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)
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19