PALMER - Alaska's state-owned dairy dodged closure when Gov. Sarah Palin's new Board of Agriculture and Conservation voted to keep it open.
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The Agriculture Board on Tuesday dismissed members of the state Creamery Board, installed itself as replacements and rescinded the closure of the Matanuska Maid dairy scheduled for July 7.
Palin dismissed the former Agriculture Board over the weekend. The board oversees the Creamery Board, which refused to accept Palin's offer for financial assistance to extend the life of the dairy.
Palin lacked authority to directly replace the Creamery Board.
Point Mackenzie dairyman Wayne Brost was the lone dissenter in the 6-1 dairy vote but said afterward he may have misunderstood what was being proposed.
The decision means the dairy will continue offering products with help from a $600,000 bailout Palin previously offered.
New Agriculture Board Chairwoman Kristan Cole, also the new chairwoman of the Creamery Board, said Mat Maid might need to close but that the board needed to try keep it open to support the dairy industry while other options are explored.
"I don't think any of us have the solution for the dairy today," she said. "But if we don't take the time to look at it, and close the creamery, we'll never know."
The state's struggling dairy industry is now down to just six farms.
Keeping the dairy open is about giving Alaskans a shot at a continuing, local supply of milk, said board member Don McLean, a dentist and farmer. Once the farms are gone, there's little chance of restarting them, he said.
"I think the people of this state understand the implications of not doing that," he said.
Cole said the board hopes to keep the dairy open another three months and to work with a task force to come up with a long-term plan for the dairy industry. Palin has not named anyone to that task force.
The board has also asked for financial information from the dairy, including reports for the past two and a half years, any business plans and a list of top customers.
"At this point, I think we need to start over, start fresh," Cole said.
Mat Maid officials said $600,000 in aid may not last long. The company lost an average of $170,000 a month this year and losses could escalate if milk and fuel prices continue to rise, said Bob Sramek, a company accountant.
The company also has lost customers because of uncertainty surrounding the plant's future, said chief executive Joe Van Treeck.
"Will the $600,000 buy us time? Unfortunately, the time period is getting shorter and shorter," Sramek said.
Among options discussed was retooling the aging Mat Maid plant in Anchorage for greater efficiency and using only local milk rather than the current mix of local and mostly Outside milk.
Van Treeck, however, said modernizing the plant would cost $30 million to $40 million, while the supply of local milk is so small it would keep the plant's milk processor running only four hours a week.
Just keeping up current sales could be a challenge, he said.
The state took over the 71-year-old dairy in the mid-1980s after the company went bankrupt.
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