Mat Maid is not milked out yet

Aug. 19, 2007

BY GREG JOHNSON/Frontiersman

MAT-SU - Matanuska Maid Dairy has stopped bleeding money, but the state-owned dairy is still in intensive care after showing a profit for the first time in more than two years.

Following losses of about $700,000 since 2005 the dairy has rebounded to show a profit of $62,000 in June and expects to post another profit in July, said Kristin Cole, a member of the state Board of Agriculture and Conservation.

Cole is part of a recently appointed board empanelled by Gov. Sarah Palin in June. She dismissed the previous ag board - which oversees the state Creamery Board, which in turn is charged with running Mat Maid - after the Creamery Board announced its intention to shut down the dairy. Since then, the new ag board has dismissed the previous Creamery Board members and has taken on direct responsibility for Mat Maid.

Over the past two months, the new board has reorganized Mat Maid management and has cut about $1 million from its budget and has trimmed costs, Cole said.

&#8220Each month so far in 2007 [until June] we had lost substantial amounts of money every month,” she said. &#8220Some of the big differences [made recently] are we actually cut $1 million out of the budget.”

Cutting expenses like travel and entertainment, and implementing other belt-tightening measures should have happened more than two years ago, Cole said, adding the previous board did little to stop Mat Maid from taking a financial nosedive.

&#8220Any company that found itself as Mat Maid did [would take action],” she said. &#8220This board found expenses that were totally inappropriate. We brought some new spirit to the company. We found people [on the board] who were really not interested in making a go of it. … There was certainly a lack of enthusiasm with management to take a hard look at costs. Unfortunately, they really didn't make changes a couple years ago when they should have.”

Matanuska Maid began 71 years ago as a dairy cooperative and operated independently until 1985, when the state bought the dairy out of bankruptcy. Under state control it had been profitable until 2005, Cole said.

The recent financial troubles happened mainly out of complacency, she said.

&#8220I think we've shined the light on the fact that a lot of times we just took advantage of the fact that Mat Maid would always be there,” she said, adding that when its closure was announced &#8220there was a huge cry of [public] support. I think everybody wants Mat Maid to continue.”

The Alaska Farm Bureau is not one such supporter. It maintains the state should not be in the dairy business and is calling for the sale of Mat Maid.

Mike Presley, vice president of the Mat-Su chapter of the Alaska Farm Bureau, said the state originally bought Mat Maid to save it from closing after bankruptcy and should be seeking a buyer for it assets.

That the state continues to run the dairy is impeding private agriculture interests like a proposal by Mat-Su Borough Assemblyman Rob Wells, Presley said. Wells, along with Anchorage business partner Rob Gottstein, have secured a $475,000 USDA Rural Development Office grant to build a smaller scale milk processing facility in Palmer. Because Mat Maid buys nearly all locally produced milk, it amounts to the state competing with a private agriculture interest.

That Mat Maid is showing a profit &#8220is not the point,” Presley said. &#8220The point is the state only became an owner of the creamery when the board of agriculture foreclosed on it [in 1985]. … They were supposed to seek a buyer for those assets.”

Cole agrees, and said the ag board's goal is to re-establish Mat Maid as a successful business to sell to a private interest. While the board could simply sell off the dairy's assets, it also strongly believes the state needs to have local dairy production.

&#8220It has always been the plan of the state to sell this company to someone who can take it to the next level,” she said, adding it is important for Alaska to maintain a safe, locally produced food supply. &#8220We still have a lot of work to do, but … it looks like we can turn this company around and sustain profitability. Regardless of who owns it, it needs to be a profitable company.”

That the ag board acknowledges a desire to eventually sell Mat Maid is a small step in the right direction, Presley said.

&#8220That's a change in their position,” he said. &#8220What they've been doing is stonewalling local farmers.”

While Cole said the state would like to sell Mat Maid intact as a working dairy, Presley said it should close down now, sell its assets and put the money into the state's agriculture loan fund.

For now, the state is in the dairy business, and as long as it is the ag board intends that business be profitable, Cole said.

&#8220There is no reason for imminent shutdown and all of us are encouraged by what we're seeing [financially],” she said. &#8220Our primary focus is to keep Mat Maid in Alaska.”