Officials: Processing, production capacity align efficiently
By CAROL RYAN DUMAS
California Dairies Inc., the state's largest dairy processing cooperative, has acquired the assets of Security Milk Producers Association.
The acquisition was announced Nov. 8 and will be effective on Jan. 1, when SMPA will cease to exist, said Marie teVelde, CDI's communications director. The majority of SMPA's members will join CDI.
The additional memberships will add 33 dairies, owned by 25 SMPA members, and bring an additional 4 million pounds of milk a day under CDI's roof. Only four dairies, owned by two SMPA members, chose not to apply for CDI membership, she said.
SMPA's assets consist of milk tankers used to haul milk but not the trucks that carry the tankers.
SMPA is a milk-marketing cooperative that has sold fluid milk and milk for cheese processing under contracts for 38 years. It has no processing capacity. The cooperative is 100 percent dependent on contracts from outside customers, teVelde said.
It has been reviewing its options to better balance its milk supply for the last couple of years, analyzing the feasibility of building a plant or buying and renovating an existing plant to handle its milk in times of oversupply, she said.
"As options were explored it became clear that aligning SMPA's successful fluid milk sales business with CDI's extensive processing capacity provided an opportunity for SMPA and CDI to better balance milk supplies in the state," SMPA Chairman Ed Haringa said in a press release.
"The SMPA board of directors is confident that its original goal of returning increased profits to its member-owners will be accomplished through this transaction," he said.
The SMPA and CDI board of directors determined that the member-owners of both cooperatives would be better served by promoting efficiencies gained by combining their memberships, the press release stated.
SMPA membership voted to dissolve its current management contract and submit applications for membership in CDI.
That management contract will end with CDI's acquisition, teVelde said.
"The addition of SMPA members to the CDI membership fits well with CDI's growth strategy," CDI president and CEO Andrei Mikhalevsky said in a press release. "Increasing milk supplies will strengthen CDI's market position to the benefit of its member-owners, both old and new, through a continued positive return on investment."
California Dairies Inc.: www.californiadairies.com