Dairy could run cost-effectively, academy was told Farm's doubtful future blamed for inaction

November 22, 1993|By Tom Bowman | Tom Bowman,Staff Writer

U.S. Naval Academy officials were told by agricultural experts more than 1 1/2 years ago how to make their money-losing dairy farm more efficient and less costly.

But Rear Adm. Thomas C. Lynch, the superintendent, did not heed key recommendations in the academy-requested report, saying it wouldn't be prudent to spend money upgrading a dairy farm whose future is in doubt.

Still, academy officials continue to study the economic viability of the 862-acre Gambrills farm they acknowledge has become "less cost-efficient," while they consider closing the dairy and using the land for other purposes, possibly a golf course. They say they have no timetable for a final recommendation.

Meanwhile, those familiar with the 82-year-old farm say it could be operated with as few as half the 16 employees whose salaries and benefits account for one-third of its $1.2 million annual budget.

The March 1992 report written by Dr. J. Lee Majeskie, an associate professor of animal sciences at the University of Maryland and a nationally known dairy specialist, proposed several changes that would "improve efficiency and help reduce the cost of milk to the midshipmen."

Dr. Majeskie's main recommendation was to replace the

30-year-old milking parlor with a new $210,000 one that would decrease labor costs and lower the academy's milk prices by at least 25 cents a gallon, making it competitive with commercial dairies.

The academy dairy produces milk for $2.30 a gallon compared with private dairy prices of $1.75 to $1.99.

But Admiral Lynch told the Maryland professor in a letter last March that the academy is "reviewing a number of options concerning the continued viability of the farm."

"Until we know exactly what our course of action will be, it would not be prudent at this time to invest in a new milking facility," he wrote, then requested Dr. Majeskie's help on a "3- to 5-year plan for the farm so we can fairly evaluate all of our options."

Academy officials never contacted him for that long-term study, Dr. Majeskie said. "I'm still willing to do this," he said.

Dr. Majeskie's report was requested by a dairy study committee that was set up by former academy superintendent Rear Adm. Virgil Hill Jr. in 1991 and headed by retired Vice Admiral C. S. Minter, Jr.

The Minter committee recommended keeping the farm open, although several studies beginning in 1966 -- by the federal General Accounting Office, the Navy and the academy's Board of Visitors -- all said it was losing money and should be closed.

"The bottom line is I think that farm could be made efficient," Dr. Majeskie said in an interview last week, adding that the farm could even become profitable.

In a statement two weeks ago, following questions by The Sun, the academy said, "We accept that the dairy is becoming less cost-efficient than it has [been] in the past." A few weeks earlier, it had termed the farm "cost-effective."

The academy now says it needs more study and analysis on two points: "how cost-effective is [the dairy] operation, and what would be the optimal way to use the dairy farm property."

Lt. Cmdr. Paul Weishaupt, academy spokesman, said the dairy farm did heed some of Dr. Majeskie's smaller recommendations -- upgrading feeding systems for about $20,000 to $30,000 -- but he reiterated that a new milking facility would be too costly, considering the uncertain future of the dairy.

Commander Weishaupt said he would look into why Dr. Majeskie was not contacted about the long-term study.

Internal academy surveys obtained by The Sun show that the academy could save more than $340,000 a year by using a private dairy. Two years ago, local dairies offered to provide milk for between $1.66 and $1.98 a gallon, compared with the academy dairy charge of $2.30 per gallon for its 2 percent fat milk.

Now, local dairies offer prices between $1.75 and $1.99 a gallon, while the academy dairy's milk still is listed at $2.30 a gallon.

The financial summary for the dairy farm estimates there will be ++ an operating loss of $21,000 for 1993.

Dr. Majeskie noted that milk prices constantly fluctuate. By installing the new milking system the academy could increase milk production and decrease labor costs, leading to a competitive and stable price of around $2 a gallon, he said.

He estimated that as many as four employees could be cut for a saving of at least $100,000 a year.

The number of employees at the farm surprises other dairy farmers. "They just laugh when they hear how many employees they have," said a farmer who requested anonymity.

Congress ordered the creation of a Naval Academy dairy as a source of safe, clean milk for midshipmen in 1911, after a local typhoid outbreak.

It can only be closed with congressional authorization.

In his study, Dr. Majeskie said closing the dairy would be %J "short-sighted and foolish." An efficiently run dairy can provide a competitive price at a time when the number of dairy farms is decreasing throughout the country, he wrote.

He also noted that Maryland is a "milk-deficient area," producing only about 50 percent of the milk needed for consumers.

If dairy farms continue to close, there will be greater pressure on the milk supply, he said.

"The Naval Academy dairy can be an important buffer in helping keep the price at a stable level," he wrote.

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