A22-Lancaster Farming, Saturday, March IS, 1986
Lehigh directors questioned closely on API sale
LANCASTER Despite
reporting an unaudited net margin
of $2.68 million, Lehigh Valley
farmers elected and appointed
officials found themselves
defending the sale of assets of an
auxiliary organization at their
sixth annual meeting here Wed
nesday.
The focus of the 20 minute
question-and-answer period was
Atlantic Processing, Inc. (API), a
federation of dairy cooperatives
Lehigh, Dairylea, Mr. Joy,
Cumberland Valley and Capitol
Milk.
Effective February 28, the API
Board of Directors sold the
organization’s assets, the “bricks
and mortar,” to John Labatt, a
Canadian food conglomerate,
Lehigh President Alpheus Ruth
told the 700 assembled farmer
owners and guests. Labatt recently
purchased Johanna Farms, a New
Jersey-based dairy processor with
markets for citrus and other
juices, milk and yogurt throughout
the Northeast. «
According to management
consultant James Compton, the
assets were sold “at book value,”
estimated at $l7 million after in
tense farmer questioning. The ice
cream, cultured products and fluid
processing plants are now
operating a Lehigh Valley Dairies,
Inc., a subsidiary of Johanna.
Johanna.
Compton estimated that the
average Lehigh farmer, producing
700,000 pounds per year, would
reap $8,893 over a five-year-period,
should the API board approve the
revolving capital plan outlined to
the farmer-owners Wednesday.
This figure includes five-year
savings resulting from eliminating
the 10-cent capital retain ($3,500),
repayment of past capital retains
over a three-year period ($3,866)
and five years of estimated
dividends from API operations
($1,527).
However,'farmers must have a
minimum level of equity before
they can discontinue their 10-cent
capital retain.
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Regardless of the financial
picture presented, some member
owners continued to question the
decision. One farmer said that
Lehigh farmer-owners are “no
longer responsible for what we are
producing. We have become, in a
sense, one more milk pooler.” The
comment was greeted with
scattered applause.
Ruth, a Fleetwood dairy farmer,
responded that the board felt it
should “return to the producer the
most dollars and cents,” com
menting that pride in owning
bricks and motar is not enough.
Ruth said the sale was
unanimously approved by the API
Board, of which he is the chair
man. Moreover, he explained that
API would not be dessolved. In
stead, its staff will be trimmed to
four people, with new manager
Roy Seifert.
API remains a federation of
dairy cooperatives with long-term
supply contracts with Johanna and
Beatrice Foods, which owns the
Allentown-based cheese plant once
a part of API, Ruth said.
API has a six-year contract with
Beatrice to supply 33 million
pounds of raw milk per month,
with a provision for shipping more
when necessary for balancing
supplies, Compton said. The 10-
year contract with Johanna-
Labatt’s is 70 million pounds per
month.
Ruth said that he hoped “not too
many Lehigh Valley Farmers
leave dairying (a reference to the
whole-herd buy-out) because
Lehigh needs more milk.” He
reminded producers that more
milk shipped equals more equity in
API.
In justifying the sale to Labatt’s
Ruth said the Canadian firm has
sales of $3 billion, 11,000 em
ployees, and 63 manufacturing and
processing facilities. They are the
world’s largest grain processor, he
said, and Canada’s leading dairy
company.
“I don’t think we should be ex
cited that they also own a brewing
company,” he said, noting that one
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of the first questions he heard was
just that. “The important thing is
they are a diversified company
that happens to own a brewing
company. They don’t have all their
eggs in one basket.”
Ruth alluded to the loss of a
major customer in early 1985, an
unfavorable labor relations
decision and the proposed ex
pansion of Federal Orders 2 and 4
as factors influencing the decision
to sell.
The labor relations problem
dealt with truck drivers at the
Lansdale plant, he said. An effort
to trim labor costs backfired with
the arbitrator’s decision to re
instate the $40,000 per year drivers
and award back pay, Ruth said.
“The main objective of the
Federal Order expansion was to
capture APl’s Schulykill-Haven
plant’s profits,” he said. The ex
pansion would cost API $2 million a
year, he said. ____
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General Manager William Stout
said the expansion is “in a holding
pattern.” After November’s in
junction, briefs were scheduled to
be filed by March 1. A decision
should be reached by summer, he
said.
What position will Johanna take
now that it owns the facility? The
question was not asked, but the
answer could be interesting, as
Johanna has supported order
expansion.
Treasurer Robert Gehman
presented the unaudited financial
statements, highlighting the $2.68
million in net margin. The 954
million pounds of Lehigh milk is
comparable to 10 percent of the
total Pennsylvania production.
Stout thanked the farmers who
had voluntarily earmarked six
cents per hundredweight for
Lehigh Valley Farmers branded
products, noting that the brand
advertising program has now been
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DIALERS
LEBAI
ISYLVANIA
BEDFORD CO.
JOHN M. EMERICK
Hyndman, Pa.
Ph.(814)842-3480
BERKS CO.
A.C. BERNET, INC.
Birdsboro, Pa.
Ph. (215)582-8103
CHESTER CO.
STOLTZFUS FARM
SERVICE
Cochranville, Pa.
Ph.(215)593-2407
PAULSHOVER, INC.
Carlisle, Pa.
Ph. (717)243-2686
DAUPHIN CO.
JIM’S LAWN MOWER MAURER’SJNOWER
SERVICE SALES & SERVICE
Harrisburg, Pa. Allentown, Pa.
Ph. (717) 545-5114 Ph. (215) 437-0452
JETER’S SALES LYCOMjNQ CO,
I senna kb. anam, me.
Ph.(717)362-8501 Ph.(/l7)3Zb ZB/4
FRANKLIN CO.
A.A.A. LAWN SERVICE
Chambersburg, Pa.
Ph. (717)369-5111
LANCASTER CO.
A. AN. EQUIP.
Narvon, Pa.
Ph. (717)768-3227
GOOD’S LAWN
A GARDEN
East Earl, Pa
Ph (717)354-0076
LAWN CARE OF PA.
Martindale, Pa.
Ph. (215)445-4541
LIMEVILLE SALES
A SERVICE
Gap. Pa.
Ph. (717)442-9304
ROMAN MUSSER
Rothsville, Pa
Ph (717)626-6363
discontinued.
A series of district meetings will
be held in the next two weeks to
report to farmers who were unable
to attend Wednesday’s session,
according to a news release
distributed at the meeting.
■iimu’ciiwn martin's pro hwo,
5 HWU - Richfield, Pa. ‘
« EQUIP. Ph. (717) 694-3220
Newmanstown, Pa. caucdcct ca
Ph, (717) 949-6817
SWOPE & BASHORE, EQUIP., INC.
, u « Addison, Pa.
„ ■ Ph. (814) 395-3521
Myerstown, Pa. , __
Ph.(717)933-4138 UNION gQ.
lcu „ unn MARTIN’S SMALL
ENGINE REPAIR
DAVE’S LAWN Mifflinburg. Pa.
A GARDEN Ph (717) 966-2545
Orefield, Pa.
Ph.(215)395-1202
HERMIT KISTLER
Lynnport, Pa.
Ph.(215)298-2011
MIFFLIN CO.
PEACHEY'S SAW SHOP
Belleville, Pa.
Ph. (717)935-2833
MONROE CO.
WEST END ENGINE
SERVICE
Gilbert, Pa.
Ph. (215)681-5419
MONTGOMERY CO.
A.F. LEIDYHWD., INC.
Schwenksville, Pa.
Ph.(215)287-8121
NORTHUMBERLAND CO
mOntandon equip.
SALES A SERVICE
Milton, Pa.
Ph. (717) 524-2473
PERRY CO.
R.E. DAVIDSON A SON
Millersburg, Pa.
Ph (717)444-3670
Selinsgrove, Pa
(Snyder Co.)
Ph.(717)374-8590
A
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IERCO.
OVERDORFF NURSERY
LAWN ft GARDEN
Mt. Pleasant, Pa.
Ph.(412)423-6288
YORK CO.
CHARLIES SALES
ft SERVICE
Brogue, Pa.
Ph. (717)927-6500
RAFFENSBERGER’S
SERVICE CENTER
CENTER
Dallastown, Pa.
Ph.(717)244-7941 •
W.L. STERNER
Hanover, Pa.
Ph. (717)637-2159
MARYLAND
CARROLL CO.
RAINBOW FARMS
SERVICE
Taneytown, Md.
Ph.(301)751-1500
MONTGOMERY CO
HARRINGTON A SONS
Germantown, Md.
Ph.(301)253-1125
WASHINGTON CO
BAER'S LAWN A GARDEN
EQUIP., INC.
Hagerstown, Md
Ph. (301) 733-8229
NEW JERSEY
RIVERVIEW NURSERIES
Flemington, NJ
Ph.(201)526-3162