Eight months after being acquired by a national dairy giant, Nature’s Best Dairy of Cranston has put a lid on the company’s 60-year-old milk processing operation, the largest in Rhode Island. The company shut down its processing and packaging division last week – eliminating 35 jobs – and will instead have its milk processed at out-of-state dairies owned by its parent company Suiza Foods Corp. of Dallas.
Consolidation has dominated the dairy market and has led to the rapid decline of dairy farms nationally, with Rhode Island being no exception. The state has lost two-thirds of its dairy farmers in the last 15 years and today only 5 percent of milk consumed by Rhode Islanders comes from the state’s dairies.
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“This business, like many others, has consolidated tremendously. This was a very difficult decision for us to make, but one that had to be made to stay competitive in this highly competitive marketplace,” said Ray B. Whitehead, chief financial officer at Garelick Farms of Franklin, Mass., one of the companies owned by Suiza.
Whitehead also announced that the company has started phasing out the Nature’s Best name and the plant and its products will soon be known as Garelick of Rhode Island.
Before being sold in December, Nature’s Best had been owned and operated by the Cicchitelli family since 1939. The company sold dairy foods and beverages wholesale to convenience stores, delis and restaurants.
The purchase by Suiza was just one of many dairies bought out by the company, including the acquisition of the milk-producing operations of Cumberland Farms of Canton, Mass. last year. Suiza has more than 50 milk manufacturing plants – a majority of which they have bought since 1996 – and reported earnings last year of $3.3 billion.
Whitehead said the company gave severance packages to employees laid off and will offer preferential job opportunities to them at other locations. He added that the Cranston location will still support 120 jobs for the company’s warehousing and distribution operations.
Whitehead added that the local dairies that have supplied milk to Nature’s Best will not be affected by the decision. As strictly a processor of milk, Nature’s Best does not have cows, but instead gets the raw milk from dairies, including at least seven in Rhode Island.
“Those dairies will see no difference whatsoever. They will have the same drivers in the same trucks picking up their milk, which they will instead bring to the Garelick facilities,” he said.
The 10 million gallons of milk that Nature’s Best produced annually was the most in the state. Only two Rhode Island dairies that process milk for distribution beyond home delivery remain: Arruda Dairy Farm in Tiverton and Wright’s Dairy in North Smithfield. There are still three dairies in the state that serve the small home delivery market.
There are now 27 dairies in Rhode Island that only produce raw milk. Seven of these dairies provided milk to Nature’s Best – now a Garelick Farms plant – while the remaining 20 dairies send their milk through Agri-Mark, a farmers’ cooperative that provides raw milk to processors throughout New England.
“Most milk today is coming from Massachusetts and Connecticut,” said Tony Pitassi of the state’s dairy inspection office within the Health Department. “About 15 years ago we had about 100 farms and a dozen plants. Now the numbers are 27 and two.”
Pitassi said many of the family farms disappeared because the next generation of farmers were no longer interested in the lifestyle or did not want to take on the financial burden.
“Many of the farmers’ kids don’t want to follow suit. We’re talking about a life of milking twice a day, seven days a week. You do this with the prospect of struggling to compete with the large dairies and processors out there,” Pitassi said.
Companies like Suiza, which is publicly traded, have been actively consolidating to become more efficient, providing, in the long-run, profits for stockholders and adding pressure on its competition.
Edward Wright and his 150-cow farm in North Smithfield is one of their competitors in Rhode Island, although Wright’s Dairy’s production is merely a drop in the bucket compared with Suiza’s.
“What has happened? The big guy is eating the little guys,” said Wright, whose family farm is three generations deep and two years shy of a century old. “It’s difficult for us to get profitable when they are competing on a whole different playing field.”
Wright rattled off the names of six dairies that existed in Woonsocket alone that have since gone out of business. He said while there was more competition 30 years ago, at least it was fair.
He said the turning point for many farmers was the advent of the gallon jug at the local convenience store.
“It was in the 1960s when Cumberland Farms started selling milk in gallons. They eventually put my father’s home delivery route out of business, because a Cumberland Farms jug of milk was cheaper,” he said,
Today, Wright’s sells its dairy products exclusively at its own milk store at the farm and has created a niche in his part of the state.
Lee Gardner, executive director of Rhode Island Farm Bureau Federation, said he doesn’t expect the pressures facing Wright and his colleagues will get any easier. He said factors all farmers have to deal with these days include cost of buying property for cows to pasture in as well as increased property taxes and the cost of equipment.
“If you paid the true value of milk in the store today you would be paying six or seven dollars a gallon,” he said. “Someone has to take the loss: the dairy farmer, the processor, the trucker. All farm products are in serious trouble and dairy is one of them.”
Wright believes for the most part consumers don’t know where their milk is coming from or the plight of the local dairy.
“People are going to have to support us if they want a chance to put an alternative product on their table,” he said. If not, Wright added, the future doesn’t look too bright for farms like his.
“If it came down to (not being profitable) I think we would put the business to bed before we sold out to the big guys,” he said. “It’s too bad.”
