at the Creamery and she does need to not cross contaminate by wearing a shirt from home. Sec 110.10 Personnel. Violation 10/09/08 wearing this shirt to work, bathroom, and to breaks is cross contamination. Thats why they have coat racks that you hang the lab coats on, or the red Creamery shirt. The coat racks are inside the processing rooms. Other wise how to you not cross contaminate? They have the clothing and the company that cleans the Outer garment is what Grade "A" PMO calls it. Dep of Health! "

Look closer wrote on Mar 16, 2010 9:27 AM:

" She does have a hair net on. And she does not have to wear gloves because she is not touching the upper portion of the milk jugs. "

Please think about it wrote on Mar 16, 2010 8:59 AM:

" The Creamery is 1/2 way to $10 a gallon and still needs our money. With in 15 months they have now asked for 3 loans. We are having to pay more as it stands right now! If we had a problem with the boats we can get it by air. People in this state need to write to the head of the state and protest NO MORE LOANS and the Fed's need to investigate the Creamery. If you use an insider from the state you will not get the truth! "

Mae wrote on Mar 15, 2010 10:32 PM:

" I really enjoy buying locally produced Mat Su Valley items. I don't buy from the Valley Creamery because the entire operation from the upstart is just to fishy.

Too many "loans", when they are suppose to be self sustainable, yet it appears they never will be. Also the backdoor Palin politics are a big turn off. "

buddyo wrote on Mar 15, 2010 7:40 PM:

" Why is the worker pictured above wearing street clothes and not wearing a coat (like a lab or chefs jacket)? No hairnet or gloves while handling open milk jugs? Does the health dept even do checks of the creamery? "

valleguy wrote on Mar 15, 2010 12:04 AM:

" If I remember correctly much of the creamery's start-up was funded with grants. If these guys haven't been paying the farmers for the milk then what have they been paying other than loan payments, are there really making these? Are the owners of this venture collecting a paycheck? The market already seems to have made a decision on this subject. Lets quit calling it loans and or grants to these jokers and lets call it a subsidy. "

SUPPORT LOCAL PRODUCTS wrote on Mar 14, 2010 7:15 PM:

" I buy locally produced milk because I think it tastes far better,and I like to support locally grown.I WANT locally grown food products available.

It won't take much of a natural or man made disaster to shut down the ships coming into the Anchorage Dock.Some of you commenting don't realize the terrible situation we'd be in if ships weren't able to come in to our port twice a week.

Not only will a disaster put us in an emergency situation, but we are at the mercy of the shipping companies when it comes to food prices. "

Supply Demand Price wrote on Mar 14, 2010 11:27 AM:

" And when there is no milk and milk products produced in Alaska, you will be paying $10/gal for your outside milk. Think about it! Why do you think they sell the outside milk under cost? "

Pasteurizer Tech 2008 wrote on Mar 12, 2010 4:00 PM:

" They are charging high prices of milk and selling it all an they will first pay a loan rather the farmers. See they would have not got another loan if they paid the farmers and struggled with the loan payments. So this is how they play the game they know every well how to play. My question to the Ag board is if they sell all the milk like they say they do then why don't you tell them to pay the farmers as well as the loan's? New board members please! "

John H wrote on Mar 11, 2010 10:23 PM:

" Having worked in the grocery business, I can say that at least at Safeway, they dictate how much shelf space and they dictate the pricing. I know that to get certified to carry the organic lable is difficult. This is the same milk used by Mat Maid and they face the same problems with pricing. I am however bothered that money keeps being poured into a private business which is borrwing more money to pay off an older loan. Ponzi, anyone? "

kek wrote on Mar 10, 2010 4:53 PM:

" I won't get into all the business end of it. I just feel I need to comment on the price comparison.
We need to compare apples to apples, which would mean comparing the local milk with organic milk....local is cheaper. I realize it's not labeled and certified organic but it's my understanding that the local cows are hormone free. That's my only reason to buy organic. Local, hormone free milk is good for my health and cheaper on my wallet. I hope the creamery not only survives but thrives. "

Amy Moore wrote on Mar 10, 2010 11:13 AM:

" I was told when we worked at the creamery that the money we got from the milk sales where to pay the farmers for the milk we got from them. But then again we had problems back then paying for the milk 2008. Why did Valley Dairy get to Business licences in 2008? They changed it from Kyle Beus being the owner Jan-Oct4, 2008. Then On Oct 5, 2008 it was changed. Look on Court View for owner information that is for the public eye! Spell Fraud ALASKA! "

boondogggle wrote on Mar 10, 2010 1:03 AM:

" Brit- I happen to remember reading that when they started that they wanted to stay small and produce premium, high dollar items. Their cheese is $12 a pound. In this economy, that is not going to fly. They are chosing to pay double for milk to the farmers and trying to pass that on to us. Having worked at Safeway, I do know they pretty much dictate to vendors what they will pay, as does Walmart, so they can't raise their prices there any higher. So I predict they will fall behind more. "

Brit wrote on Mar 9, 2010 3:38 PM:

" to ChefDitto: I agree if there was a finite number of customers and cows. However, business grows when there is demand. If they sell all they produce now that means that there is a market for more, which is then a signal for farmers to invest in more cows. This is where the quantity of scale comes in. The more cows and farmers there are, the cheaper they can buy their feed and, in turn, can afford to offer their product for less. In a growing state like Alaska, many enterprises have startedout small and grown with demand. "

Conflict wrote on Mar 9, 2010 1:36 PM:

" Sounds like a lot of conflict here, and it you want better dramatic facts about this dairy situation here in Alaska google this: "The Valley Dairy: Got Fraud?" This detailed article of what I would call a fraud process and how a few have scammed millions is beyond belief. Talk about Conflict read the article, and yes that Wells thing is likely very much a conflict, begins to sound like these folks are all just a scammin! Sounds Bernice Madoff, dairy farmer! "

supply and demand wrote on Mar 9, 2010 12:32 PM:

" it costs more to feed yor stock?

it costs more for electricity?

it costs more......

yeah, that's the law of supply and demand.

if i can buy a product of like kind and quality (relatively) i will buy the less expensive.

too bad you farmers cant figure that out- but, why do you have to- the state keeps giving you money.

turn off the spigot of subsidies. our schools and roads could use a little help right now.

i can but mile for $2.99 at wal mart, thank you. "

akshutterbug wrote on Mar 9, 2010 11:47 AM:

" This is most commonly referred to as a Ponzi scheme "

Tired of handouts wrote on Mar 9, 2010 9:51 AM:

" Hey there, farming in Alaska does not work, Alaskans cannot afford it any longer. Food supply, that is a joke. When the food supply runs out you can be assured no farmer will share his with you, small self centered group that they have become. Stop handing out State Money to subsidize private business, or allow all small business to take advantage of this corruption and fraudulent game of deception practiced by the farm community, small as it really is in Alaska. And these folks all have conflict and personal interest, right down the list. "

feed is high wrote on Mar 9, 2010 9:02 AM:

" I do believe in the free market and if we can't produce it cheap enough here then we should buy it elsewhere. What gets me is the butcher shops here get 80 cents to cut and wrap. It cost less than half that amount in the lower 48 and they arent even feeding the workers that expensive hay. "

feed is high wrote on Mar 9, 2010 9:00 AM:

" What the average person doesnt understand is that feed cost a ton more here than in the lower 48. A round bale used to cost me $25 delivered in Wisconsin. Up here it cost $150+. It is better for a farmer to sell it to someone for their horses than feed it to the cattle since there is no money in it. I sold 7 steers a little over a year ago before I moved here and got $2500 for them. Up here I would get $5000+ Hogs, I sold full grown for less than feeders here. "

ChefDitto wrote on Mar 9, 2010 12:15 AM:

" Brit, With all due respect you say that if more people would buy their milk, they would not have to get more loans. I just watched a KTVA video clip shown on Palingates blog and Karen Olsen stated right there that they are selling all the milk they produce. So if they have a 100% sell out of milk and are falling behind, it is not going to get any better, but worse. The state thought they were out of the dairy business with the sale of MatMaid, but are deep, deep back in again . "

towneil wrote on Mar 8, 2010 11:01 PM:

" Everyone here would benefit more if you actually researched WHY milk is so cheap from the lower 48 dairies. Look into the govt role nationwide to drive down some food costs but in the long run, sacrifice your health to do so. You obviously have a computer, stop blogging and read something educational for crying out loud. "

conflict wrote on Mar 8, 2010 8:35 PM:

" Isn't this a conflict of interest since Wells, was on the agriculture board before he lost the election and got his DUI? I understand the Agriculture board was asking for more money. Isn't is funny that he now gets a 200k loan? "

Brit wrote on Mar 8, 2010 8:30 PM:

" Dear "To Brit": Just to let you know that you are so wrong about how we make a living. I did go through the school of hard knocks big time, but never ever did we take a dime from the State or any other public assistance program to survive.(PFD excepted). No free school lunches, no food bank. The dairy farmers aren't in it for the profit. We should be thankful for what they do and support them. If enough people buy their milk they won't need to apply for any more ag loans. Don't be so judgmental. "

Stop the Insanity wrote on Mar 8, 2010 7:13 PM:

" Karen Olson CFO AND CEO? That is a RED flag right there! NEVER is this done in a corporation! Hope Beus and Wells are watching her books.

Beus and Olson have each defaulted on state loans to the tune of over $2 million a piece. Public records.

Obviously the Board of Ag are handing out loans hand over fist knowing they are not surviving on their own. "

valley wrote on Mar 8, 2010 3:45 PM:

" We buy local as much as possible...and by local I mean buying valley products...not just Alaska, but I have to say I was very disappointed in Matanuska Creamery milk. We started buying it again about 3 months ago, and stopped after four gallons went sour on, or before, the expiration date. Kept in the fridge like we always have, and didn't last. How is that a better product? I hate to say it, but we now buy "industry" milk...don't notice a taste difference, and it lasts... "

Patricia wrote on Mar 8, 2010 2:38 PM:

" Wow. Another lovely bit of the legacy that Palin left to the Alaska taxpayers.

This has nothing to do with supporting local farmers, and everything to do with mismanagement and corruption. "

Out Side The Box wrote on Mar 8, 2010 12:58 PM:

" When does the name change from Valley Dairy Inc to State of Alaska Creamery? When they exceed $550,000 in State loans? This is TOTALLY rediculous!! "

To Brit wrote on Mar 8, 2010 11:29 AM:

" I bet you're happy- your family must be one of the farm families that gets money for nothing. How about this, Brit- go back to school and learn the meaning of "a dollar". Then, quit asking the state of Alaska for more of them.

Sheesh. Entitlement culture! "

JD wrote on Mar 8, 2010 11:10 AM:

" That milk that arrived from Seattle for $2.99 is almost a week old already-the milk from the local farmers is less than 24 hours old. It's the best milk on the shelves in taste,I believe. Their ice cream is AWESOME! I was born and raised on a dairy farm so I know what the farmers go through and I will gladly pay more to support our LOCAL farmers. "

Cronopio wrote on Mar 8, 2010 11:10 AM:

" The more you look into their finances, the shadier it looks. "

allen wrote on Mar 8, 2010 11:08 AM:

" I support the local farmers that pay their bills, but this is getting a little ridiculous. A $200,000 loan to pay off another indebtedness? Come on Ag Board, the handwriting is on the wall. "

Alaskan wrote on Mar 8, 2010 8:49 AM:

" I'm all for local but the price has to be competitive. Stop digging a hole or it will be the same failed Dairy we had before. Scale back and ramp up as the market allows. If uncle Ted was still in office you could ask and probably get some Federal Grant money. Wouldn't be any different than all that money spent on Palmer South Railway Station that sits idle 11.5 months of the year. "

disaster wrote on Mar 8, 2010 7:46 AM:

" if a disaster happens? 3 day supply?

OHHHH NOOOOOOO!!

What the real disaster is, my friend, is the business operations at the creamery.

loan after loan, year after year.

frankly many people are tired of having to use STATE MONIES to subsidize this failed operation!!!

That, my local friend, is why MOST people do not buy the product.

That, and it is more expensive by far. "

Brit wrote on Mar 7, 2010 10:43 PM:

" My family is glad that the people at Valley Dairy and the farmers are making this heroic effort to supply us with local milk. I wish everyone would support local farmers because down the road we may get real hungry if a natural disaster hits which cuts off the transport from outside.. There are only a few days' worth of groceries on the shelf in case of an emergency. Please show your support for our farmers by buying local. We earn a bit more in Alaska. Why not spend a little extra to encourage Alaska farmers to succeed. "

Huh wrote on Mar 7, 2010 1:36 PM:

" If it is "sooo good" and "soooo fresh" compared to the $1.29 per gallon less expensive milk, then WHY is Mat Creamery not selling enough to pay its bills?

Proper business takes "price point" into the equation. maybe you work for them.

Clearly the consumer disagrees with YOU and MAT CREAMERY and purchase the less expensive millk.

If you sold more, you would have MORE INCOME and not have to rely on MORE LOANS.

Economics 101. "

Oops wrote on Mar 7, 2010 1:29 PM:

" Buy Valley - I too want to support locally BUT I'm not willing to pay for their debts. Good product or not it's not worth it if they can't manage to produce a good product without "MILKING" the consumer. Local doesn't equate to cost it should be less expensive. It's not realistic for them to expect us to pay almost double to get them out of debt. I'll pass on this business. "

Change the Ban wrote on Mar 7, 2010 12:14 PM:

" You want good local dairy products? Well tell the State of Alaska to ease up on it's ridiculious rules on "TRUE" valley farmers. I cannot legally sell my dairy product because I do not have the fancy gizmos or the State's backing. "

LeeFree wrote on Mar 7, 2010 12:04 PM:

" With all of the loans and grants, it appears this business after 2 years is not surviving on their cash flow. Will they just continue to get further behind as time goes on? And why are they paying double the price of the open commodity pricing? Our cost of living here is not double, right?

I did try their milk and noticed no difference in taste to what I buy at Costco. With the size of my family, I can't afford to pay double for milk. "

RAND wrote on Mar 7, 2010 10:52 AM:

" So, I thought we were getting out of the dairy business with the closure of Mat Maid? It is obvious if they need this new $200,000 loan, that their sales are not enough to support this business. They are paying double the normal price for raw milk, so now basically the state will have to continually subsidize this operation. Why did this board approve this loan even though the audit advised otherwise? This seems reckless on their part. Oh well, it is just the state's money....no big deal, eh?: "

TTOSBT wrote on Mar 7, 2010 7:56 AM:

" Many businesses use loans to gain cash flow in the slow part of the business cycle, especially during start-up and/or lean years. It is good such funding is available in Alaska. The lack of short-term lending outside caused businesses to close that otherwise could have survived the recession. As for MC products, my family can taste the difference and believes MC items are well worth their cost. Most Alaskans earn a bit more in their jobs and our local farmers and producers deserve the same yield. "

akopr8 wrote on Mar 7, 2010 7:18 AM:

" Would funny like to do the math comparing hamburger to steak??? its a 1.29 difference to buy to buy a better local product. Mat-creamery milk tastes better and has a longer shelf life than milk brought in from out of state. if you dont think so you havent even given it a chance. "

Wow wrote on Mar 7, 2010 5:58 AM:

" The creamery took out a second (wait, third) loan in order to pay off the first one in order to have enough money to pay suppliers. Isn't that the same as taking out a second credit card to pay off the first. That's a disastrous plan. Many people predicted there would be more requests for state assistance and were roundly criticized for saying so. Guess they were right. Look for history to repeat itself again a year or so from now. "

funny pricing wrote on Mar 6, 2010 10:30 PM:

" A choice:

1. Purchase 1 gallon of milk that arrived 24 hours ago from Seattle: $2.99.

2. Purchase 1 gallon of milk that arrived 24 hours ago from The Matanuska Creamery: $4.29.

It's not tough math. "

Buy Valley wrote on Mar 6, 2010 10:02 PM:

" My family buys local milk and farm products, it is worth it.

If we do not support our local farmers we will have none. "

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