KARL BERGER
Special Correspondent
FREDERICK, Md. The
recent bankruptcy of Cumberland
Farms Inc., a New England-based
convenience store operator, will
have a minimal impact on dairy
farmers in the Mid-Atlantic area,
according to industry officials.
The firm, which owns a network
of almost 1,000 convenience
stores in 12 states, filed for protec
tion from its creditors under Chap
ter 11 of the federal bankruptcy
code in early May. The firm con
tinues to operate while it seeks to
restructure its finances.
Cumberland Farms operates
several fluid milk processing
plants, including one in Florence,
NJ., south of Trenton, that is
pooled in the Mid-Atlantic milk
marketing order.
Various suppliers to this plant,
including at least one cooperative
and a number of independent
dairymen, did not receive their
final payments for April milk,
according to industry sources.
Atlantic Dairy Cooperative, the
region’s largest, reportedly is the
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Cumberland Farms Problems Pose Small
Problem To
major supplier to the New Jersey
plant Bob Dever, Atlantic’s assis
tant general manager, said the
cooperative sells Cumberland
Farms about 6 percent of its total
supply.
Although serious, the bankrupt
cy should not have a major effect
on Atlantic’s finances for several
reasons. The total dollars
outstanding reportedly in the
neighborhood of $1.5 million
is equivalent to only slightly more
than two weeks worth of milk.
Shipments since April have
been on a C.O.D. basis, Dever
said. Moreover, the firm reported
ly remains in decent financial con
dition, reassuring creditors that its
restructuring will be successful.
Atlantic survived a disruption of
much greater magnitude when the
old Abbolts Dairies firm went
bankrupt in the early 1980 s, Dever
noted. The cooperative got some
of the money it was owed from
Abbotts relatively quickly through
the milk security provisions then in
effect in Pennsylvania.
It eventually received much of
the balance through the settlement
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of bankruptcy proceedings, but the
process took years, Dever noted.
Now, as then, the cooperative’s
financial reserves have allowed it
to pay its members in full despite
the shortfall from Cumberland
Farms, Dever said. In potentially
worse shape, however, are the var
ious independents who sold milk
directly to the firm.
Out of the 40-50 New Jersey
dairymen supplying the plant, fa
instance. are eight independents,
according to Vin Samuel, an offi
cial with the Division of Dairy
Industry within the New Jersey
Department of Agriculture.
In contrast to Pennsylvania,
New Jersey has fairly minimal sec
urity requirements as part of its
licensing of milk dealers. The
firms are required to have only
$lOO,OOO in bond coverage in the
event of bankruptcy, Samuel said.
Although a number of legal issues
remain to be resolved, the Chapter
11 filing is likely to lead to a dis
persal of funds from this bond,
Samuel added.
Samuel said there is not yet an
official tally of the amount Cum-
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berland owes New Jersey farmers,
but the total is somewhat less than
$3 million. He acknowledged that
the security fund would provide
just a few cents for each dollar
dairymen are' owed.
A number of New Jersey ’s dairy
industry leaders are saying the
amount is woefully inadequate to
meet farmers’ needs in an era in
which monthly milk checks often
reach five figures.
“We have to provide more sec
urity,** said August Knispel, a
Hunterdon County farmer who
currently serves as president of the
Garden State Milk Council.
Charlie Miller, a forma- dairy
farmer who now lobbies for the
New Jersey Farm Bureau, said far
mers have asked the state to beef
up its security provisions since the
last major bankruptcy in the early
1980 s. Miller said he’s hopeful
something can be done now while
the Cumberland Farms situation is
still fresh in people’s minds.
The typically long delay and the
fact that farmers often must wait in
line behind secured creditors for
money they are owed by bankrupt
milk dealers are among the reasons
that many states have adopted
extensive farm security
provisions.
In Pennsylvania, for instance,
the state's Milk Marketing Board
oversees the Milk Producers’ Sec
urity Act The act requires licensed
dealers to take out a bond to cover
at least 30 percent of the amount
the firm would spend for 40 days
worth of milk from its Pennsylva
nia suppliers, according to a board
spokesman.
In addition, dealers must contri
bute two cents a hundredweight to
separate security funds for each
handler. Dealers that have security
bonds that cover at least 75 percent
of their 40-day exposures are
exempt from this provision.
In New Jersey, the ag depart
ment’s Samuel said his division
had been studying security provi
sions in other states even before
the Cumberland Farms
development
Lancaster
Chamber Sets
Ag Events
LANCASTER (Lancaster Co.) The agri
culture committee of The Lancaster Chamber of
Commerce and Industry has announced two
upcoming events designed to better acquaint the
local community with the business of agriculture
in Lancaster County.
“Wake Up to the ‘Ag Issues’” will be pre
sented on June 5 at the Southern Market Center,
100 South Queen Street. This breakfast meeting,
which begins prompdy at 7:30 and ends at 9 a.m.,
will feature local agribusiness people who will
discuss “What Every Lancaster County Business
Person Should Know about Agriculture but
Didn’t Know Who or How to Ask.”
Speakers are Bruce R. Limpert, director of
financial services for Wenger Feeds, who will
give an overview of Lancaster fanning, the
nature of our competitive advantage, and the eco
nomics behind the issues, and Michael W. Bru
baker, president and owner of Brubaker Agro
nomic Consulting Service, who will highlight
the key issues facing agriculture in the ’9os.
Cost of the program is $lO for Chamber mem
bers, $8 for Chamber Farm Associates.
On June 12, the annual Agri-Business Tour
will provide an opportunity for farmers and non
farmers alike to tour some of Lancaster’s ag
related industries. According to Jay Howes,
manager of agricultural services for the Cham
ber, ‘The three distinctly different facilities and
types of business activities represent the diversi
ty of agriculture and serve to emphasize the fact
that the total agricultural industry is far more
than just plowing, planting, and reaping.”
The day’s schedule begins at 9 a.m. with
departure by bus from Lancaster Shopping Cen
ter, Lititz Pike. The first stop is John F. Cope
Company, Inc., in Rheems. A well known local
food processor. Cope is expanding into new veg
etable processing markets. Next stop is the Lan
caster County Solid Waste Management Author
ity’s (LCSWMA) Resource Recovery Facility in
Bainbridge for a discussion of LCSWMA's ag
related programs. Following a catered lunch, the
bus leaves for the final stop at Smoketown Veter
inary Hospital on Old Philadelphia Pike to tour a
modem large- and small-animal veterinary clin
ic. Return to the Lancaster Shopping Center is
scheduled for 2:45 p.m.
Cost for the tour is $l5 for Chamber members
and Chamber Farm Associates, $2O fa- non
members. Cost includes transportation and
lunch, and registration is limited to 45 persons.