The retail landscape for milk producers is changing, and big producers are struggling to keep up.
Yesterday, Borden Dairy became the second major U.S. milk supplier to announce a bankruptcy reorganization. For Borden, the move is “designed to reduce its current debt load, maximize value and position the Company for long-term success,” the company said in a statement.
The nation’s largest milk producer, Dean Foods, filed for bankruptcy protection in November 2019.
“[T]he Company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry,” Borden CEO Tony Sarsam said in the release.
The cost of raw milk has gone up 27 percent in the past year and is expected to rise more despite retail prices dropping, according to Bloomberg.
“These challenges have contributed to making our current level of debt unsustainable,” Sarsam said.
Consumers are also switching to plant-based alternatives such as soy, nut, rice and oat milks.
In March, the Dairy Farmers of America reported that net milk sales dropped by $1.1 billion since 2017, a decrease of 7.5 percent.
“While milk remains a household item in the United States, people are simply drinking less of it,” Borden CFO Jason Monaco told Bloomberg. “In parallel, since the turn of the century, the number of U.S. dairy farms has rapidly declined.”
Bordon was founded in 1857 and its cow mascot, Elsie, is widely recognized. The company employs 3,300 people.
Stressing that it is “business as usual” at Borden, Sarsam noted that the Company had proactively filed expected motions as part of the court-supervised process, which allow it to pursue day-to-day operations.