Organic MOOMilkCo formed in Maine

After many months of organization and planning, Maine’s Own Organic Milk Company (MOOMilkCo) is a reality. The 10 organic dairy farms – previously dropped by H.P. Hood – have joined with Maine Farm Bureau and the Maine Organic Farmers and Gardeners Association (MOFGA) to form a limited liability corporation. Support was provided by the Maine Department of Agriculture.

Production is expected to begin at the first of 2010. Schoppee Milk Transport will truck milk to Smiling Hill Dairy, Westbrook, where it will be processed and packaged in half-gallon paper cartons under the MOOMilkCo label, which will include use of Farm Bureau’s “Maine Produces” logo. The milk will be homogenized and pasteurized, not ultra-pasteurized, and sold in retail grocery stores in Maine and New Hampshire, available in whole, 2%, 1% and skim. Other products may be added later.

Oakhurst and Crown O’ Maine Organic Cooperative will distribute the product. Hannaford, Associated Growers and a number of natural food stores have agreed to stock it, and sales negotiations are in process with Shaw’s and Wal-Mart.

When fully operational, the farms will be paid an advance price of $24/cwt. a week after they ship the milk. Farms will receive an additional payment the month following shipment after all expenses have been paid. The short-term goal is to have the two payments total $30/cwt, with a long-term goal of $40/cwt. In all, 90% of company profits will go directly to the farms as payment for their milk. The remaining 10% will be retained for expansion, maintenance and balancing cash flow.

What will make this possible is the fact that the farms are part owners of the company – and thus owners of the milk from the time it is produced until the time the consumer buys the product. The farms will self-balance, and will be responsible for returns of unsold product through reductions in the company’s profits. The farms collectively own 45% of the voting units of the company and elect three of the seven board members. An additional 45% will be owned by investors now being sought to provide half-a-million-dollars in equity. Farm Bureau and MOFGA will each own 0.5%; 4% will be owned by the three-person team – all Farm Bureau members – who formulated and executed the development plan; and 5% is being withheld for future employee performance incentives.

The business model was common in earlier times, when individual farms bottled and sold their own milk. What makes this project different is that 10 farms are working together in all aspects of the company management.

MOOMilkCo is not a cooperative. In a cooperative, the members pool their production and attempt to maximize the profits of the cooperative, sometimes at the expense of the individual members. In MOOMilkCo’s case, the goal is to provide a stable and profitable market for the individual farms, with the company maintaining only a fraction of the profits. The goal is to use the company to make the farms profitable.

Currently, while final agreements and production renovations are being completed, the 10 farms are being picked up by Schoppee Milk Transport and trucked to Oakhurst Dairy in Portland, where the milk is being processed with Oakhurst’s conventional production. Oakhurst will pay MOOMilkCo the conventional federal-order-based price for the milk. Using a start-up grant from Stoneyfield Farms, MOOMilkCo will pay the farms the difference between the $24/cwt. contract floor and the conventional price.

Technically the company is incorporated as an L3C company — a legal name for a low-profit, limited liability corporation, but one which is eligible to receive grants and endowments in the same way as can a cooperative or non-profit. Because the Maine Legislature has not yet approved L3Cs, the company incorporated in Vermont to obtain L3C status. It then registered in Maine as Maine’s Own Organic Milk Company, L3C, LLC. The three-person development team who put the project together is Agricultural Consultant Bill Eldridge of Bar Harbor; Farm Bureau Aroostook County staffer Rommy Haines; and David Bright, a member of the Farm Bureau Marketing Committee.

The board of directors includes Eldridge, chair; and farmers Vaughn Chase of Mapleton, Aaron Bell of Edmunds, and Richard Lary of Clinton. Haines, Bright, and Russell Libby, executive director of MOFGA, are serving as interim board members until the investor pool is established. At that point, the investors may elect three board members. Once the company is up and running, and operations stabilized, a search for a permanent general manager to replace Bill will commence. Attorney Paul Dillon of Corinth and Accountant George Richardson of Auburn have been retained to provide legal and financial assistance. Both work with many farm clients.

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