Local dairy farmers will have an option of selling their milk to either Land O'Lakes or DFA. They have until May to make their decision.
Land O'Lakes and DFA have formed Melrose Dairy Proteins LLCC, which will own and operate the Melrose plant. The Melrose plant currently makes bulk cheese that is shipped to other plants for further processing.
Land O'Lakes will offer employment to the existing work force of 150 people at the plant. Kraft has agreed to purchase a portion of the plant's production. Until the transaction is final, Kraft will continue to operate the plant.
Current plant operations, service to existing customers and current milk supply agreements will continue, according to John Gherty, president of Land O'Lakes. Raw milk will be supplied to Melrose Dairy Proteins by former Kraft producers, Land O'Lakes members, and DFA members.
Information meetings are being scheduled around the area to answer questions farmers might have about the new partnership.
According to Jeff Reed, Kraft plant manager, Kraft believes the sale of the plant is the best long-term solution to provide continued employment for employees and a continuing market for farmer's milk.
Lydia Botham, Land O'Lakes spokesperson, said they are committed to preserving the milk market access for members. "We will be talking with patrons so they will understand the sale. Land O'Lakes is a long-term supplier of milk to the Melrose plant" she added.
Because milk sold to either company will end up at the same place, Math Hemmesch, who farms near Lake Henry, thinks farmers' options will be limited by the sale. "It looks like we are losing another market for our milk," he said. "There are still a lot of unknowns about the sale," he added.
Roger Hemmesch of Paynesville, felt Kraft couldn't compete with the larger cheese plants, which prompted the sale. He's waiting for more information on how the joint venture will affect his milk sales.
Phil Ahrens, who farms north of Paynesville, heard about the pending sale a year ago. "It's probably a good deal for all involved as we'll be dealing with a bigger company," he said. "There wasn't enough milk out there to meet the plant's needs," he added.
Kraft has had a plant in Melrose for 32 years, according to Cathy Pernu, a Kraft spokesperson. The sale to Land O'Lakes is expected to be completed in early March.
Kraft receives milk from 850 farmers in central Minnesota. They purchase about one billion pounds of milk per year.
Kraft has five plants in Minnesota. Other plants are located in Albany, New Ulm, Minneapolis, and Round Lake. The Melrose plant is the only plant affected by the transaction.
Officials of Lake O'Lakes and DFA said the decision to form the joint venture reflects a strong, shared commitment to the upper midwest dairy industry and a focus on market access for member milk.
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