Prairie Farms Dairy

Current Information

Prairie Farms receives milk from 743 producers, operates twenty four plants, and produces dairy products through thirteen joint venture plants. In 2008, the company reported that its producers produced 1,387,347,510 pounds of milk, averaging 1,873,000 pounds per farm. The sales from the 2007-2008 financial year were about 2.9 billion dollars, a large improvement from the $33,000 sold in the company’s opening year.

At its beginning, Prairie Farms distributed locally in Indiana, but currently distributes its products to fourteen states, most of which are located in the Midwest. These states are Michigan, Kansas, Nebraska, Oklahoma, Tennessee, Iowa, Illinois, Kentucky, Arkansas, North Carolina, Ohio, Missouri, Indiana, and Mississippi.

Economic Impact

Prairie Farms Dairy makes large contributions to the economy of the Midwest by employing local residents. In 1999, Prairie Farms stated that they employed twenty-one hundred people in eight Midwest states, and a total of forty-three hundred if they included those employed at joint venture plants.

Products

In 1938, Prairie Farms’ income came solely from the sale of butter. Today, Prairie Farms manufactures and sells dozens of different products, including milk, cheese, ice cream, juices, sour cream, dips, and many others. The company also provides for special dietary needs, manufacturing fat-free and low fat versions of almost every product, as well as lactose-free dairy products.

Prairie Farms also makes several novelty products. During the winter months, candy cane and eggnog-flavored milk is available. The Ice Cream Specialties Division manufactures several types of ice cream novelties under the North Star brand.

Ice cream makes up a significant portion of Prairie Farms’ sales. The company offers multiple variations, ranging from fat free to premium to sherbet, in an array of sixty five different flavors.

Brands

Prairie Farms produces a wide range of products, and sells them through multiple branded partners. These brands are:

• Southern Belle Dairy Company, LLC

• Luvel Dairy Products, Inc.

• Ice Cream Specialties, Inc.

• Turner Dairy Holdings, LLC

• Hiland Dairy Foods Company

• Roberts Dairy Company

• Hiland-Roberts Ice Cream Company

• Muller-Pinehurst Dairy, Inc.

• Madison Farms Butter Company

• Coleman Dairy

History

During the Great Depression, dairy cooperatives were scarce. Starting a cooperative required large amounts of money, and the only way to obtain it was to sell shares of stock. However, because the market was so fragile, going public was generally not beneficial, especially when the price of a share of stock was far greater than the price of the product sold by the company. In the 1930s, the average container of butter sold for approximately ten cents, while a share of stock in Prairie Farms would have cost nearly twenty-five dollars. When the Depression ended, cooperatives began to form because farmers sought solutions to common problems. Due to milk’s short shelf life, it needed to be sold quickly or converted to other products which did not spoil as quickly. However, the facilities needed to do this were expensive, and most farmers did not possess the resources needed to install them on their farms. Through the use of cooperatives, raw milk was purchased from the farmers and converted to butter and cheese, then distributed and sold to consumers. In 1938, the Producers Creamery of Carlinville, which would later be renamed Prairie Farms Dairy, was the ninth cooperative creamery to join the Illinois Producers Creameries.

Growth

The Producers Creamery of Carlinville of 1938 differed greatly from the current Prairie Farms. Over the past seventy years, the dairy cooperative has grown largely by merging with and buying other dairies. The first such merger occurred on January 1, 1954, when the company bought the Community Dairy of Alton, Illinois. This acquisition benefited the Producers Creamery of Carlinville greatly in many ways. The Community Dairy of Alton received four million pounds of milk per year from forty producers, and had annual sales of approximately $250,000. The Producers Creamery of Carlinville continued to use the Community Dairy name on all glass-bottled products produced by the facilities in Alton.

March 1, 1962 marked a major change for the Producers Creamery of Carlinville. After merging with Prairie Farms of Western Illinois, the Prairie Farms Dairy of Carbondale, Illinois, and the Producers Dairy of Danville, Prairie Farms Dairy Incorporated was formed. The new company distributed products throughout the middle of the country and was more financially secure than the three companies were individually.

In April 1969, Prairie Farms created the PFD Supply Company, a company designed to produce nondairy products for fast food restaurants. This decision was profitable for Prairie Farms, bringing in three million dollars annually by 1978. PFD Supply manufactured and distributed almost all of the food and paper products used by McDonald’s, Wendy’s, Burger King, Dairy Queen, and many others. Another notable acquisition consisted of the purchase of the Chamberlain Ice Cream Company and the Vix Ice Cream Company. On August 1, 1969, Prairie Farms created Ice Cream Specialties, Inc. in conjunction with the purchase of the two companies. Ice Cream Specialties mainly produced ice cream novelties, or small, individually packaged ice cream treats, which Prairie Farms thought would bring in sizeable revenue during the summer months. The purchase cost Prairie Farms about two million dollars, and the company predicted ice cream novelty sales would pay for it within ten years. However, Kroger opened an ice cream novelty plant soon after in Indianapolis, reducing sales by thirty percent.

By 1979, the company was the result of thirty six dairy purchases, nine mergers, and two joint ventures, and those listed previously are only a few of the many that occurred. The businesses purchased by the cooperative varied greatly, from distributors to ice cream producers. Prairie Farms acquired dairies with sales ranging from $250,000 a year to $7,000,000 a year, and the reason for the purchase ranged from the acquisition of a competitor’s customer base to gaining new facilities with modern technology. The total amount paid for the mergers and acquisitions up until 1982 was more than ten million dollars.

Recent Developments

In recent years, consumers have been largely concerned with the presence of rbST and rBGH, which are bovine growth hormones used to allow a cow to produce more milk. Although the Food and Drug Administration has repeatedly stated that dairy products from cows given these hormones are safe for human consumption, many people remain unconvinced. Beginning February 1, 2008, Prairie Farms decided to prohibit its producers from using rbST and rBGH due to increasing requests from consumers.

In early 2010, Wal-Mart, a major Prairie Farms customer, decreased the amount of product purchased from Prairie Farms. Previously, Wal-Mart had used Prairie Farms as the milk source for its house brand, Great Value. Currently, Wal-Mart buys the milk for the Great Value brand from a dairy in Texas. Although this shift decreased the volume of milk sold by Prairie Farms, CEO Ed Mullins says that Wal-Mart is still the company’s largest customer. In an article from the Illinois Times, Mullins stated that layoffs and plant closures are a possible result of the loss in sales, but that the company is trying to make up for the loss by increasing sales to other companies.