Walmart dairy shift looms over local farms

Allison Collins Farmer Erin Johnson of Unadilla points out cattle in the 129-head Joleanna Holsteins herd.

A soon-to-open Walmart milk-processing facility in Fort Wayne, Indiana, has upstate dairy farmers in an already-ailing industry feeling curdled.

In a story Saturday, the New York Post said the impending opening of Walmart’s plant spurred one of its primary dairy suppliers, Dean Foods of Texas, to cancel 100-plus contracts with farmers across eight states, including New York.

Walmart media representative Molly Blakeman said Dean Foods acted independently in issuing termination notices, effective May 31.

“We did not know about the letters,” she said, “and they may have been a little farther-reaching than where Walmart’s plant might actually affect.”

The more than 250,000-square-foot plant, dubbed in a Walmart media release as “one of the largest in the industry,” will process raw milk from “co-ops and some farmers directly, to be supplied to around 500 stores,” Blakeman said.

In a written statement, Dean Foods said: “Our decision was an incredibly difficult one and a step that we worked very hard to avoid.” After farmers were notified Feb. 26, the statement said, Dean Foods field representatives are “serving as a conduit of additional resources to dairy farms” and “connecting them with counselors if needed.”

Blakeman noted that, while Walmart continues to source “complete milk products — what’s in the jug and ready for consumption” from Dean Foods, the supplier was never planned as a source for the Indiana plant.

Though Blakeman stressed that the facility will only pasteurize and bottle (not produce) raw milk, farmers in Delaware and Schoharie counties said top-down changes in the industry impact everyone, especially the little guys.

“We don’t need another giant dairy out there,” said Shannon Mason of Cowbella, a seventh-generation farming operation in Jefferson.

Addressing what she called the industry’s No. 1 problem — plummeting milk prices amid a supply glut — Mason, 42, added: “We already have too much milk in this country, so even though not all farms are affected directly by this … it has an overall impact. Them building this (facility) and using it to supply milk for Walmart stores has a very negative impact on independent dairy farmers that are going to have fewer and fewer markets to sell to.”

With the new plant, Blakeman said, Walmart plans to match farmers to markets.

“Actually, when any farmer contacts us at our processing facility,” she said, “we’re giving them the name of a co-op so they can potentially find a home for their milk.” Blakeman said many supply lines are in place, but commented: “I can’t talk directly to the exact farms that we’ll be sourcing from.”

Chris DiBenedetto, treasurer for the Delaware County Farm Bureau and owner of Crystal Valley Farm in Halcott Center, said he expects corporate processing plants to influence local marketability.

“We’re the farms that are going to be looking for a market,” he said. “It used to be that we had a for-sure market and we’d have co-ops … trying to convince us to sign up with them, but now that’s not the case. You’re lucky to have a market at all, and it seems like if you make one wrong move, you’re in trouble. It’s nerve-wracking.”

DiBenedetto, who milks a 70-head herd, said corporate buying power gives commercial-scale dairies an advantage with which small operations can’t compete.

“There’s definitely a lot of pressure on smaller farms,” he said. “Bigger farms have more leverage … and there’s a lot of money being turned over from small farms in the community to larger farms. The economies of scale allow them to buy bigger things, at a discount.”

“It’s all about economies of scale,” Mason echoed. “A smaller farm being less efficient than a bigger farm (with) very expensive feeding and milking equipment really gives bigger farms the advantage.”

Mason, who milks 40 Jerseys, added: “The smaller farms are not going to be able to survive through these times. The trend is going to be toward bigger farms, and pretty soon that’s all that’s going to be left.”

Forty-year, first-generation farmer Paul Santobuono of Franklin’s Isoletta Farm, a 40-cow operation, said the outlook isn’t bright.

“When the laws of supply and demand are out of balance, this is what happens, and it really needs to be straightened out or only the strong will survive,” he said. “It seems now that there’s a ‘go big or go home’ attitude.”

For some small dairy farmers, the uphill battle has already proven too steep.

Fourth-generation farmers Danielle and Chase Buck, of Buckvale Farms in Jefferson, are selling their 65-head herd later this week.

“It feels defeating,” Danielle, 34, said, “but we’ve tried everything we can. Last month’s milk price paid us $15.30 per 100 pounds. Most small farms need … at least $19 to $20 per hundred pounds to break even.”

Theirs, Danielle said, is becoming an all-too-familiar fate.

“There are a lot of herds 200 cows and under selling out and a lot of farmers are thinking that’s the way things are going,” she said. “Corporations can just start investing in their own dairies and making cheaper milk than a small dairy herd in the Catskills.”

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