ARLINGTON, Iowa — It's been two months since Associated Milk Producers Inc. announced the closing of its Arlington nonfat dry milk plant. The dairy cooperative, its farmer members, employees and the surrounding community are sorting out what comes next.
The decision to discontinue production was a combination of low returns on the type of product produced at the plant and the decline in farm numbers and Midwest milk production, said Sarah Schmidt, AMPI vice president of public affairs. Since 2008, Iowa has lost 45% of its dairy farms — from 2,020 in 2008 to 1,120 farms in 2019.
The Arlington plant produced nonfat dry milk, a common ingredient in baked goods. This type of dairy product is sold at a lower price point than cheese, for example, Schmidt said.
“The AMPI Board of Directors and management team worked diligently to map strategies for the cooperative, and options for keeping the plant viable were explored at length,” Schmidt said. “The decision was difficult, knowing the impact it would have on valued employees and their communities.”
Discontinuing production at the Arlington plant allows the co-op to focus resources on those areas of the business yielding the highest returns, Schmidt said. This includes maximizing the benefits of new cheesemaking technology at the co-op’s cheese plants in Sanborn, Iowa, Paynesville, Minnesota, and Blair and Jim Falls, Wisconsin.
Doug Carroll has served on the AMPI Board of Directors for five years. He and his family milk 120 cows near Ryan.
“The biggest reason we closed Arlington is that we've got more profitable plants we can put the milk into to create a better bottom line for the co-op,” Carroll said. “It makes more sense to put the milk into cheese than to powder. There's a better return.”
Tarriffs and trade embargoes have really hurt the powder market, Carroll said.
“The powder market was soft before that,” he said. “You can't just put powdered milk in the warehouse and hope that you can sell it someday.”
AMPI's decision to close Arlington and a Rochester, Minnesota, cheese plant was highly debated, but board members all agreed it was the best thing for AMPI to do, Carroll said.
Carroll said most of the feedback from farmers has been on hauling and where their milk is going to go.
“They're not really upset, but just want know what's going on,” Carroll said.
The plant closing has not impacted member services, such as milk haulers and the cooperative’s field representatives, Schmidt said. Milk from member farms previously processed at Arlington is being routed to other plants in the surrounding area.
Schmidt said AMPI is working to ease the transition for the 49 Arlington employees who lost their jobs, providing resources needed to find alternative employment. That includes encouraging employees to apply for positions at other AMPI manufacturing facilities.
Mallory Hanson, Fayette County Economic Development and Tourism director, said she is confident there are companies for the employees who are in need of a job.
“AMPI is working to assist those employees as much as possible, however, I believe we can find a company to bring into the building to help maintain our workforce in Fayette County,” said Hanson. “Debbie Durham (director of the Iowa Economic Development Authority and the Iowa Finance Authority) recently noted in a presentation that ‘there are 60,000 open jobs in Iowa and 42,000 unemployed people.’”
Fayette County Economic Development and Tourism is working with the real estate company, and there are already potential buyers interested in the Arlington AMPI facility, Hanson said.
The AMPI plant closing surprised Arlington Mayor Don Handel. He knew people who worked there.
“Some of the AMPI employees were from our town and we'll probably end up losing a couple families who move somewhere else to find employment,” said Handel. “It’s kind of a tragic thing to have happen for us.”
Handel said the East Penn battery plant in Oelwein has expanded and some AMPI employees have applied there. It would be nice to have another manufacturing plant come to the area and provide jobs, the mayor said.
Starmont Community School, located just across Highway 3 from the plant, has been sending its wastewater to the AMPI wastewater treatment lagoons since 1978.
“AMPI has been in close communication with the Starmont Community School District,” said Schmidt. “The co-op is honoring the current agreement to provide wastewater treatment services for the district through June 2020 and will be working with them during this time of transition.”
Dairy has faced a down cycle the last 4½ years, Carroll said.
“A lot of farmers were frustrated being at breakeven or pulling off equity,” Carroll said. “It's going to take quite a while of good milk prices to pay back the equity lost. We need some good milk prices and people drinking a lot of milk and eating dairy products.”
Dairy farmers currently have more positives going for them, Carroll said. Prices are up, trade disputes are being resolved “and the updated Dairy Margin Coverage Program is finally sized to where it could really help in challenging times.”
AMPI is headquartered in New Ulm, Minnesota, and owned by dairy farm families from Wisconsin, Minnesota, Iowa, Nebraska, South Dakota and North Dakota.