Valley dairy venture to shut down operations Sunday

PALMER — After a five-year struggle to continue milk production in Alaska, Matanuska Creamery announced late Thursday that it will close its doors Sunday.

After a long and storied history, Dec. 30 is the final day for milk pickup and processing in the Mat-Su Borough.

“We’ll be open that day at noon and people can come and say goodbye, I guess,” said Karen Olson said, who heads up the creamery

She said the creamery along the Palmer-Wasilla Highway has ice cream, eggnog, butter and cheese for sale.

“We will sell that until it’s gone,” Olson said.

She said the dairy won’t file for Chapter 11, it just plans to cease operations.

Earlier in the week, Olson said she was waiting for a call back from the state that was her last hope for a reprieve. That call came today, but without the hoped-for stay, she said.

The dairy’s death knell began sounding earlier this month when the state Board of Agriculture and Conservation voted Dec. 5 to recall $850,000 in loans made to the dairy. Calls to the attorney in charge of that loan recall process, Bob McFarlane with the state Attorney General’s Office, were not returned Thursday.

Now that the dairy’s life expectancy is measured in hours, what will happen to these farmers and their cows?

For one thing, it seems unlikely the state is going to get back the $850,000 it loaned to the creamery.

“Valley Dairy owns approximately $677,000 in equipment,” Olson wrote in an affidavit filed with the state on Dec. 12. Of that, she wrote, “Valley Diary estimates an auction would be unlikely to recover more than 10 percent. For example, Valley Dairy has already attempted to sell surplus trucking equipment and to date there have been no buyers. An auction held last summer netted $4,500 per tractor.”

The equipment is old. A lot of it came from the collapsed Matanuska Maid dairy and is designed for a larger-scale operation and would be vastly oversized for a smaller start-up that might follow the creamery’s demise.

“Who is going to buy old equipment and ship it Outside?” Olson asked.

As for the employees, she said the dairy has employed 15 to 18 people for five years. There are 15 employees there now and they’ll all be out of work. Plus, there also are hundreds of thousands of private dollars invested in the creamery that will evaporate Dec. 30 when the business shuts its doors.

Then there are the cows.

As she worked to put the enterprise on sound financial footing, part of Olson’s effort has been to increase the size of the herd. Everyone who had looked at the creamery’s books had said that what it needed was more milk to sell. And more milk, equals more cows.

But with the collapse of Matanuska Creamery the state is left without a place to sell the milk and farmers can’t afford to continue paying to feed their dairy cows. There’s something on the order of 400 cows and calves that are supported by the creamery. Some are Olson’s, others belong to Wayne Brost at Point MacKenzie.

And there is another herd of animals owned by the Beyers that also was ordered liquidated at the same board of agriculture meeting Dec. 5 when the dairy’s loans were recalled.

In an interview two weeks ago, Ty Havemeister, who is helping run Havemeister Dairy, a small on-farm milk processor that was once sold its milk to the creamery, said that he may eventually be able to take on other farmers’ milk.

But first, he said, he needs to be able to sell his own milk.

In the meantime, some of those cows that depend on Matanuska Creamery can be sold or leased out, but not nearly all of them. The rest? Well, Olson said the state-owned slaughterhouse can butcher a couple dozen each month, but it will take months to slaughter the whole herd, and there’s already a waiting list.

“It truly is a crying shame,” she said. “I don’t know what I can do anymore.”

Contact reporter Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.