Maine milk producers are dealing with the same declining sales issues that led to the bankruptcy filing this week by Dean Foods, the country’s top producer of milk.

A 40 percent decline in the consumption of fluid milk since the mid-70s by U.S. consumers has challenged dairies across the country, but Maine producers say other products have stabilized their operations.

John Bennett, the president of Portland-based Oakhurst Dairy, said declines in liquid milk sales at Maine’s best known milk processor have been offset through “cost-saving initiatives, our strong local brand recognition and key product innovations such as blueberry milk, egg nog and other seasonal programs.” He declined to disclose sales figures.

Dean Foods, based in Dallas, said dropping sales have led to losses in eight of the last 10 quarters. The company doesn’t have any processing plants in Maine, but does process Maine milk in its Massachusetts facility – something that has prompted concern among some Maine farmers.

Oakhurst was purchased by Dairy Farmers of America in early 2014 and analysts predict that Dean Foods – which is probably best known to local consumers as the owner of the Friendly’s restaurant chain – will be sold to the huge cooperative as it wends its way through bankruptcy proceedings.

CHANGING TASTES

Maine milk processors have seen a drop-off in sales similar to the national decline as consumers eschew milk in favor of other beverages and non-dairy alternatives, such as almond milk. Sales of dairy milk in the state have declined from an average of 2.5 million gallons a month in 2005 to 2.05 million gallons a month this year, a decrease of 18 percent, said Tim Drake, executive director of the Maine Milk Commission, part of the Maine Department of Agriculture, Conservation and Forestry.

Drake said a big part of the steady decline – “I see it month after month” – is attributable at least in part to the state’s aging population. Older people tend to drink less milk than younger ones, he said, and households without children buy less milk.

But overall, per capita dairy sales are up, said Sarah Littlefield, executive director of the Maine Dairy and Nutrition Council, boosted by higher sales of cheese and butter, which also reflects a national trend. She also said liquid milk sales are still strong, with studies indicating that 94 percent of households nationally have milk in the refrigerator.

She also said that sales are rising nationally in certain categories of milk, led by lactose-free varieties, which are up about 11.5 percent over the last year. Sales of glass-bottled milk and whole milk also are climbing, Littlefield said.

STABLE PRODUCTION, VALUE

Figures from the U.S. Department of Agriculture show that the value of milk production in Maine has increased in the last decade by about 11.6 percent, from $111.9 million in 2008 to $124.8 million last year. The volume of the milk produced has risen as well, from 603 million pounds in 2008 to 618 million last year, but that’s a smaller percentage of about 2.5 percent, USDA figures show.

The International Dairy Foods Association said the industry supports 5,626 jobs in the state and a $1 billion direct economic impact while generating nearly $150 million in state taxes. Maine had 216 dairy farms as of September.

Jenni Tilton-Flood, a dairy farmer in Clinton, said the Dean bankruptcy filing could have “immense implications” for Maine farms.

She said some of the milk produced in Maine goes to Dean Foods processing plants in Massachusetts. Much of the milk that is bottled there then comes back to Maine store shelves, she said.

“They own a lot of facility capacity,” she said of Dean Foods, expressing concern that an outlet for Maine milk could be impacted by the bankruptcy proceedings.

Dean Foods did not respond to an email requesting information Friday afternoon. At the time of its filing Tuesday, it said that it had secured financing to continue operations through its reorganization.

Tilton-Flood said the primary competition for liquid milk is bottled water, as it is for other beverage makers. That’s why big companies such as Pepsi and Coca-Cola have bought bottled water companies, she said.

Dairy farmers, on the other hand, are dependent on the processors who buy their milk to be innovative and come up with different end products for milk. Industry officials have said that the increasing popularity of butter and cheese are helping to offset the decline in sales for liquid milk, as are lactose-free varieties and flavored milks.

Many Maine dairy farmers are members of Dairy Farmers of America, the huge cooperative that ranks just behind Dean Foods as a producer of milk. Last year, DFA posted sales of $13.6 billion.

Some dairy farmers are concerned that combining two of the largest milk producers might not be the best thing for either the farmers or consumers. Littlefield, the director of the Maine Dairy and Nutrition Council, said she will leave it to federal regulators, who would have to approve a sale or merger, to make sure the combination isn’t anti-competitive if it comes to that.

Drake, the director of the Maine Milk Commission, said that might not be a big concern to Maine dairy farmers, since many are members of the DFA. The cooperative, created in 1996, has about 14,000 members nationwide and operates 47 plants processing milk and making cheese, butter and other dairy products.

It bought Oakhurst in 2014, but retained local management to run the plant.

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