Regional cooperative buys N.C. processing facility
RESTON, Va. — The Maryland & Virginia Milk Producers Cooperative Association purchased a North Carolina processing plant last month, a move that will further diversify its business and keep it competitive in a consolidating marketplace, a cooperative spokesperson said.
The cooperative of more than 900 dairy farms from Pennsylvania to Georgia announced last month it had purchased the dairy processing plant in High Point, N.C., from the Harris Teeter grocery chain, part of its Hunter Farms dairy brand. In addition to milk, the facility produces a variety of dairy treats, juices, ice creams and culture products for retail and restaurant chains across the Southeast.
The 70,000-square-foot facility’s sale price was $8.2 million, according to the Winston-Salem Journal.
“We realized we really saw some areas where there was room for growth,” said Lindsay Reames, the cooperative’s vice president of sustainability and external relations.
The sale had been in the works since 2019, she said, and continues the cooperative’s aggressive realignment from a marketer of raw milk into a retail business with a line of products across its Maola dairy brand.
“We’ve had an overwhelmingly good response from customers,” she said.
The sale also adds another to the cooperative’s roster of processing facilities in Newport News, Va., Strasburg, Va., Laurel, Md., and Landover, Md. The cooperative is also keeping the North Carolina facility’s 160 full-time employees and plans to honor existing supply agreements with farmers selling to the High Point plant, Reames said.
The plant will also help it remain competitive in an industry that’s seen considerable consolidation of processing facilities over the last several years. The cooperative joined Food Lion to sue Dairy Farmers of America last year after it announced that it had purchased more than 40 processing plants from Dean Foods Co. for $433 million, a transaction that made DFA the largest milk producer and processor nationwide. The cooperative is DFA’s primary competitor in the Carolinas, and the lawsuit claimed that DFA’s takeover of the plants represented the “coup de grace for competition” in the regional milk market. The lawsuit was eventually settled. Terms were undisclosed.
The sale is also an indicator of the cooperative’s improved financial health. It was struggling in 2018 with cash flow issues after it lost business from several bulk raw-milk customers. It was forced to slash advance milk checks to farmers as it scrambled to transform its business and, at that point, had spent $40 million updating and expanding its facilities.
It’s a shift that has paid dividends. In June, the cooperative announced that Costco was selling its half-and-half and heavy whipping cream in 10 of its new warehouses. Its whole chocolate milk is available in 20 of the chain’s warehouses.
David Herbst, a cooperative member and owner of Misty Meadow Farm Creamery in Smithsburg, Md., said the cooperative seems like its on more stable ground than in recent years.
“(Retail is) where we want to be and where want to go,” he said.
The High Point facility will help the cooperative grow into the next century, Reames said.
“It’s been a kind of roller coaster within the industry over the past five years,” she said. “The purchase of this plant has allowed us to take the next step as an organization.”