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Edaleen Mulls Future Under Fed System: Local Dairy Decides to Pay $100,000 Monthly Instead of Cutting Production

Posted on: Wednesday, 5 April 2006, 09:00 CDT

By John Stark, The Bellingham Herald, Bellingham, Wash.

Apr. 5--As it shoulders the new cost of forced membership in the federal milk price system, Whatcom County's Edaleen Dairy is developing strategies for survival.

"Number one, we want to be around," said Duane Brandsma, general manager of the 70-employee family business. "Edaleen Dairy wants to be around, for the sake of our customers and our employees especially."

The dairy, at 9593 Guide Meridian north of Lynden, is the only one in Whatcom County that processes, packages and sells its own milk and other products from its herd of about 2,700 cows.

Until now, Edaleen and a handful of other similar Northwest producer-processors were exempt from provisions of the federal milk price support system that benefits most milk producers by stabilizing prices and supplies.

But after more than two years of deliberations, the U.S. Department of Agriculture ruled earlier this year that Edaleen and similar dairies had two choices: Cut production below 3 million pounds of milk per month, or make stiff cash payments into the federal milk price system. The USDA's ruling was ratified by a vote of other milk producers in the region.

With production now at 6 million pounds per month, Edaleen could only avoid the payments of about $100,000 per month by cutting production in half. For now, Brandsma said, Edaleen is maintaining production and making the payments. He's not sure what course the company will take in the future.

"We've got a lot of family with a lot of different ideas right now, and we're trying to sort those out," Brandsma said.

Edaleen is attempting to pass on the added cost to customers, but that risks loss of business, especially from wholesale customers who will look elsewhere in search of a better deal, Brandsma said.

The long political struggle leading up to the federal ruling took its toll on Edaleen employees and family members, Brandsma said. While the family was thrilled with the willingness of many local residents and customers to send letters and e-mails supporting the company, most other local dairy owners who were already part of the federal system closed ranks against Edaleen.

"It's hard," Brandsma said. "Your friends vote against you. It's hard to handle some of those things."

Dairies that are part of the federal system all get the same "blended price" for their milk production.

That price reflects the fact that only a portion of that production can be sold as whole milk, the most lucrative product. The rest is converted to lower-priced commodities like cheese or powdered milk.

As other dairy operators saw it, Edaleen was making an end run around the system by processing and packaging its own output in order to sell more of its production as whole milk.

The resulting loss of whole milk market share from Edaleen and similar producer-processors elsewhere in the region was costing other dairies an average of more than $300 a month, according to one industry estimate.

Reach John Stark at 715-2274 or john.stark@bellinghamherald. com.

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Copyright (c) 2006, The Bellingham Herald, Bellingham, Wash.

Distributed by Knight Ridder/Tribune Business News.

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Source: The Bellingham Herald, Wash.

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