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Monday deadline looms for Smith Brothers - Public has until then to submit comments about rule change

June 12, 2005
by Bruce Rommel
King County Journal Reporter

KENT -- The president of Smith Brothers Dairy doesn't like to think about how the longtime family business might have to change if the U.S. Department of Agriculture adopts a proposed regulation that would force them to sell the raw milk their dairy cows produce to a regional pool.

Smith Brothers, which still delivers milk and dairy products to the homes of 40,000 customers throughout South County and the Eastside, as well as from Olympia to Arlington , now processes its own milk at its own plant in Kent .

Alexis Smith Koester, whose grandfather founded the dairy, said if the rule is adopted and they must sell milk to the pool, buying it back could cost $150,000 per month -- so much it could force them out of business.

``Right now, we're just hoping that this isn't going to happen and we can continue to operate our business and serve our customers,'' Koester said.

Monday is the final day for the public to comment on the proposed federal milk marketing rule change.

Months of review

A spokeswoman for the USDA said the agency already has received close to 20,000 comments from across the nation. It probably will take several months to review those and decide whether to formally adopt the new marketing rule, the spokeswoman said.

Smith Brothers and Edaleen Dairy in Whatcom County are the only dairies in the state that would be affected by the new rule. Nearly all dairy farms in the Pacific Northwest sell their raw milk to regional pools or cooperatives which, in turn, sell it to processors who produce consumer products.

The proposed rule Koester and owners of Edaleen are fighting would require dairy farms that produce more than 3 million pounds of raw milk per month (or roughly 350,000 gallons) sell the milk to a regional cooperative.

`No good options'

Smith Brothers' herd of 3,000 dairy cows in Eastern Washington produces about 6 million pounds of raw milk per month, which is processed at the company's plant in Kent .

If the rule is adopted, Smith Brothers would be forced to look at several options. One would be literally cutting production in half, selling half the herd and laying off some of the 110 employees at the Kent plant.

Another option is to close the processing plant and sell milk produced by the herd to the regional pool. Or, conversely, sell the herd, keep the plant in Kent and buy raw milk from the regional pool to process.

``None of those options are good options,'' Koester said.

Her grandfather started the business in West Seattle in 1920 and moved to Kent in 1925. Smith Brothers, at the intersection of South 277th Street and the West Valley Highway , now has about 60 independent drivers delivering about half of the company's products to homes of customers from Olympia north to Snohomish County . The other half goes to school districts, some convenience stores and wholesale distributors.

The federal milk marketing rules were first imposed in 1937 to protect small dairies and family farms. The new rule opposed by Smith Brothers and Edaleen Dairy is supported by state and national dairy farmers associations and others.

Unfair advantage cited

Proponents say larger dairies with their own processing plants have an unfair market advantage in producing their own milk. That allows them to sell products to wholesale distributors at lower prices, which can undercut prices paid to the regional pools.

``They have the edge because they don't have the same costs when they don't buy milk from the pool,'' said Bill Anderson, vice-president of legal and public affairs for WestFarm Foods.

WestFarm is one of the region's largest pools, buying raw milk from more than 600 dairies around the Pacific Northwest . Its processing plants produce dairy products sold under the Darigold label and other brand names.

Anderson said the average family dairy business or small farm has about 300 cows. He said operations such as Smith Brothers, with its own plant and thousands of cows, is large enough that changes in the federal marketing rules are needed to protect smaller farms in the area.

Koester doesn't see Smith Brothers having any edge over small dairy farms. They produce raw milk that is stored in tanks, she said, then picked up by a truck owned by the regional pool buying their product and they know they will be paid for whatever they produce.

Smith Brothers has the added costs of operating and maintaining its own trucks, plus advertising and distribution and other costs.

And with Smith Brothers' consumer products being delivered to the doorsteps of customers, Koester added, ``We're not in the grocery stores competing with these other farmers.''