FarwinfcSitwday, 1... 30,1979. _ member8 > contributions
Eastern’s equity fund over $1.25 million
By DIETER KRIEG
SYRACUSE, N.Y. Howard McDonald,
general manager of Eastern Milk
Producers Cooperative, says “Eastern’s
net worth has never been better in
history.” He made the glowing remark at
last month’s annual meeting, here, at the
Hotel Syracuse.
He empasized that the 4500-member
dairy farmers’ cooperative has been able
to reduce its financial costs considerably
through the collection of “a number of
long-standing debts and by taking strong
efficient measures.”
Another factor in the improved picture is
the operation of two cheese plants
acquired by Eastern within the past year
and leased to Leprino Foods. Eastern’s
president, Arden Tewksbury of
Meshoppen, Pa., says the two plants,
located at Horse Heads and Waverly,
N.Y., “have turned around the surplus
milk problem. To prove his point,
Tewksbury cites marketing figures of
March 1978 and March 1979. “Eastern’s
members had to make up $475,000 in ex
cess marketing costs in March of last year,
compared to $70,000 this past March,” he
says.
For the entire fiscal year, Eastern
milked its membership for an estimated
$3.5 million to cover marketing costs, the
cooperative president has revealed. All of
that is part of a dark past for the Syracuse
based milk marketing organization which
once boasted a membership of 10,000.
“But I feel if we don’t understand the
past, then how can we possibly accept the
present and how can we prepare for the
future?” Tewksbury asked delegates at
the annual meeting.
“I’m mighty proud of many of the ac
complishments made during those years,”
he continued, making the remark in
reference to the early years of Eastern. He
recalled how the cooperative was
operating with 1-cent dues and guaran
teeing every member a market. “It wasn’t
hard to obtain new members at that time,”
hequipped.
But conditions changed when handlers
withdrew from the market and in some
cases even ceased business completely.
That left cooperatives without markets
and even non-payments for milk that had
already gone to market. “Eastern was not
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Howard McDonald
sufficiently ready for the market con
ditions that developed in 1976-78,” the co
op chief admitted. “But you know we were
not alone,” he added.
“Since December of 1976 this
cooperative has gone through enough
turmoil to last for a lifetime,” he said.
“The marketing years 1977 and 1978
almost proved to be a disaster for your co
op,” he told the delegates at the June 6
annual meeting. He praised the mem
bership for their support.
“You are to be complimented, not
condemned for your actions,” he assured.
Eastern has come under considerable
attack from both members, bystanders,
and some members of the farm press.
Fifty-two dairy farmers who are members
of Eastern are 17 directors, former
directors, and officers to court for alleged
wrongdoings. Charges include
mismanagement, the overstepping of
authority, and misleading accounting
procedures.
Eastern is seeking to clear itself of the
challenges. As for an internal house
cleaning - some of that’s going on too,
according to spokesmen at Eastern’s
Syracuse headquarters.
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A financial manager was hired two
years ago. He is Herbert Dom. Last
March, a controller was added to the staff.
He is Robert Zom. “We have taken steps to
improve the efficiency of cur accounting
department,” says Tewksbury. The
cooperative, however, did not have
audited financial statements at its annual
meeting in June. The fiscal year had ended
on March 31. Tewksbury is aware of
criticism for providing fmancial in
formation too slowly, he says.
The unaudited version of Eastern’s
money sheet says nearly $300,000 in profits
were realized during the last fiscal year.
Tewksbury hints that keeping track of
accounts in milk marketing is no easy
task, especially when many handlers are
involved. He’s happy that the Leprino
Foods arrangement will limit the scope of
the accounting demands.
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Elaborating on McDonald’s rosy
statement about Eastern’s net worth,
Tewksbury revealed that the cooperative’s
total equity stands at $1.25 million and is
growing. The equity is the result of a
special equity fund that was initiated IV2
years ago. Members are assessed five
cents per hundredweight of milk shipped.
And to keep its operations solvent,
Eastern is using a $lO million line of credit
through Walter Heller and Associates. The
cooperative’s director of member and
public relations, Lisle Dutton, says bet
ween $1.5 million and $3 million are
borrowed by Eastern each month. It’s paid
back the following month. It’s necessary to
borrow the money because milk suppliers
have to wait 30 or even more days before
handler pay them. Most of the interest
charges are passed on to the handlers. The
interest rate is 4% points over prune, says
Dutton.
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