State moves toward selling dairy

Matanuska Maid reports $300,000 loss

Posted: Wednesday, August 29, 2007

ANCHORAGE - The state agency overseeing Matanuska Maid has decided to sell the state dairy.

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The move comes after an emergency meeting Monday in response to a loss of $300,000 in July and rising milk prices from the Lower 48.

Cost-cutting measures that began in June will not cover the gap now that wholesale milk prices are up 43 percent. Creamery Board Chairwoman Kristan Cole said the loss came as a shock.

As recently as a week ago, the board believed Mat Maid would be in the black for a second month in a row. The loss is the worst suffered in one month since the state took over the dairy more than 20 years ago.

"It was a shock to all of us, honestly, on Saturday to find this out," Cole said.

With Mat Maid's retail prices nearing $7 per gallon of milk, Cole said they are working against a price point that people just won't pay.

She cited several reasons for the July losses, including skyrocketing milk prices, decreased sales, supply expenses and legal costs associated with an earlier plan to shut down the dairy.

"All the way along the line, I don't care what report you look at, it all says the same thing: this company needs to be privatized. And that that is in the best interest of (the Department of Agriculture) and the state," Cole said.

She said the company also needs to correct a June report that showed a profit of more than $60,000. Cole said the actual profit was only a couple of thousand dollars because of expenses that were mistakenly omitted.

The board will start working right away on setting up the process for bidding and Mat Maid has already received letters of interest from potential buyers, Cole said.

Kyle Beus, a Wasilla businessman, is interested in buying the dairy if his business proposal proves a fit. Beus already plans to begin producing cheese and ice cream in the Valley by the end of the year.

State officials have been trying to determine the dairy's future since mid-June when Gov. Sarah Palin reversed a decision by the previous creamery board to close the dairy.

In the last two years, Mat Maid has reported losses of more than $700,000.

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