Dec 22: Separating opinions from facts....one gallon at a time.

It was former U.S. Senator Daniel Patrick Moynihan who coined the phrase, "You sir, are entitled to your own opinion, but not your own facts."

In an editorial printed yesterday in Matanuska Valley's the Frontiersman, they asked for the governor and the legislature to quickly grant the State Creamery Board's request for $200,000 to help Valley milk producers get by until March.

In their editorial, they wrote;

"Critics continue to lament last Friday’s unanimous decision by the state Creamery Board to request $200,000 from the state. The money would help bridge an expected three-month gap for local dairy farmers between the closure of state-owned Matanuska Maid Dairy and the opening of the new Southcentral Dairy Venture."

There are those who say local dairy farmers have had six months to prepare for a financial future without Mat Maid."

This represents the factual part of the editorial. Many industry watchers, including lawmakers have already been scratching their heads at the latest request for more state assistance.

The editorial continued.

"While this is partially true, it’s important to remember the board was replaced with new members charged with trying to find a way to save the dairy processing facility from closure. Early in the process, the outlook was promising as the new board uncovered inefficiencies and extravagant expenditures. It was several months before the board exposed the full extent of the dairy’s financial woes."

This is where the Frontiersman's editorial starts confusing their opinion with the actual facts of the matter surrounding the handling of Matanuska Maid since June.

While there was a new Creamery Board appointed on June 19 after Governor Palin didn't agree with the recommendations of the previous board and fired them, the new board accomplished little more than to take a bad situation and make it worse. 

The first action the new board took was to voluntarily raise the amount of money paid to local farmers for their milk. Industry watchers were stunned, as the 71 year old dairy was already hemorrhaging cash with no end in sight.

Then for the first two months, the board went on a witch hunt trying to prove the management of Mat Maid was incompetent. Plowing through files, expense reports, taking inventory of equipment. At one board meeting, they actually accused the previous management of making off with a piece of equipment that was eventually found in a Mat Maid storage trailer after one phone call.

Then the board ran up accounts payables and falsely claimed they were making a profit when in fact they were suffering record losses.  

In an August 19 editorial, the Frontiersman trumpeted the return of a profitable dairy. In an editorial, "Mat Maid looks good in black",
the new board chair had claimed the dairy made $62,000 in June due to their cost cutting and eliminating questionable expenses.

One week later, the board announced that in July they had the largest financial loss ever recorded in one month at Mat Maid, and oh by the way they were retracting their June profit figure.

However, the  Frontiersman's editorial board didn't write one word about this stunning collapse just eight days after they proclaimed the dairy profitable.

In fact, the only cost cutting the new Creamery Board actually did was eliminate all advertising and travel which was a small pittance. Although the board said they cut a million dollars, not once could any of the board members articulate where that million was cut from.

Matanuska Maids annual advertising budget was $300,000 in 2007 and the year was already half gone by the time the board took over. Travel expenses to industry conferences and meetings ran less than $20,000 per year for a $15 million a year business.

Judging from the combined $550,000 the new board lost in July, August and September, cost cutting obviously wasn't as beneficial as they had stated.

In many ways, Palin's handpicked Creamery Board actually increased operating expenses.

They voluntarily raised the price of milk paid to local milk farmers. They hired an interim CEO that was being paid more than the outgoing CEO who had decades of experience in the dairy industry. They improperly terminated two executives and now are facing expensive lawsuits. They have driven accounts payable to well over a million dollars with no cash reserves and no buyer for their assets.

Contrary to what the Frontiersman writes, there was never a time when the "outlook was promising" for Matanuska Maid. Only a time when the new board had the ability to point fingers at the old board until they were forced to announce they were losing more money than the previous board ever did.

The new board found no "inefficiencies and extravagant expenditures". This was misinformation produced by the new board as not once did we hear anything or any amount specifically related to what these   so called extravagant expenditures were. In fact, Creamery Board Chair Kristen Cole told outgoing CEO Joe Van Treek that he had passed the test, after Cole's people sifted through every invoice, inventory list and milk crate.

And finally, it didn't take the new board several months before they realized "the full extent of the dairies woes", it took two months and even then they refused to admit that everything the previous board had predicted was in fact true.

What's ironic about this whole exercise is  the main reasons in keeping the dairy open were to review the decision made by the previous board and to give the farmers time to come up with a transition plan so they didn't have to kill their cows or pour out milk on their fields.

Last June, when it became public that the recommendation had been made to close the dairy, there was already a plan underway to open a new bottling plant in Palmer. This new venture, fueled by a $675,000 federal grant was predicting a November open date. But due to the Creamery Boards inability to come up with a viable time table for shutdown, (dairy officials as late as August 25 were talking about staying open indefinitely), the uncertainty caused the new dairy idea to falter.

In November, a new group organized forming the Southcentral Dairy Co-Op and now says they won't be open until possibly March. Hence the request by the Creamery Board for the $200,000 in transition aide to local milk producers.

So seven months later, after incurring massive losses with still more to come, we find ourselves deeper in debt, no bidders for the dairy and local milk producers who are still trying to avoid killing their cows or pouring milk on their fields.

For the last twenty years, economists and agricultural experts have been writing Mat Maid's obituary. The eventual shut down shouldn't have surprised anyone, especially local milk producers.

We have stated from day one, that keeping the dairy open was asking for more trouble. That the experts who predicted continued rising costs of milk supplies and stronger competition were to be believed. That the previous Creamery Board and management of Matanuska Maid made the right decision in voting to shut down the dairy while they had the money to pay off their debts.

What really needs to happen is Governor Palin, the Creamery Board and the Frontiersman need to apologize to the hard working Alaskans who served on the previous Creamery Board and the former management of Matanuska Maid. 

They were unfairly fired by the governor. They were unfairly labeled as incompetent and accused of mismanagment by both the governor and her inexperienced handpicked Creamery Board. And they were falsely blamed as the new Creamery Board ran Mat Maid deeper into debt.

But more importantly, everything the previous Creamery Board and management at Mat Maid came true. 

As economist John Maynard Keynes once said, "When the facts change, so will my opinion, how about you sir?"

For extensive archived blogs on Matanuska Maid, use the search function on the left side of page and enter Mat Maid.

To read the entire editorial by the Frontiersman:

http://www.frontiersman.com/articles/2007/12/22/opinion/editorials/doc476b78834d798513600921.txt