ST. ALBANS — The St. Albans Cooperative Creamery board is recommending that its members approve a merger with Dairy Farmers of America (DFA).
The board held an informational meeting with its members on Monday and a conference call with the press this morning.
Members themselves will have to approve the merger in a two-thirds vote to be held in late July before it can take place.
Harold Howrigan, Jr., chairman of the cooperative board, said the board’s number one goal in negotiating the merger was preserving members’ equity, followed by securing access to markets for members’ milk.
The co-op’s powdering plant and store will be combined into the St. Albans Creamery, LLC., a wholly owned subsidiary of DFA. McDermott’s Trucking Service, currently a wholly owned subsidiary of St. Albans, will become a wholly owned subsidiary of DFA.
Employees of St. Albans will become employees of DFA.
Representatives of both DFA and St. Albans declined to discuss details of the transaction, although both said DFA will be reinvesting in both the plant and McDermott’s.
“We are sellers and buyers together on this transaction,” said Howrigan, noting that St. Albans members will continue to own St. Albans’s assets as DFA members.
DFA has 14,000 members nationally. St. Albans has between 330 and 340 members in Vermont, New York and New Hampshire.
In the Northeast, DFA has 3,100 members, according to Brad Keating, DFA’s chief operating officer for the Northeast region.
The addition of St. Albans means DFA will control about 30 percent of the milk produced in the Northeast, he said.
In some areas of the country, DFA has used a base excess program (in such programs each farm has an assigned base and does not received as much money for production in excess of that base) to limit production in an effort to reduce the oversupply of milk which has kept milk prices low since 2015.
However, Keating said there is a “lack of consensus” among members in the Northeast about employing such a program here. “We continue to study it,” he said.
Howrigan said he believes the merger will have a net positive on farmers’ milk checks. However, he said that in considering the merger the board was “looking deeper and beyond what the immediate impact on the milk check will be” at “long-term market security.”
“Our members are just looking for market security,” he said.
With the merger, St. Albans members will “become part of a national cooperative with a national presence,” Howrigan said.
The merger will not negatively impact St. Albans existing customer relationships, according to St. Albans CEO Leon Berthiaume. “DFA is committed to continue to work with St. Albans customers,” he said, including Ben & Jerry’s.
Many St. Albans members participate in the company’s Caring Dairies Program in which farmers receive a premium above their regular price for meeting certain criteria. That will also continue, although St. Albans does regularly re-evaluate such programs, explained Berthiaume.
St. Albans members can expect to receive a packet of information with the details of the proposal within the next ten days. Then St. Albans will host five regional meetings with members to answer questions before a full membership meeting in late July. Two-thirds of the members present at that meeting will need to approve the merger for it to go forward.
This year marks the hundredth anniversary of the St. Albans Cooperative Creamery.
“When we started this process we had to let go of our emotional ties,” said Howrigan of the board, which has been considering the cooperative’s future for two years.
St. Albans joined DFA in 2003 as a member cooperative. The two also formed Dairy Marketing Services with Dairylea, a western New York cooperative, to jointly market milk.
DFA merged with Dairylea in 2014.
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