"The plant is losing money," said Larry Purdom, who serves on the DFA Board of Directors. "There's not enough milk to run a full volume. Corn is the culprit. Dairy farmers can't pay the feed bills."
Randy McGinnis, the chief executive officer for the southeast region of DFA, was in Monett on Wednesday to make the announcement to employees. A public announcement was expected on Thursday.
Purdom said the Monett plant almost closed seven years ago. At that time, sufficient support was secured to continue operations.
With corn selling at around $7 bushel on the Chicago Mercantile Exchange, a cost that rises another $1 a bushel once the cost of transportation is factored in, Purdom said dairy producers cannot afford to continue.
"We lost 182 dairies in Missouri in 2012," Purdom said, "and a lot more in the first months of 2013. Well over half of the milk processed in Monett is brought in here from outside of the area. Corn got so high farmers have ploughed under their alfalfa to plant corn. "
Monica Massey, vice president of communications for DFA, said the closing was a business decision and did not reflect on the quality of the local workforce. DFA planned to offer employees the opportunity to transfer to other DFA facilities within 70 miles of Monett and to work with the Workforce Investment Board to hold a job fair for the employees.
Dr. Tony Rickard, University of Missouri dairy specialist, said the closing of the DFA plant will potentially have a significant impact on dairy farmers in the Monett area. Additional costs to haul milk to another location will have to be borne by the farmers.
DFA provides receiving and initial processing of milk at its facility. The company owns its equipment and leases its building from Schreiber Foods, which contracts to purchase cheese curd from DFA.
"The plant is not shutting," Massey told The Times. "We are ceasing operations. Schreiber will figure out what they need and their employees as well. We'll work out those details over the next six months.
"DFA is a farmer-owned organization," Massey continued. "We have an obligation to our members to bring a return on their investment. The Monett plant had financial losses for a few years. It was time. It was important to get information in front of our employees to let them know what we're doing."
"For us, it's really business as usual," said Andrew Tobisch, director of communications for Schreiber Foods at the corporate office in Green Bay, Wis. "DFA's closing will not impact jobs at Schreiber. We'll have to access a few things and determine how we're going to get some supplies," Tobisch continued.
No immediate plans were in place for Schreiber to absorb a significant number of DFA's workforce.
"We have some opportunities there," Tobisch said. "We do plan to invite DFA employees to apply for any jobs we have at any of our facilities. We're always looking for qualified employees."
The timetable for a transition with Schreiber Foods will depend on DFA, Tobisch added.
"There are many dairy food companies in a 70-mile radius of Monett," Massey said. "We'll let companies know we have a skilled labor force that's available. We'll be working with our employees to help them land new positions."
On the state level, Purdom said he has worked to secure assistance for dairy producers. Arkansas, Virginia, Vermont and other state governments have provided supports for their dairy farmers. Production in Wisconsin is on the increase. Purdom said he encouraged state political leaders to create parity for Missouri dairy producers competing with those in other states.
"While the government is twiddling his thumbs, they're making money for milk producers in Texas and New Mexico," Purdom said. "Any housewife would prefer to buy locally if she could."
In addition, Purdom said the Missouri Dairy Association has calculated dairy producers should receive $38 per hundredweight of milk as parity for their costs to produce milk. Currently the market pays in the $17 range.
Representatives from the Missouri Dairy Association, including Purdom, spoke in Chesterfield on Wednesday before a diverse group of representatives from the Missouri Senate Committee on Agriculture, Food Production, and Outdoor Resources, the House Committee on Emerging Agri-Business, the House Committee on Agriculture Policy and the House Committee on Agri-Business. The dairy representatives promoted proposals on drought assistance to reseed and fertilize pastures, a tax credit based on the amount of milk produced and sold, and a dairy economic development fund.
"Dairymen have been extremely efficient. That's how they have outrun costs," Purdom told The Times. "They can't do it any longer. We've just run out of time."