Dean Foods terminates contracts with local dairy farmers
Bob Nickerson has owned R-Dream Farm in Columbus Twp., Warren County since 1991. But he received a letter last week from his milk processor, Texas-based Dean Foods -- also owner of Erie's Meadow Brook plant -- in which the company informed Nickerson they were terminating their contract with him effective May 31.
CORRY, Pa. - Bob Nickerson has owned R-Dream Farm in Columbus Twp., Warren County since 1991. But he received a letter last week from his milk processor, Texas-based Dean Foods in which the company informed Nickerson they were terminating their contract with him effective May 31.
"It was somewhat of a shock," Nickerson said about the letter, which is dated Feb. 26.
Nickerson's farm, located just outside of Corry, isn't alone.
Dean foods is cutting ties with more than 100 farms in eight states, the company tells Erie News Now. Forty-two of those farms are in Pennsylvania -- 26 in Eastern Pa., the other 16 in Western Pa. with several in our area, according to Jayne Sebright, the executive director for the Pennsylvania Center for Dairy Excellence.
Dean Foods, which owns the Meadow Brook plants in both Erie and Sharpsville, tells Erie News Now the cuts are a result of oversupply and shrinking demand. "The fluid milk market has always been competitive, but we're in unprecedented times," said Reace Smith, spokesperson for Dean Foods, in an email on Tuesday.
The company has not made a decision regarding any potential job cuts at either the Erie or Sharpsville plant as a result of these contract cuts, Smith added.
"It'll be kind of rough for a little bit if they don't find another milk plant to take you," Nickerson said.
Dean also cites a decrease in their milk production due to a new processing plant in the region. Recently, Wal-Mart opened their own milk processing plant in Indiana. While Dean didn't explicitly name the retailer as the reason behind the cuts, Nickerson says many farmers are connecting the dots.
It seems as if there is no real rhyme or reason as to why some farms were selected over others. Some farmers who received the letters have 100 cows, but other farms are much bigger with nearly 1,000 cows. Nickerson and his 350 cows, which produce roughly a semi-load of raw milk every two days, are still looking for a new processor.
Because Dean Foods is giving farmers just 90 days notice, they have to act quickly. Farmers generally are only permitted to contract with one processor at a time. That means either finding a new contractor, or the worst case scenario, Nickerson said, selling the cows or even the farm.
"It worries you," he said. "Everybody is waiting to see -- the milk plants are too -- what's coming down the road for them, too."