Another US dairy firm, Borden, files for bankruptcy

One of America's oldest and largest dairy companies, Borden Dairy, has filed for bankruptcy, just two months after the nation's largest milk producer, Dean Foods, went bust.

The Dallas, Texas-based Borden filed for Chapter 11 bankruptcy on Saturday, saying that it can't afford its debt and pension obligations. It has 3,300 employees, operates 12 milk processing plants and distributes nearly 500 million gallons of milk annually to businesses.

Borden said that it had fallen victim to changing consumer tastes, as milk consumption in the US has dropped by 6 percent since 2015, and the market for milk alternatives – such as plant-based milks made from soy and oat instead – was expected to be worth $18 billion in 2019, according to Euromonitor.

The 94-year-old Dean Foods filed for bankruptcy in November, saying it is saddled with debt and unable to fund all of its workers' pensions. The company blamed its struggles on the "accelerated decline in the conventional white milk category".

Borden CEO Tony Sarsam said in a statement: "Despite our numerous achievements during the past 18 months, the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry. These challenges have contributed to making our current level of debt unsustainable." 

Borden said it will stay in business during the bankruptcy process and will offload debt. The filing offered no other details.

Last year, the dairy firm reported a net loss of $42.4 million, according to its bankruptcy filing. The company had net sales of $1.2 billion in 2018, but a net loss of $14.6 million.

The filing highlighted that 2,700 dairy farms had gone out of business in 2019, and 94,000 had stopped producing milk since 1992. That has led to the wholesale cost of milk rising with fewer suppliers, and milk prices falling due to lower consumption, which impacted Borden negatively.

Alan Bjerga, senior vice-president of communications for the National Milk Producers Federation, said that despite challenges, including competition from plant-based milk, the industry is still thriving.

He told China Daily: "A shakeout from a company or difficulty in different farms does not mean that the industry itself is on a decline. … Milk is still in 90 percent of American refrigerators.

"Dairy farmers are just coming out of a period of low prices that's based in 2015; however, prices in 2019 were at their highest since 2014. So, it seems like some of the cyclical price issues that farmers have been facing are working themselves out."

Borden, a 163-year-old company, was founded by Gail Borden Jr in 1857, after he developed the first successful commercial method of condensing milk.

In 1861, he and his partner opened a plant in upstate New York. They officially named the company the Borden Dairy Co, in 1919. The familiar "Elsie the Cow" logo has been used by the company since 1936.

Along with milk, the company bought 23 firms for $442.6 million in 1987 alone. But by the early 1990s, it was forced to cut back. In 1995, it was purchased by private-equity firm Kohlberg Kravis Roberts & Co for $2 billion and went private, selling several of its businesses.

Adam Landau, senior vice-president at Global Innovation Partnerships for Dairy Management Inc, a trade association funded by 37,000 dairy farmers in the US, acknowledged that the dairy industry is changing but is still popular. He told China Daily: "When we think about the dairy category, dairy as a whole is still growing every year, even beyond fluid milk."