News | February 19, 2001

Land O'Lakes buying Kraft's Melrose, MN cheese plant

Land O'Lakes, Inc. and Kraft Foods, Inc. have announced they have reached agreement for the purchase of the Kraft cheese plant in Melrose, MN, as an ongoing operation. Separately, Land O'Lakes and Dairy Farmers of America, Inc. (DFA) also announced that they have reached agreement for a joint venture, Melrose Dairy Proteins LLC, which will own and operate the Melrose plant.

Located at 1000 East Kraft Drive, the plant has approximately 150 employees and produces bulk cheese, which is shipped to other plants for further processing and packaging. The plant purchases over 1 billion pounds of milk per year.

As part of the agreement, Land O'Lakes will offer employment to the Melrose facility's workforce, and Kraft will purchase a portion of the plant's output. The sale price was not disclosed. The sale is expected to be final in early March. Kraft's manufacturing facilities in Albany and New Ulm, Minn., are not part of the transaction.

Officials of Land O'Lakes and DFA said the decision to form the joint venture reflects a strong, shared commitment to the Upper Midwest dairy industry and a focus on market access for member milk.

``This is driven in part by our two organizations' long-standing commitment to Upper Midwest dairying,'' said Jack Gherty, Land O'Lakes President and Chief Executive Officer. ``Perhaps even more important, this joint venture illustrates our continued confidence in the ability of the Upper Midwest dairy industry to be competitive long-term. Our goal is to maintain and upgrade the region's dairy infrastructure, as well as to preserve market access for the region's dairy producers.''

DFA president and CEO Gary Hanman said the new partnership is a very positive match. ``As farmer-owned enterprises, we share specific cooperative values ... like a commitment to producer profitability and productivity ... which make our organizations very compatible partners,'' said Hanman. ``A key aspect of our cooperative commitment is preserving market access for member milk, and this joint venture directly addresses that issue.''

Officials at Kraft said they were pleased to find committed buyers for the plant. ``Over the past year, we have looked for the best option for this plant, recognizing the changing dairy industry dynamics,'' said Tom Hedge, vp of operations for Kraft's Central Area. ``We believe this is the best outcome for our business, for the long-term viability of this plant, for our employees, milk patrons, haulers and the community. Land O'Lakes is gaining the expertise of a highly skilled, outstanding work force. And, because it is being purchased as an ongoing operation, the plant will continue as an important contributor to the local economy, as well as provide a market for dairy patrons' milk. We are committed to making this a smooth transition to new ownership.''
Land O'Lakes has been a long-term supplier of raw milk to the Melrose facility. DFA has significant milk supply in the region.

Land O'Lakes and DFA, which will each hold 50% ownership in Melrose Dairy Proteins LLC, said current plant operations and service to existing customers and producers will continue, adding that plans are to further upgrade plant technology and tailor ongoing production to market needs.

Land O'Lakes ( http://www.landolakesinc.com ) is a national, farmer-owned food and agricultural cooperative, with sales approaching $6 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the U.S.; services its international customers with a variety of food and animal feed ingredients; and provides farmers and local cooperatives with an extensive line of agricultural supplies (feed, seed, plant food and crop protection products) and services.

DFA is the nation's largest dairy-farmer owned marketing cooperative. Last year, DFA marketed and processed more than 44 billion pounds of milk for its 24,000 dairy producer members in 45 states. DFA supplies milk to bottling and manufacturing plants that produce a complete line of dairy products and food components for consumers in the U.S. and around the world.

Kraft Foods, the nation's largest branded food company, is the North American food business of Philip Morris Companies Inc.

SOURCE: Land O'Lakes

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