Dozens More Farmers Lose Milk Contracts

Many factors lead Dean to this place, including “a surplus of raw milk at a time when the public already is consuming less fluid milk and companies assertively entering or expanding their presence in the milk processing business, have exacerbated an already tenuous situation in a highly competitive market.” ( Dean Foods )

Last week, at least two dozen producers who ship milk to Dean Foods in Pennsylvania, Indiana, Kentucky, Tennessee, North Carolina and Ohio were told they have until May 31, 2018 to find a new home for their milk.

“Unfortunately, Dean Foods has made the difficult decision to end milk procurement contracts with a number of farmers in about 90 days,” says Reace Smith director of corporate communications at Dean Foods. “We regret this decision had to be made.”

If this sounds familiar that’s because, almost one year ago, producers in Wisconsin were told by their processor, Grassland Dairy, that they had 30 days to find a new home for their milk. While that wave of milk rehoming was due to export market woes, Dean says their issue is purely domestic.

According to Smith, many factors lead Dean to this place, including “a surplus of raw milk at a time when the public already is consuming less fluid milk and companies assertively entering or expanding their presence in the milk processing business, have exacerbated an already tenuous situation in a highly competitive market.”

Is Walmart To Blame?

Dean is not pointing a finger at Walmart. Still, farmers are doing their own math to piece the puzzle together. For decades Dean has had a private label contract with Walmart for their Great Value branded milk. In many parts of the country, they still do. But in the region where these contracts have been lost, Walmart built their own bottling plant. The plant, which is in Ft. Wayne, Ind., is expected to be fully operational and running at capacity by the end of May.

While Dean has made it clear they aren’t blaming this situation on the new Walmart plant they do cite “the introduction of new plants at a time when there is an industry-wide surplus of fluid milk processing capacity” and losing milk volume at “higher levels than anticipated” during a time of increased volume competition as reasons for terminating producer contracts.

More Contract Losses Ahead

Unfortunately, this could only be the first wave of Dean suppliers that will lose their contracts in 2018.

“We expect to consolidate our supply chain by a meaningful amount over the next 18 to 24 months while also making sure that we deliver the same great quality, value and service that our customers have come to expect from us,” Ralph P. Scozzafava, chief executive officer at Dean Foods told the Food Business News. “For this important reason, we’ll implement our supply chain changes in phases with targeted completion in 2019.”

Smith says Dean field representatives are working with producers to find solutions and that the company is offering resources for counseling to any farmers who might need it.

As spring flush arrives and milk continues to flood the market, analysts say this scenario could play out with other processors as well.

Is There A Way Farmers Can Be Proactive?

Independent shippers like those who sold milk to Grassland, or the producers who ship milk to companies like Dean carry a substantial amount of risk. Unlike cooperative members who have some level of certainty a truck will pick up their milk every day, albeit sometimes for a discounted price, independent shippers can be dropped within the amount of time specified by their contracts. It is critical farmers understand their milk contract completely, says Todd Janzen of Janzen Ag Law. Farmers must know how much time they would have if the company that buys their milk decided to walk away.



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Submitted by First Officer on Tue, 03/06/2018 - 07:10

Did Walmart build the plant from scratch? If so, i wonder why if there is excess bottling capacity to be bought. Is Walmart going to contract directly with at least some of those dairy farmers since they still need about the same amount of milk?

Submitted by Dennis schiller on Tue, 03/06/2018 - 17:03

The illegal Hispanic must go.

Submitted by ROBERT FOSSUM on Tue, 03/06/2018 - 21:04

Does Wal-Mart believe opening their own plant help them sell more milk? Their sales might improve if they concentrated on clean stores and good service.

Submitted by Frank on Wed, 03/07/2018 - 13:49

No, I don't believe it will help them sell more. I think it is partially because there is a large supply of milk in this area that can be purchased cheaply, and partly to improve the negotiation power they have with other milk suppliers in other parts of the country. Wal-Mart can always threaten that they will just build their own plant if they can't buy bottled milk at the lowest price possible.

In reply to by ROBERT FOSSUM (not verified)

Submitted by RL on Tue, 03/20/2018 - 15:21

It can help them sell more milk. That's because they are losing to Kroger's in milk sales right now. Cheaper milk can help them combat Kroger's and can mean more sales volume.

In reply to by Frank (not verified)

Submitted by Billy Bones on Wed, 03/07/2018 - 11:02

Grandpa loves me sum milk

Submitted by Cookie Monster on Wed, 03/07/2018 - 11:03

C is for Cookie an cookie is for me

Submitted by Jeff williams on Wed, 03/07/2018 - 14:45

Walmart built the new plant to cut the middle man out and to get rid of the multiple stop farm routes. There milk will come from mega farms! As a 1st generation dairy farmer I know my days are numbered thanks to Walmart!

Submitted by Tom on Wed, 03/07/2018 - 18:08

After graduating with an Ag degree I was planning on taking over our family agribusiness. In 1987 my father said that when the spreader truck broke down he was not replacing it and shutting the company down. If we had survived we would have been in business for 100 years this year and I would have been the 4th generation owner/operator. The dairy buyouts in the early 80's hurt and then they leased their land to others who then became big enough to buy their fertilizer, lime, etc.. direct cutting the dealers like us out. The only ones in my area that have survived are close to town and have picked up the city slickers.
We also grew produce, raised hogs, and had some beef cows. The hogs left in 1991 when the companies forced producers to go to vertical integration, the produce decreased as the chain stores stopped the store managers from buying local and small stores closed due that they couldn't compete, but we still have cattle , but you never know what price you're going to get. Big business has killed the USA and the bad thing is that small businesses built this country.

Submitted by Randommmark on Mon, 03/12/2018 - 19:38

Yeah, but Corporations are people too now right, so this is just more winning!

In reply to by Tom (not verified)

Submitted by Dairy consumer on Thu, 03/08/2018 - 09:13

The reason there is less milk consumption is that the prices were raised so high that people quit buying it. We also know (Mayfields faithful) that the milk has changed since Mayfields is no longer the mail company it once was.

Submitted by Tim on Thu, 03/08/2018 - 11:57

The vegans are spreading their message and more and more people have stopped consuming dairy products. Unfortunately people are giving up on dairy, they think it's unhealthy and harmful to animals. What can farmers do to overcome this situation?

Submitted by Todd on Fri, 03/09/2018 - 07:27

And organic was started by telling consumers it was "better" for you than the other stuff. I am a dairy producer myself and very upset to hear how many people think regular milk has antibiotics in it...

In reply to by Tim (not verified)

Submitted by Jim on Mon, 03/12/2018 - 19:16

Rape a cow kill its baby drink bovine growth fluid how silly

In reply to by Todd (not verified)

Submitted by JGoodman on Tue, 03/13/2018 - 06:53


In reply to by Adam suchan (not verified)

Submitted by Anonymous on Sat, 03/17/2018 - 09:56

You freaking idiots are what's wrong with this country!

In reply to by Jim (not verified)

Submitted by Stephen on Sat, 03/10/2018 - 03:10

Change to a product that consumers are demanding.... Probably something vegan if it is food related. Plant milk isn't going away. Vegans numbers are growing and you can't make a marketing campaign to swing them to purchase dairy...

In reply to by Tim (not verified)

Submitted by Cmick on Sat, 03/10/2018 - 10:36

Vegans are growing because of the educators in this country. Small farms are antiquated because of the same cause. The benefits of our way of life have been denigrated by those who want a more global lifestyle here.

In reply to by Stephen (not verified)

Submitted by Jim on Mon, 03/12/2018 - 19:13

Rape a cow kill the baby drink bovine
Lactate how silly

In reply to by Tim (not verified)

Submitted by Joe Chrystler on Thu, 03/08/2018 - 16:17

I was a Chapter 12 Trustee for 30 years, from the inception of Chapter 12 to two years ago. Obviously I have been a bit out of touch for the past two years, but my wife and I still buy 2% milk, and to be able to buy it for $ 1.19 a gallon is ludicrous. I don't keep up with milk prices because my newspaper does not show them, but with those kind of
prices, I can only imagine that milk is below $ 10.00, only adjusted for butterfat and a few other possible minor adjustments. My recollection is that when I retired the prices were at a level that is not sustainable by many, if any farmers, and I figured they had to have at least $ 16.00 just to break even.
I don't know if there have been any price props in the last two years, but I certainly hope so, by the federal government.
I think the biggest herd I was involved in was about 300 head, and that included those
that were not producing. Anything much above that, and the farmer had to file a

Chapter 11. I assume the debt level is now higher than when I retired, but Chapter 11
is cumbersome for the farmer, to say the least.
These poor folks rarely, if ever, get a vacation. I have yet to see a cow that didn't have to be milked twice a day, 365 days a year.
My overall impression is these folks are the salt of the earth. They provide such a
valuable service to our society, yet hang by their fingernails a good share of time.
I won't even delve into those that are grain farmers. My newspaper does daily post
prices for corn and soybeans, and those also are well below break-even.

Respectfully submitted,

Joseph A. Chrystler
Chapter 12 and 13 Trustee - Retired
Western District of Mi chigan

Submitted by Amanda Greene on Sat, 03/10/2018 - 06:44

This is heartbreaking considering I have part of my dearest family that is generations passed down dairy farmer's. Unfortunately, our economy hasn't decreased cost, we live in an already middle to poor class area. We are sad to see already our area changing to more commercial use. We fight hard to keep the local businesses going, but when you live paycheck to paycheck, budgeting is necessary. I used to live as a child for going to the farm. Feeding calves, watching milk the cows, and my Dad was a milk truck driver. I have a cousin now that is a milk truck driver. Those jobs will be decreasing too. Robotics will be the next thing to start taking jobs. I've watched our country decreasing and I unfortunately can't see that changing until someone supports our needs. Very scary.

Submitted by Bo on Mon, 03/12/2018 - 08:07

If Walmart built their own bottling plant, than these dairy farmers are selling milk to them. This is affecting Dean, not the farmers. Walmart has to get its milk from someplace.

Submitted by Anonymous on Mon, 03/12/2018 - 13:43

Walmart has not contacted these dairy farmers to have them supply any milk. The dairy farmers that belong to a coop heard about the Walmart plant in an annual meetin. We were told Wal-Mart would be doing 30 day contracts with chairman of their choice. These dairy farmers that have been let go by Deans have not heard from Walmart. I am a dairy farmer and this whole thing is upsetting. You work hard all day everyday struggling trying to make end meet and feel like you are working your but off for nothing. A lot of people do not respect the farmers like they use to. These dairy farmers that are loosing their contracts have been doing this for years and this is all they know.

In reply to by Bo (not verified)

Submitted by Wilson on Mon, 03/12/2018 - 16:54

It takes 4.65 Quarts of Milk to Make 1 pound of Cheese. many cheese types get better with Age.... think "aged chedder or Swiss " anyhow why don't you dairy folk consider different ways to utilize this abundance of Milk and conside a Cheese Co-Op you can operate. There are still pizza and Burger joints opening up in the USA and they will need "well made and properly produced "cheese." so to that, I say Smile and say "Cheese",

Submitted by Shawn on Tue, 03/20/2018 - 18:23

Currently in Allendale Michigan Leprino operates a cheese plant. On a daily basis milk is turned away because there is to much.

In Claire Michigan Yoplait runs a yogurt operation. Local co-op MMPA use to sell milk to them. But again to much milk production and Yoplait took a lower cost opportunity and left MMPA out in the cold. So it's not as simple as finding another use. It's simply a matter of farmers cutting/dumping till this over production is stopped.

In reply to by Wilson (not verified)

Submitted by Marc C. on Mon, 03/12/2018 - 16:59

Pennsylvania, Indiana, Kentucky, Tennessee, North Carolina and Ohio. All extraordinarily republican strong holds. The GOP is pro-business, but not necessarily small business. Hate to say it, but this should not be a surprise.

Submitted by Chris Snyder on Mon, 03/12/2018 - 17:00

I don't buy much milk... used to buy enough ice cream to make up for it .. but after needing some for stroganoff I was surprised at the cost. Even at Walmart. They've priced themselves out of the market. Sorry to see this happen, but everyone has to keep up with changes in markets.

Submitted by Ohio Joe on Mon, 03/12/2018 - 18:13

Dairy products have lost favor as more healthier and environmentally friendly products have become widely available. The way for farmers to survive is to move away from animal agriculture and cultivate plant based foods. With an estimated 65% of the world's population lactose intolerant it's only a matter of time until dairy is purely a niche food.

Submitted by Anonymous on Mon, 03/12/2018 - 19:59

I don't believe your percentage is right and not everybody is vegan. All farmers are struggling. I cannot drink milk that has been processed but I can drink milk straight from the cow and it is healthier for you. We need all the farmers. I think we would be healthier doing stuff the ways our ancestors did. They lived longer and didn't have as many health issues. We grow and raise about 90% of our own food and I myself have been healthier. All our farmers deserve more than people downing them all the time.

In reply to by Ohio Joe (not verified)

Submitted by Adam Suchan on Tue, 03/13/2018 - 04:23

So if the market is flooded with cheap milk then why does it cost almost $5.00 a gallon in the up of Michigan? Talk about being raped, of course in the Marquette area they think they have something so special that they rape you on everything I guess

Submitted by C Smythe on Tue, 03/13/2018 - 04:31

I heard China wants into the market and Walmart is the way in. Everthing else is made in china. Time to test for melamine in milk over here. Seriously . . .

Submitted by Sandrala on Tue, 03/13/2018 - 05:30

I'm no vegan, but I detest the big corporate farms who are taking over our food industry today. They're not interested in producing healthy food, only in producing it cheaper and faster. They only pay attention when they get sued for poisoning people with filthy food or the chemicals used to produce food faster and cheaper. Meanwhile, they lobby the FDA endlessly to let them get away with it...

Submitted by KN on Tue, 03/13/2018 - 06:53

People are figuring out that dairy is complicit in cancers of reproductive organs and linked to diabetes. Read The China Study and learn why all dairies should be closed.

Submitted by Lou Malone on Tue, 03/13/2018 - 09:44

Humans do not need to consume cow breast milk. More and more folks are waking up to the inhumane and environmentally disastrous effects of dairy, not to mention it’s NOT good for our health.

Submitted by Anonymous on Tue, 03/13/2018 - 12:50

What is not good is when it goes through the processing plant and they add to it. I help on a dairy farm and we are not inhumane and there is no environmentally disastrous effects from our dairy. What do you use to fertilize with? If you raise any kind of plant it usually has some type of manure in it.

In reply to by Lou Malone (not verified)

Submitted by Shawn on Tue, 03/20/2018 - 18:15

Walmart can build a plant and then come in and buy milk cheap because it is grossly over produce currently. It's not a demand problem, it's a supply problem and the average little farmer doesn't want to solve it. Afraid to lose even more if he cuts back on production because the neighbor will increase to make up for it and make more money. Gesh but that's just a shell game at best. But they better figure it out fast or well I guess real estate is back to stupid expensive. Build condos!