MONROE, Wis. – Maple Leaf Cheese Cooperative has weathered milk-market cycles for 110 years. Then 2020 happened. The cooperative – comprised of 25 dairy farmers – is now needing to find a new market for its milk after negotiations soured with Maple Leaf Cheesemakers, a long-time partner.

Not everything can be blamed on 2020 and the devastating impact of the COVID-19 pandemic. But it has exacerbated problems that have been building following years of depressed milk prices as well as increasing costs for dairy farmers and cheesemakers alike. The pandemic led to the closure of schools, restaurants and other food-service outlets that has diminished demand for dairy products.

The farmer cooperative has been carrying a heavy debt load. In the past 15 years it expanded and made improvements to the decades-old cheese plant in Twin Grove near Monroe, Wisconsin. The cooperative has been making mortgage payments on the plant, which it purchased in the 1990s, said Will Hughes, an independent consultant who specializes in project management and development. He has been advising the cooperative for more than a year. His career experience has included serving as the administrator of agricultural development at the Wisconsin Department of Agriculture, Trade and Consumer Protection.

The cooperative’s farmers are paid differently than most farmers, in a method unique to the Swiss-style cooperative. The monthly patron prices are derived as a residual after subtracting from revenues the primary cost of goods in cheesemaking and the cooperative’s overhead costs.

One of the cooperative’s concerns was that patron milk prices in recent years were decreasing relative to other competitors in the area, Hughes said.

“We discussed that,” he said. “We also talked about adjusting cost sharing.”

The farmer cooperative owns the land on which the 15,000-square-foot cheese plant is located. And it owns seven stainless steel whey and milk tanks as well as chillers and milk-separation equipment.

Maple Leaf Cheesemakers owns the cheese-making equipment; it will cease production at the plant in early December. It will continue to make much of its Monterey Jack, smoked Gouda and specialty-Cheddar products at other contract facilities.

The farmers and the cheesemakers had been working for the past year to reach an agreement but negotiations halted in April. The COVID-19 pandemic was adversely affecting food-service accounts so both parties agreed to a temporary contract. But the virus has resurged in early fall; they ended the relationship.

“We knew something like this could happen but we weren’t ready for it,” said Bob Bade, who milks 53 cows near Monroe and serves on the board of the Maple Leaf Cheese Cooperative. “We were going to have do something eventually just to pay the bills at the co-op and pay the farmers a fair price.”

Jeremy Mayer of Mayer Homestead was elected to the cooperative’s board in February 2020. He milks 50 cows near Monroe.

“I’m disappointed we couldn’t reach an agreement but it wasn’t for lack of trying,” he said. “At some point you need to step back and re-evaluate.”

He said he’s optimistic about the possibility of working with other cheesemakers.

“We have an opportunity to pick ourselves up," he said. “No industry stays the same and we may take a different approach. If you want to remain in small- to mid-sized markets, you need outlets moving forward. I believe we’re on the right path. A number of people have been reaching out.”

People understand the importance of cooperatives to local economies and to the dairy industry as a whole, he said.

Hughes said, “We don’t have a new deal yet but we do have options to sell milk in bulk to other buyers. We’ve received calls from companies asking what they can do to help.”

The goal is to create a business model that provides more money to farmers and offers a sustainable plan for cheesemakers.

Shirley Knox, president of the Maple Leaf Cheesemakers, said the decision to close the cheese plant was based on economics after the closure of specialty-cheese shops earlier this year and the toll of the pandemic on food-service distributors.

“No business has made it through (the pandemic) without being affected,” she said. “It’s really been difficult. We’ve never experienced anything like this.”

The options for the cheese company include moving its equipment to a new facility where it could continue to make cheese such as “English Hollow,” its prize-winning cheese. Or it could sell the equipment and have the cheese made at another facility.

The cooperative’s members hope to restart the cheesemaking facility by this spring. But Bade said it will be a big investment that will require the right type of agreement with a new cheesemaker.

“It’s going to be a balancing act because we need to move the milk, but we also need to get a fair price for it to keep our farmers around,” he said. “They can’t afford to take less than market (price).”

The Wisconsin State Journal contributed to this story.

Lynn Grooms writes about the diversity of agriculture, including the industry’s newest ideas, research and technologies as a staff reporter for Agri-View based in Wisconsin.