Last city dairy says cheap milk from Pa., Va. threatens future Doomsday view comes as Md. weighs supports similar to neighbors

December 05, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

Baltimore's only milk processor says its long-term survival is threatened by price supports that allow dairies in Pennsylvania and Virginia "to dump" their milk in Maryland, hurting the state's struggling dairy industry.

At risk are the 500 jobs at Cloverland Green Spring Dairy, said Ralph C. Kemp, the company's president. He said Cloverland wouldn't close this year and not likely next year. But he couldn't say how long the dairy would continue operating.

He blamed his company's plight on Maryland being the only state in the country located between two states with milk price supports.

That, he said, gives his competitors in Pennsylvania and Virginia an unfair business advantage. The price supports guarantee profits that allow to them to sell their excess milk in Maryland's free market, undercutting local dairies.

"It is like a slow cancer that keeps eating away at the company," Kemp said of the regulatory programs in Pennsylvania and Virginia that provide the out-of-state dairies with a competitive advantage by setting minimum milk prices for wholesalers and retailers.

"We face a very serious threat" of closing," said Kemp. "I think it is extremely serious.

"I remember when I got out of the Marine Corps in 1952, there were 14 other dairies in Baltimore. They are all gone. Sealtest, Koontz -- I could run down the whole list. We could be next."

Cloverland Green Spring was formed last year through the consolidation of two of Baltimore's oldest dairies: Cloverland Farm Dairy and Green Spring Dairy.

Cloverland was founded in 1929. Green Spring opened eight years later.

Despite the gloomy outlook, Kemp said, the company is spending $5 million to enlarge the refrigeration capacity of the former Green Spring plant on Loch Raven Road, where the operations of the two dairies will be consolidated in March.

At that time, Cloverland's plant on Monroe Street is scheduled to close.

He said the privately owned company is operating at "minimal profitability" and the investment is needed to boost its efficiency. Kemp named a half-dozen chain stores in Maryland, including Acme and Super Fresh, that he said were once served by local milk processors but now get their milk from either Pennsylvania or Virginia.

Cloverland's plight has been called to the attention of the General Assembly by a legislative task force that has been examining the reasons for the decline of Maryland's dairy industry.

"I think there is a real threat of them [Cloverland] going out of business if this situation continues," said Robert E. Vaughn, the retired general manager of the Maryland Virginia Milk Producers Cooperative and a member of the dairy task force.

Another member of the task force, Del. J. Anita Stup, a Frederick County Republican, said the threat of a Cloverland closing, "was serious enough to make us concerned." She said the state needs to take action if it wants to save its milk industry, which had dozens of dairies a decade ago but only five today.

In its recommendations, which were presented to lawmakers last week, the task force suggested a controversial price-support plan for Maryland similar to those in Virginia and Pennsylvania.

Such a move would very likely result in Maryland consumers paying more for dairy products. But its backers hope price supports will reverse the decline in the state's dairies.

"I don't want to cry wolf, and I don't like government running business any more than anybody else, but something needs to be done," said Cloverland's Kemp said. "All I want is a level playing field so I can be competitive."

The task force, headed by Maryland Agriculture Secretary Lewis R. Riley, concluded that Pennsylvania and Virginia milk processors can sell milk in Maryland below the minimum prices enforced by regulatory authorities in their states.

In its report, the task force supported Kemp's charge that the out-of-state processors can use the guaranteed profits from sales in their regulated market to undercut prices in Maryland.

"Virginia dairies can take their profits from the milk they sell in Virginia and then sell their excess milk in Maryland. They dump it here," Kemp said. "For me to stay in business, I've got to match that price or be competitive. But I can't be competitive when the bulk of their business in Virginia is at a higher price. It's the same in Pennsylvania."

Maryland dairies are prohibited from selling milk in the two states below the regulated price.

"It is a very complicated situation," said Kemp. "I would either like things changed here or have the systems thrown out in Virginia and Pennsylvania. Then I could fight them.

"I'm a fighter. I want to be competitive. I want to be one of the best and biggest dairies on the East Coast, but I can't fight the unfair competition that Pennsylvania and Virginia provides."

Pub Date: 12/05/96

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