Future of Matanuska Maid creamery uncertain

Editors note: This is the first article in a series examining the past and future of Matanuska Maid and its relationship with Valley farmers.

Alaskan farmers were crestfallen when a legislative audit released in September recommended selling Matanuska Maid creamery within a year or liquidating it.

The reason for their dismay is because the state only has 10 dairy farms five of which are located in Mat-Su.

Without the Anchorage-based milk processing plant, there would be no buyer for milk in Southcentral Alaska and no future for the family dairy farms based in Mat-Sus agriculture colony days, along with newer farms that have struggled to stay alive on Point MacKenzie as most of their neighbors declared bankruptcy.

State legislators say they dont want to abruptly end the states ownership of Mat Maid, but they would like to see it placed back in private hands.

Local farmers worry that if the plant is sold to an out-of-state concern, it will be shut down or used as a processing plant solely for imported milk.

Valley milk and some surplus milk purchased in the Fairbanks area supply 30 to 40 percent of Mat Maids raw milk. The rest is imported from Washington state.

According to a history of Mat Maid in the audit, written by legislative auditor Pat Davidson, the original Mat Maid creamery plant opened in Palmer in the 1930s and was transferred to a farmers cooperative in 1939.

The cooperative ultimately formed Matanuska Maid. In 1965, the company moved its operation to a newly constructed plant in Anchorage.

In the early 1980s, Mat Maid filed for bankruptcy, owing $3 million to the state Agricultural Revolving Loan Fund (ARLF.)

The state foreclosed in 1985 and has operated the plant ever since. Its roughly a break-even operation, and the state hasnt provided any cash to the company since 1990.

Brett Huber, legislative aide for Senator Rick Halford, R-Chugiak, said Halford and other legislators arent interested in dismantling the creamery, but would like to get it out of state ownership.

Placing it back in the hands of a cooperative and returning the plant to Palmer would be a good start, and would create more jobs in the Valley, he said.

We do not want to get rid of the dairy operation by any means, but is there a possibility of relocating the facility? Huber asked.

Halford became interested in Mat Maids operations in 1996 when a Valley constituent complained that he wanted to bid on a Mat Maid trucking contract, but was denied the opportunity because Mat Maid awarded the contract without bids.

It was a wholly owned state entity, but because the state owned the creamery through receivership, it didnt have to operate by the same rules that govern most state operations, Huber said.

It was hard to get information and we were kind of frustrated, because it is a state asset.

The complaint spurred the legislative audit, which was released Sept. 30.

Now that Point MacKenzie lands are being sold back to private owners, Huber said he hopes there will be enough milk production and potential members for a co-op to make Mat Maid a thriving, private concern.

We have to have the market to drive the need to produce the product, Huber said.

Rob Wells, director of the Alaska Division of Agriculture, said he and other state officials also would like to see Mat Maid become a more independent entity.

Theres a general concern about state ownership, of Mat Maid, and we appreciate that, Wells said.

However, he disagrees with dismantling the plant entirely, and said he thinks thats not likely to happen soon.

The Legislature is not out to pull the rug out from underneath farmers in the short term, he said.

The November issue of the Alaska Farmer magazine said such a move also could close the Northern Lights milk processing plant in Fairbanks, because the two plants buy and sell each others surplus milk and Northern Lights purchases its bottles from Mat Maid.

The magazine also predicted

closure of half of the states six feed-processing plants,

impact on the three state-owned meat-processing plants, which process cull animals and bull calves from dairy herds,

impact on 10 family dairy farms, with 55 employees and family members,

reduced demand for crops from the states 34 grain farms and 230 hay farms,

loss of $16.3 million farmers spent on seed, fertilizer, chemicals, fuel, parts and equipment repair in Alaska in 1992, and

devaluation of the $1.9 billion value of the states farmland, machinery, buildings and infrastructure.

The biggest shock in the audit is the reports blatant attempt to conceal Mat Maids 51-percent market share in mainland Alaska, wrote Alaska Farmer publisher Jim Ellison. This is not only harebrained, but borders on criminal intent (disruption of commerce) because these facts are well publicized. Makes one wonder if a few dollars from the West Coast dairy lobby might have drifted north.

In a Nov. 11 letter to the Legislative Budget and Audit Committee, auditor Davidson said she had reviewed the response to the audit made by Division of Natural Resources Commissioner John Shively, who oversees the Division of Agriculture.

The dominant theme in the response is the current administrations intention to expand the dairy industry and keep Mat Maid in state ownership, Davidson wrote. We believe that DNRs five-year commitment to continue Mat Maid is just one more in a long string of attempts to postpone decisive action … Thus, if the Legislature wants to dispose of Mat Maid, it will need to directly intervene.

Next Tuesday: Reactions to the Mat Maid audit from Valley farmers.