One of the United States' oldest and largest milk producers has now filed for bankruptcy. Borden Dairy Co. has officially now become the second major US dairy company to file for bankruptcy in the last two months, a trend attributed to decreasing demand for milk throughout the country.
The country's largest milk producer, Dean Foods, filed for bankruptcy on November 12. The company attributed its decision to rapidly tumbling milk consumption and the continued increase in milk prices.
Borden Dairy also stated the same factors, which had led to its decision. Both factors, along with decreasing suppliers and lowered margins, have apparently crippled the country's milk industry.
According to its bankruptcy filing, Borden Dairy stated that it could no longer afford to pay its debts and pension obligation as there was not enough money coming into its business. The company currently has more than 3,300 employees, with close to a quarter of them to be covered by a collective bargaining agreement under its bankruptcy.
Borden Dairy mentioned in its filing that the broader industry trends and the drop in overall US milk consumption over the past few years have greatly affected its business. The company noted that more than 2,700 family dairy farms across the country have gone out of business over the last year alone. Since 1992, over 94,000 milk farms have halted operations.
The company's CEO, Tony Sarsam, mentioned in a statement that they have already exhausted all efforts and despite their numerous achievements over the past years, the company can no longer continue to operate under the present market conditions. Sarsam further elaborated that they had already talked to their lenders for possible strategic payback plans but they, unfortunately, failed to reach an amicable agreement.
Borden Dairy did not immediately elaborate in its bankruptcy filing whether it plans to stay in business for the long-term or simply liquidate. The company, however, did state that it would stay in business throughout the entire bankruptcy process. Sarsam did mention that he hopes that the process would allow the company to shed some of its debts.
In its previous earnings reports, Borden Dairy revealed that it had raked in over $1.2 billion in net sales in 2018. However, all of its sales were wiped out by other costs resulted in a net loss of $14.6 million. For 2019, the company reportedly even staggering losses standing at $42.4 million.
As previously mentioned, Borden Dairy is one of the US' oldest dairy companies, dating back to even before the US Civil War. The company is attributed to being the first to develop a commercial method of condensing milk, which it did in 1856.
