Report shows creamery lacked adequate collateral, but still got loan

Most people would prefer to buy goods made locally and that goes for milk, cheese and ice cream processed at Matanuska Creamery. Yes, it costs more than milk coming up from Outside, but it is fresher and it’s local.

However, how much longer can the state keep pouring money into that operation?

The Legislative Budget and Audit Committee took a look and came away unimpressed by the backing loans made to the creamery had in the way of collateral. Most individuals or businesses would not get a sniff of a loan if they couldn’t convince a banker they had assets to ensure the loan would be paid off in time.

People are rightfully disturbed to see yet another $200,000 going into the business when the creamery admits it will use the loan to pay off an existing loan.

That sounds fiscally irresponsible. At what point does the state finally say, “pay off the loans you already have?”

It’s understandable that the creamery feels obligated to pay off dairy farmers so they can begin budgeting for the coming season. But shouldn’t that be in its business plan? Couldn’t the creamery foresee that obligation to its producers in the field?

There seems to be too many questions about the financial operation of Matanuska Creamery.

While the report found some lack of collateral, it seems like somebody should look into how the creamery does its business. That would seem to be the job of the Board of Agriculture and Conservation, but that group doesn’t seem to have a handle on what is taking place at the creamery. Otherwise, why would that entity approve a loan to pay off another loan? It seems like that’s digging a hole the board or the creamery can’t climb out of.

Again, supporting Alaska Grown is a fine thing. We lose farm ground every year around here and that is a sad thing. We also lose something that has drawn many people here over the years: a rural lifestyle.

Once the ground is paved over and the farmers’ children go on to other livelihoods, we have lost an important asset in the community.

At the same time, continuing to prop up a business that seems to be in failure mode can’t continue. The creamery needs to start making a profit.