DFA enters new joint venture with New York's Dairylea

Dairy Farmers of America and Dairylea Cooperative Inc. of Syracuse, N.Y., Sept. 1 announced the formation of a milk marketing joint venture to begin operations Oct. 1.

The new entity, Dairy Marketing Services LLC, will market nearly 10 billion pounds of milk annually in the Northeast and is expected to save the milk marketing cooperatives and their members as much as $5 million in transportation costs per year.

The joint venture was announced after the Aug. 30 meeting of the DFA Northeast Area Council where the deal was approved, DFA's corporate board had already assented to the arrangement.

"This is a giant step of cooperation in the Northeast," said Lewis Gardner, a Galeton, Pa., dairy farmer and chairman of DFA's Northeast Area Council. "Both DFA and Dairylea have milk trucks traveling the same roads. We also serve many of the same customers. By working together, we can reduce our marketing costs significantly."

Dairylea Chief Executive Officer Rick Smith said DFA and Dairylea already have experience working together.

"Since March 1 of last year, we have operated a limited liability company with a joint investment in Dietrich's Milk Products of Pennsylvania," Smith said. "The Dietrich venture enabled both cooperatives to operate more economically while providing better milk-supply balancing services to customers. We are excited about this new business venture. This is going to enable us to use both cooperatives' resources more efficiently to provide better customer service to all our customers."

"Both of our cooperatives have overlapping membership in the same counties," said DFA Senior Vice President and Chief Operating Officer John Collins. "This joint venture will benefit both our farmer members and our customers by improving the operating efficiencies of both DFA and Dairylea."

Dairy Marketing Services will annually market close to 10 billion pounds of raw milk, provided by more than 6,000 dairy farmers located throughout New England, New York, Pennsylvania, Delaware, Maryland, West Virginia and New Jersey. The company will service more than 90 fluid milk and manufacturing customers in the area. Major customer of the new company include Suiza Foods, Kraft Foods, Great Lakes Cheese, Leprino Foods, H.P. Hood and Sorrento Cheese.

Dairy Marketing Services LLC is a 50/50 venture that related solely to the milk marketing operations of DFA and Dairylea. Membership activities, other member services and lines of business will remain separate. Day-to-day operations of the new company will be handled by marketing specialists from DFA and Dairylea, working out of offices in Syracuse, N.Y. Collins and Smith will serve as chief executive officers of the new venture. John Siglow, chief operating officer of DFA's Northeast Area will direct day-to-day operations as COO of the new company.

"We are excited about putting together this venture, which will allow for increased savings for our farmers on hauling and supply distribution," said Clyde Rutherford, president of Dairylea. "Together we will manage about 35 percent of the Northeast's milk supply, which will enable us to provide superior service to our customers, particularly those large dairy companies with multiple plant operations."