March 14, 2018

Land O’Lakes Offers Members Optional Equity Buyout

 |  By: Anna-Lisa Laca

The dairy industry faced a new wave of uncertainty earlier this week when Land O’Lakes cooperative announced a voluntary equity buyout for producer members in the East region and select milk sheds in the Upper Midwest.

“This decision was made because ongoing market volatility has impacted Land O’Lakes businesses and created economic uncertainty for many of our members,” says Brooke Dillon communications manager for Land O’Lakes. “This was a mutually beneficial, completely optional solution that could support Land O’Lakes businesses and members who choose to participate.”

While most Land O'Lakes producers welcomed the program, some producers don’t see the deal as mutually beneficial. Debbi Myers, a Pennsylvania farmer and Land O’Lakes member who received the letter, says producers who are 70 years old and want to sell their remaining equity will have the first bid.

Dillon says the buyout will help Land O’Lakes by “limiting our need to market excess milk to unprofitable outlets, while also supporting members by providing a one-time lump sum payment of their equity.”

In the East region, 750,000 pounds is the maximum milk volume reduction Land O'Lakes can accommodate, Dillon says.

To qualify for the buyout members don’t have to stop dairying altogether, they only need to exit their Milk Marketing and Membership agreement with Land O’Lakes, Inc.

“You also lose base and it cannot be sold. It disappears. Period,” Myers explains. “You are free to keep dairy farming but where would one go? It is not a very appealing offer. No cow buy out. That is your problem. The worry is getting to be frustrating. Seems every corner is just another roadblock. We will see what the future holds.”

Still, some producers who were looking for an exit path have already started to take advantage of the program.