Ag board declares Mat Maid emergency

July 10, 2007

By Will Elliott / Frontiersman

MAT-SU - Matanuska Maid will be milking the state for more money as officials work to find a long-term solution to keep the struggling state-run dairy afloat. Meanwhile, critics question why the state is in the dairy business at all instead of encouraging the private sector to process milk.

The state Board of Agriculture and Conservation, which also serves as the Creamery Board, on Monday declared the Mat Maid financial situation an agricultural disaster and decided to pay dairy farmers more for their milk.

Mat Maid has struggled in competition with large Outside dairy operations, mounting losses in recent years surpassing $700,000 since 2005. A number of state entities are working to help the struggling dairy and local farmers who depend on Mat Maid to process their milk. Those entities include the governor's office, a governor-appointed task force and the state ag board.

The Creamery Board oversees Mat Maid and is made up of ag board members. Gov. Sarah Palin deposed the previous ag board last month when it voted to close Mat Maid and replaced it with an all-Valley lineup charged with finding a way to keep the dairy open.

Monday's moves are temporary, but are hoped to keep Mat Maid viable until longer term solutions can be found, said Kristan Cole, who chairs the state agriculture board. Under the new purchasing guidelines, farmers will be paid a rate comparable to what the Mat Maid pays Outside producers. By declaring an agricultural disaster, the ag board is hopeful Mat Maid would be eligible for federal assistance.

The board also continued its search to replace outgoing Mat Maid CEO Jack Van Treeck, who will leave the dairy Aug. 31, Cole said. Van Treeck voted to shut down the dairy under the previous ag board and resigned under the new one.

Cole said the board is also studying the past operations of Mat Maid and is comparing the dairy to models used by similar entities across the country. That kind of homework is crucial because until the board has a good idea of what caused Mat Maid's financial downfall and how similar dairies have succeeded, more specific steps like choosing a new CEO are impossible.

&#8220There won't be a replacement [CEO] until we know what kind of model we're looking at,” she said. &#8220We need to hire for that model.”

Point MacKenzie dairy farmer Vicki Trytten attended the board's Monday meeting and was pleased with outcome.

Trytten's 300-acre farm owes more than $1.2 million in federal farm loans and the family was facing bankruptcy and slaughtering their herd last month when the dairy announced its plans to close. Mat Maid had not raised its price for locally produced milk in about 20 years, Trytten said, while costs and Outside competition had steadily risen. To avoid foreclosure, the Tryttens stayed current on their farm loans, but could not keep up with taxes or credit card payments.

The higher price the ag board has ordered Mat Maid to pay for local milk means an infusion of cash Trytten said will prove the difference between life and death for her farm.

&#8220We've been screaming for years, and they finally heard us. God bless you, Sarah,” Trytten said. &#8220We're so thankful. It's really saved this farm.”

Increasing expenditures may seem the wrong way to turn around a dairy undone by mounting costs, but Trytten said upping what Mat Maid pays farmers is as crucial to the survival of local dairy farmers.

&#8220It's only good for Mat Maid if it's good for farmers too,” Trytten said. Without the price increase, there wouldn't be any farmers left in Alaska to produce milk, she said. &#8220We're interlocked. We've been separate far too long.”

Money to pay for the price increase will come from a number of sources, Cole said. Besides federal aid in response to the board's disaster declaration, Cole said the board is looking into local ways to raise cash. The state could also transfer state-owned buildings to the Matanuska Maid corporation, allowing the dairy to use them as collateral for loans. Additionally, Mat Maid could sell some of its processing equipment, which would not be needed if the dairy were only handling local milk.

More consumers are buying Mat Maid milk now, Cole said.

&#8220The truth is, with the state being the shareholder, all of us as citizens own the creamery,” she said. &#8220Wouldn't it make sense to buy from your own store, instead of a competitor?”

At least one Alaska Farm Bureau official says that's the wrong way to approach the Mat Maid situation.

Mike Presely, vice president of the bureau's Mat-Su Chapter, said the state should let the private sector take care of processing instead of pouring money into what he calls a socialist enterprise that would compete with private business.

Instead of paying more for their milk, Presely recommends putting that money back into state loans for local dairy farmers. Already a private dairy was starting up in the Valley that could take over milk processing from Mat Maid, Presely said. That dairy is headed up by Mat-Su Borough Assembly Member Rob Wells. Wells led the state Department of Agriculture under Gov. Knowles and had received grants from the department to get the dairy going.

&#8220Palin had the right idea when she started out - keep Mat Maid open only until a private company could take over processing,” Presely said. &#8220There's no reason to ‘save' Mat Maid in the long-term.”

That was the recommendation the Farm Bureau already made to Palin and the ag board, he said. Presely said neither had responded.

Two more ag board meetings are scheduled this month for July 19 and 21, and are open to the public. The governor's task force hopes to present concrete findings for the ag board to move on at its July 21 meeting, Cole said. Both meetings will be held 8 a.m. at the Division of Agriculture building in Palmer.

Contact Frontiersman reporter Will Elliott at 352-2252 or will.elliott@frontiersman.com.