Dairy groups wary as Dean Foods files for bankruptcy
The National Milk Producers Federation, which represents dairy farmers and their cooperatives, was circumspect in its reaction to Dean Foods, the largest U.S. milk company, filing for bankruptcy on Tuesday.
Analysts said that Dean Foods had fallen victim to a combination of declining fluid milk sales, pension obligations and rising competition from big retailers including Kroger, Albertson’s and Walmart establishing their own milk processing plants.
The company said it is discussing a potential sale to Dairy Farmers of America, the largest U.S. dairy cooperative.
A spokesman for the National Milk Producers Federation told The Hagstrom Report in an email, “A number of NMPF’s member cooperatives provide milk to Dean Foods and could be affected by its bankruptcy filing. We will work closely with our members to provide whatever support we are able to through this process.”
International Dairy Foods Association President Michael Dykes focused on the overall industry.
“In light of today’s news about Dean Foods, IDFA is working across our broad membership to ensure the industry continues to meet growing demand for dairy products,” Dykes said. “The fact remains that overall consumption of dairy products is at historic levels, and demand for dairy in the United States and around the world increases each year. While we gather more information about how today’s news will impact our industry, IDFA is working to ensure a safe, reliable supply of milk continues to move from farmers to consumers. We will work across the industry to ensure farmer cooperatives remain competitive, dairy processors have a reliable supply of milk, retailers and grocers continue to put milk on the shelf, and consumers continue to make milk and other dairy products a key part of their diet. Fortunately, consumers are turning more and more to the goodness of dairy because it is delicious, nutritious, and affordable, and our industry will work together to ensure this positive growth story continues.”
Overall U.S. dairy consumption has grown by nearly one-fifth since 1975, as consumers buy more yogurt and pile more cheese onto pizzas, the Wall Street Journal noted today. But the Journal also noted that U.S. consumers in 2018 drank 146 pounds of milk on an annual per capita basis, according to U.S. Department of Agriculture data — the lowest level since the agency began keeping records in 1975 and down 39% over the past 40 years. The consumers have shifted to water, fruit juices and non-dairy milk alternatives.
“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption,” Eric Beringause, Dean’s chief executive, said in a statement.
Dean Foods said it had lined up about $850 million in bankruptcy financing to continue operating while it arranges a deal, USA Today reported.
–The Hagstrom Report
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