Dairy c ;r Continued from Page 1 cents per hundredweight for the next five years, hoping to build a capital fund of $5 to $7 million during that period of time. .a r Lehigh Valley, which is coming out from under debts which have burdened them for several years, is not doing it without sacrifice, however. During better times farmers were paid annual dividends on the shares they held in the cooperative. Those payments of interest have ceased and there is some speculation that the face TAKE A LOOK AT THIS PRODUCTION RECORD! Ul o <e ui a. SHAVER HI amount of the certificates will go down the drain. Despite the'- increasing financial pressures, spokesmen for these and other dairy cooperatives are optimistic about the future. Dairylea' is banking on its growth as a consumer products cooperative, Lehigh Valley considers itself to be in an ideal marketing situation with its plants and growing mem bership, and Eastern has hopes of rolling unhindered once financial stability is established. Another jjair-of cooperatives - Maryland Cooperative Milk Producers and Inter-State Milk Producers - are waiting to SHAVER STARCROSS 288 LAYERS GREIDER flex their muscles once a powder and butter plant is in operation. The target date' for that happening is May 1. Although the approaches to strength vary from cooperative to cooperative, they all have one thing in common. That is, they need the continued support of their members. Financial instability among the cooperatives has come more and more to the surface this year due to the increased marketing pressures. Production is up and Class I utilization is down. This situation has not only pressured the cooperatives, it has in creased costs for milk SOLD BY FARMS, MOUNT JOY. RD 1. PA. handlers. Some of the smaller dairies have closed their doors, many more have notified and continue to notify dairymen that they will no longer accept then milk. The end result is that farmers are being stung. Bruce Snow, public relations director for the 5000-member Dairylea Cooperative, says that a part of the problem has always been that cooperatives have not insisted on dependable cash flows from milk han dlers. He reasons that if dairy cooperatives are expected to have the cash on - hand to pay its bills, then the same should be true for milk dealers who buy milk from AGE IN WEEKS INC. Lancaster Farming, Saturday, March 18,1978 the cooperatives. He claims this hasn’t always been the case. The waiting time between date of delivery of the product and receipt of the payment has cost cooperatives millions of dollars in interest annually. That’s a major reason why they’re scrambling to build permanent base equity. Eastern Milk Producers, for, example, has been troubled lately by having to send producers’ checks out late. Some checks are reportedly covering just a portion of what is due to the dairyman. Eastern’s creditor, the Marine Midland Bank of Syracuse, has suggested that the cooperative’s management raise its equity. It’s being done through the five-cent deduction. Bolstering current operating costs are dues of 10 cents per hun dredweight, three cents of which go into a contingency fund. The Marine Midland Bank has suggested that Eastern needs an equity equal to 20 to 30 per cent of its total assets. It’U take about five years to raise that amount, according to Eastern’s officials. Eastern’s members will receive certificates at the end of each year to show their amount of contribution for that time period. The funds contributed by each patron can be returned in three different ways - 1. at retirement, 2. at death, 3. when ceasing dairying altogether. The funds ac cumulated in this manner cannot be used to cover operating expenses. Other deductions and the con- SHAVER BjSI tingency fund are designed for that purpose. As of December 31, Eastern had $802,000 worth of accumulated marketing costs during the current marketing year, asccording to information released at a recent membership meeting in Lancaster County. The contingency fund has split that figure in half and of ficials at Eastern predict that the debt will be eliminated by August of this year. Thereafter, the con tingency fund will continue to accumulate and be used for capital improvements. It’s also speculated that after a number of years, the monies raised through the contingency fund could be returned to producers via revolving funds. Detailed information on this matter will be mailed along with the March 25 milk checks, an Eastern official said. Eastern’s membership is also being told that if marketing costs continue to go up, then deduction will have to go up accordingly. The cooperative is operating on a service at cost program to avoid deeper economic woes. To further illustrate how delayed payments from dairies are causing a part of the problem being faced by cooperatives, Franklin Wagner, director and dairyman for Eastern, noted that his cooperative is borrowing $7 to $8 million per month because of a lot of their operating needs are tied up in storage and checks from handlers aren’t coming soon enough to meet payroll and expense demands. Snow, speaking from his office in Pearl River, N.Y., told Lancaster Farming during a telephone interview that lending institutions are (Turn to Page 22) ATTENTION We Now Stock HYGRO-MIX Swine Wormer TYLAN-10 MIX Compare our prices (Quantity Discounts) SPRING SALE ALL THE WAY IPG Pig Heaters TINSLEY FOOTWEAR Work Robbers & Boots Compare Onr Prices Work Shoes ALSO Home Hair Cutting Sets CLEM PLASTIC For Plant Beds BLACK MULCHING PLASTIC ZIMMERMAN ANIMAL HEALTH SUPPLY RD4,Lititz, PA 17543 Home Store Phone 717-733-4466 Closed All Day Wednesdays. 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