St. Albans Farmers Approve Merger With Dairy Farmers Of America

Jul 29, 2019

Farmer owners of the St. Albans Cooperative Creamery voted Monday to merge their co-op into the much larger Dairy Farmers of America, based in Kansas City.

The vote was held at the American Legion in St. Albans.  For the merger to pass, two-thirds of all the members present had to say "yes." Co-op Chairman Harold Howrigan Jr. said 108 farmers showed up, and 99 voted in favor.

The co-op has 307 farmers eligibile to vote, officials said. Howrigan said he was pleased by the turnout.

"We are incredibly excited about this new chapter for dairy farmers in Vermont," said Howrigan, a sixth-generation dairy farmer from Fairfield. "We are very pleased with the outcome of today’s vote and are optimistic about the future our membership will have as DFA members."

"We are incredibly excited about this new chapter for dairy farmers in Vermont." — Harold Howrigan, Jr., St. Albans Cooperative Creamery Board Chair

The seven-member St. Albans board had already voted unanimously to have the St. Albans co-op, its trucking company and retail store become wholly-owned subsidiaries of the 14,000-member Dairy Farmers of America based in Kansas City, Kansas.

Farmers going into the meeting seemed supportive of the planned merger. Although some, like Harold Sunderland of Bridport, were apprehensive.

"I think we've got to vote in yes, 'cause we're kind of in a bind," Sunderland said. "Long range, I'm not so sure."

Bill Rowell operates a large dairy farm in Sheldon. He said members had little choice.

Bill Rowell.
Credit John Dillon / VPR File

"And really, we don't have any other place to market our milk," Rowell said. "So if we don't vote for this at this late point in the game —I think there's been enough opportunities to do something else leading up to this — but at this late time, I think we'd be remiss not to vote in favor of it."

"I think we've got to vote in yes, 'cause we're kind of in a bind. Long range, I'm not so sure." — Harold Sunderland, Bridport

The St. Albans board pitched the deal as a win-win for the Vermont co-op. Proponents of the merger cited the need for investment in the co-op’s plant and equipment. A DFA official has pledged that it will invest $30 million in the St. Albans processing plant, and another $5 million in the trucking company.

Howrigan said the amount of money needed to upgrade the plant was beyond the reach of the membership of the St. Albans co-op alone.

"Our farmer members have known that we've had to re-invest more in our plant," he said during a Monday afternoon conference call with reporters. "There is a limit going through these cycles of what we can ask our members to give. As we move in this direction with Dairy Farmers of America, they are willing to help us make these investments in the plant and infrastructure that we need."    

But critics pointed out that St. Albans' farmers voted on the deal without knowing fully how it would affect their bottom line. The exact value of their ownership stake will be determined by an audit following Monday's vote.

Howrigan said as of last October 31, when the books were last closed, farmers would have seen a 3 % "slippage" in their equity totals to account for previous years losses. The equity amount that will be calculated after the Monday vote will include those losses, in addition to transaction costs to cover the deal. 

The merger will officially close on Thursday, Aug. 1.

Update July 29, 2019, 4:55 p.m.: This post was updated to include vote totals and other information from Monday's media call following the vote.