This story was updated on Tuesday, April 4, 2017 at 11 a.m. CST
Imagine walking to the mailbox on a Monday only to find a note from your processor that in one month they will no longer be picking up your milk. That’s what happened to several Grassland producers in Southern Wisconsin this week.
Grassland handles the majority of cream sold in Wisconsin. The generic, unsigned letter producers received cited issues selling a milk product (Ultra Filtered Milk) to Canada as the reason for their decision to cut ties with some of their producer suppliers. According to Goedhart Westers, vice president of business development for Grassland, the company was given two days notice that their Canadian buyer would no longer be purchasing the product which is an equivalent of 1 million pound of milk per day. For the approximately 75 producers reportedly being dropped, distance from the milk plant appears to be a factor in determining to kill their contracts. While he won’t confirm how many producers lost their contracts yesterday, Westers says one is too many and the company chose producers in areas they thought would have the best luck in finding another home for their milk, not simply based on distance from a plant.
“This is a terrible situation for everyone involved,” he says. “We don’t want people to think this a decision that came from a desk, because we really do care.”
With only 30 days to find a new home for their milk, those who lost their contracts are looking to strike deals with other processors in the area which Mike North, of Commodity Risk Management, says could be a challenge.
“In a normal market where milk is not coming out of our ears, the search [for a new processor] includes many factors including distance from the plant, how milk is paid for and recent history of patronage dividends if you’re looking at a coop,” he says. Unfortunately we are not in a normal market.
Oversupply has plagued much of the Upper Midwest and spring flush isn’t here yet.
“It will be very difficult to find anyone in the market to buy milk,” he says.