Scenic Central dairy co-op has another growth year
Scenic Central Milk Producers Cooperative has grown far beyond the expectations of its founders.
Last year it had sales of $82 million, general manager Ken Boll told members at their annual meeting in Richland Center Thursday (Feb. 9.) “I never imagined having those kinds of sales.”
There was over $108,675 in net income after paying farmers their Christmas bonus, he said, and $600,000 remains in a fund balance. The co-op hired some extra people in anticipation of the growth.
“Ninety-four percent of every dollar went directly to farmers in basic price and component price. We ran the entire co-op for 1 percent of sales,” he said.
Boll flashed a slide indicating how the cooperative can achieve this – No Debt – in large, bold letters. “Everything we spend, we pay as we go.”
Some investments have been joint ventures with business partners to help develop markets for members’ milk, he said, like a Grade A milk silo at Meister Cheese in Muscoda.
The cooperative had 36 million pounds of new milk this year.
“We had wanted to slow down in 2009 and protect our existing farmers,” Boll said, but the milk buyers who work with the co-op saw their businesses grow and needed more milk.
“We don’t need a lot of new buyers, we just have to keep up with the ones we have,” he told members with a smile.
“We feel we do things others don’t do and that puts us where we are today.”
Boll also touted the patron annuity program that allows members to contribute money to a retirement account through a fraternal member-owned organization. The co-op matches a nickel per hundredweight if farmers put that in.
Over the years Scenic Central has put over $362,000 into the annuities which guarantee at least a 3 percent growth. Members now have a total of $3 million in the program, which began in 2005.
“As far as I know, we’re the only people the country to do this for our members,” Boll said.
Boll recognized Lyle Tydrich, a Yuba farmer who served as the first board president when the cooperative was getting started in 1998. He was president until recently when he sold his cows, which meant he had to step down from the leadership position.
Tyrich, whose farm has been in his family for nearly 150 years, recalled the early days of Scenic Central when they were collecting milk from the first 16 producers and weren’t sure where they were going to send it.
He signed checks and ran to the bank to take care of the co-op’s business even when they weren’t sure of the future of the organization.
At the meeting members also heard from Pete Hardin, publisher of The Milkweed, a monthly newspaper on dairy issues. “I’m proud to know you folks,” he said. “You have a co-op that does the basics well and I commend you on your efficiency.”
The unique annuity program is “spectacular,” he added.
Hardin predicted that dairy farmers will have to weather prices in the $15-per-hundredweight range for February and March and likely into April. “We are looking at three tough months,” he said.
With the high price of corn and soybeans, the prices don’t cash flow very well, he added.
One of the factors that led to the price drop was that a lot of milk went into cheese vats in recent months as fluid milk consumption dipped. In December 2011 there were 430 million pounds more of milk processed than in December 2010, he said.
“That’s 8,000 semis more going into cheese vats than a year earlier and it’s pulling down the whole milk price structure.”
Sales of cheese in the supermarket for 2011 were also down.
With beef cattle and cull cow prices high, Hardin urged farmers to cull wisely and trade in those animals for springers, which are in plentiful supply “and get the calf to boot.”