Matanuska Maid to close

June 8, 2007

By MATT TUNSETH/Frontiersman

WASILLA - After 71 years as a Valley institution, the Matanuska Maid dairy will cease operations next month.

The State Creamery Board, which oversees the dairy, made the decision to shut down the state's largest dairy and beverage producer Wednesday.

Board chair Mac Carter said market forces and rising shipping costs forced the board's hand.

&#8220It wasn't our intention to do this but we had to look at reality,” Carter said Thursday.

Matanuska Maid, which employs nearly 50 people, will likely cease production by next month, with the total closure of the company by August.

He explained that milk prices are expected to more than double by the end of the year. In order to be competitive, Mat Maid buys milk from both in-state producers and Outside dairies. Combined with the increased milk prices, shipping from Outside has caused the dairy to lose hundreds of thousands of dollars over the past year. Because of this, he said Matanuska Maid has essentially been priced out of business.

&#8220There is no way Mat Maid can ever sell its milk in Alaska for a comparable price,” he said.

Carter blamed large corporate farming operations Outside for monopolizing the industry and helping to drive small dairies out of business.

&#8220They are sucking up all of the dairy farms around the nation,” he said. &#8220The smaller outfits are going down.”

In addition, top Mat Maid employees have begun leaving the company in recent months as rumors of an impending closure have circulated.

&#8220We're losing our employees,” Carter said.

The decision will leave Alaska's existing milk producers with no place to sell their product. There is currently only one other dairy in the state, located in Delta Junction, but it is small and can't handle a large volume of product.

Point Mackenzie farmer Vicki Trytten cast the lone dissenting vote at the board meeting, after which she resigned. Trytten said she was stunned by the decision.

&#8220How can the state just say, &#8220OK dairy farmers, that's it, we're not picking up your milk anymore?'” she asked.

Trytten, her husband and their two children have operated their dairy farm for 13 years. She said it's always been profitable and she's enjoyed the farming lifestyle. The family's herd of 100 cows produces approximately 6,000 pounds of milk per day. But when Matanuska Maid halts production - likely by July 7 - Trytten said she'll have nowhere to sell that milk.

&#8220We're going to be calling you guys out to take pictures of us dumping milk down the drain,” she said.

Rep. Mark Neuman, R-Wasilla, said he doesn't believe the board made the right decision in deciding to shut the dairy down.

&#8220I think it was extremely shortsighted of these folks to do what they did,” Neuman said.

Neuman said the $600,000 grant was intended to keep Mat Maid open until plans to possibly privatize the state-owned dairy came to fruition. However, it appears the board decided that was not a feasible option, and decided not to use the money. That doesn't sit well with

Neuman.

&#8220I've got a problem with that,” Neuman said.

Neuman believes the dairy can be saved, and said he doesn't think the decision by the Creamery Board is necessarily the last hope.

&#8220I'm not going to say it's going to happen, but there's options available,” he said.

If the decision remains final, Neuman said it will have dire consequences for the state's $50 million agriculture industry.

&#8220This is going to be a really widespread catastrophe in this state,” Neuman said.

Matanuska Maid began its history in Alaska in 1936, when a group of Valley colonists formed a cooperative to sell vegetables and dairy products. According to a history on the dairy's Web site, the cooperative sold 6,458 pounds of butter and more than 26,000 eggs during its first year of operation. By the 1940s, the operation was producing more than $1 million in sales annually.

In the mid-80s, the dairy underwent hard times, and was bought out by the state. Since then, it has operated under the direction of the Department of Natural Resources and the creamery board.

The Alaska Legislature recently allocated a $600,000 state grant to help keep the day-to-day operations going, but Carter said that even with the state money, continuing to operate the struggling dairy simply was not feasible.

&#8220You can throw as much money as you want but it's not going to solve the problem,” he said.

Carter said he believes the shutdown could have been prevented had the state shown more interest in purchasing the dairy's products. He argued that if the state had bought milk for use in schools, prisons and on the state ferry and rail systems, Mat Maid could have possibly stayed afloat.

Carter said the dairy's demise is partially a consequence of state lawmakers' preoccupation with oil and gas development rather than agriculture and other industry.

&#8220They're more interested in how much money they can get out of the ground,” he said.

Carter said he doesn't blame Alaska Gov. Sarah Palin for the problem, but said the culture of politics in the state over the past two decades is to blame.

&#8220It's the former and past administrations' fault that have not addressed this problem,” he said.

In a response issued Thursday evening, the governor expressed surprise at the board's decision.

&#8220This is so very frustrating and shocking,” Palin said. &#8220Earlier this year, when we were informed of the financial challenges facing Mat-Maid, the Creamery Board asked the state for $600,000. We responded and fought hard to get the money with the help of the legislators. To now see a vote to shut down Mat-Maid without even knowing why we need to right now is perplexing. For quite awhile, the state has been asking for the business plans and economic models used to evaluate the future of Mat-Maid; we have yet to receive the information. The state still expects to see alternatives presented and reasons for the immediate shutdown,” Palin said.

&#8220In the meantime, we are reviewing the situation and looking at what options might be available on behalf of the state to help the dairy producers and other Alaskans involved.”

Dairy farmer Trytten agreed that the state has not done enough to foster an agriculture-friendly environment in Alaska. She, too, said she doesn't blame Palin, but said the governor now looks to be the only option for saving the dairy.

&#8220We have to have Governor Palin get out of the oil and gas and into this,” she said.

Trytten warned that the loss of the dairy could have dire consequences for farmers who rely on dairy cows to sell feed, and warned the closure could harm the entire agricultural community.

Trytten said she's not optimistic the dairy will be saved. At this point, she said she's just trying to figure out what will happen to her family farm in the next couple months.

&#8220What do we do? How do we feed them?” she asked. &#8220All of this is over. What do we do? Kill these cows?”

With plenty of livestock, Trytten said she's not in immediate danger of going hungry, but said that the Mat Maid closure likely will mean the end of her family's way of life.

&#8220I spent all day yesterday crying,” she said. &#8220It's just

devastating.”

Contact Matt Tunseth at

352-2265 or matt.tunseth@

frontiersman.com