Dairy interests pop for co-op

MAT-SU — A partnership between Mat-Su Valley dairy farmers and new milk processors is a done deal.

Former dairyman Kyle Beus said Friday he will be the new general manager of a group that will produce and bottle local milk and make other products like cheese and ice cream from Valley farm products.

Beus and Rob Wells, who’s also a Borough assemblyman, will use their federal rural development grants totaling more than $600,000 and other cash from cooperative participants to create the partnership and open a new bottling plant and cheese production facility, Beus said. He met with state agriculture chief Franci Havemeister Thursday to discuss the details of the venture.

Wells received a USDA Rural Development grant of $475,000 in March to process and bottle locally produced milk. Beus was granted $168,000 to process local milk into cheeses and premium ice creams. That cash, along with other funds and in-kind contributions, will bring the plant to completion, Beus said.

Beus’ and Wells’ companies will share processing facilities as part of the deal and can handle all the raw milk produced in Southcentral Alaska, Beus said.

The partnership comes at a time when Alaska dairy farmers are uncertain about the future of the industry in Alaska. State-owned Matanuska Maid Dairy continues to operate at a deficit but is up for sale.

Wells had been attempting to open a bottling facility through a partnership with Anchorage businessman Robert Gottstein. Gottstein’s Purely Alaska water plant in Palmer is no longer a possible site to process milk, but Beus said another site will be found soon.

Under the deal reached between farmers and processors, all the milk, cheese and ice cream processing will be combined in one Valley location, Beus said. Dairy farmers will participate through an association and promise to sell their milk to the joint venture.

“One of the challenges of the joint venture is that we anticipate Matanuska Maid discontinuing the pickup of raw milk from the dairy farmers before [our] new plant is on line this winter,” Beus said. “Several strategies to solve the short-term gap are being pursued. One solution may be to involve Northern Lights Dairy in Delta Junction. … We are all very excited to take this step toward stabilizing the dairy industry by working together.”

Signers of the deal include Beus, farmer and state Creamery Board member Wayne Brost, farmer Merlene Baskin, farmer Bob Havemeister and Wells. Beus said area barley and hay farmers are also willing to work with the fledgling venture.

Beus said he feels more optimistic about the future of Alaska’s dairy industry than he did two weeks ago. The uncertainty surrounding Mat Maid has been a motivating factor all-around.

“Trauma promotes change, and we so needed change,” he said.

Farmers like co-op

Gottstein’s departure from the deal doesn’t bother one local dairy farmer. He sees the new co-op model evolving among dairies and potential processors as preferable to recreating a version of Mat Maid’s business model.

“With a co-op environment we feel we have a vote,” said Brost, who has about 200 head of dairy cows on his farm near Point MacKenzie. “At least a voice at the table.”

A mobile cheese processing plant is one of many options local dairy farmers are discussing as they plan how to survive if Matanuska Maid closes before others can get bottling and processing plants up and running.

Time is running out fast. The state’s target for closing a deal on Mat-Maid facilities is late December.

Cows will still eat and produce milk in January, when dairy farmers with restricted markets for Alaska milk must make tough decisions if there are no buyers and the state does not offer subsidies to dairy farmers.

State Board of Agriculture and Conservation Chair Kristan Cole said Thursday, before the co-op’s announcement, meetings are ongoing with co-op founders. She said the board wants to do everything it can within the rules set by the state to support and sustain Alaska agriculture.

The board is also in talks with Northern Lights Dairy in Delta Junction and other potential milk buyers to see how much extra product could be absorbed if Mat Maid closes, Cole said. “It comes down to a pretty small share left over.”

When co-op organizers visited state agriculture officials last month the board urged them to complete some basic documentation so the state could consider how to assist. The state has to consider the co-op a viable entity and it must have a solid business plan, Cole said.

Cheese wheels

Self-contained mobile cheese processing plants built into enclosed vans is one option being considered to process product if Mat Maid stops buying milk, Brost said.

“I think we’ve had a lot of local support here,” he said about Alaska consumers. “We just hate to see this quality of milk go away and people here not have that option.”

Beus and Wells said they hope to ink a lease on a processing facility soon. Beus said it is possible cheese production could start before Mat Maid closes. He spent a good part of Friday with a dairy inspector. Beus owned a processing plant in Washington State.

Two weeks ago, Brost and others went out with Wells and a dairy equipment expert scouting sites for imported machinery in the Palmer area. Both Wells and Beus are searching for the proper combination of existing structures and equipment that can ship quickly to get the venture up and running as fast as possible, Brost said.

The stakes are very high now, especially for the livestock, Brost said, adding that, “I don’t want to have to kill cows come January.”

When a market can’t be found for milk in the Lower 48, cows can be sold, Brost said. For Alaska dairy farmers that’s not an option because Canada’s borders are closed to cows and the market rate for dairy cows as beef is 20 percent of their value.

Wells and Beus are expected to appear before the state’s Board of Agriculture and Conservation when the board meets again Nov. 3. There are six large dairies left in the state, four of which sell product to Mat Maid.

Mat Maid bids will be opened in early December and the state hopes to conclude the dairy’s sale before the new year, Cole said.

Contact John R. Moses at john.moses@frontiersman.com or call 352-2270.