Idaho

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Idaho Creamery Closes Its Doors After Striking Wal-Mart Deal

Sandra Mu / Getty Images News

Idaho is the nation's third-largest cheese producer, according to the state Department of Agriculture.

Days after the Idaho State Department of Agriculture touted that Wal-Mart has begun carrying cheeses from Nelson-Ricks Creamery Company’s Rexburg plant, the company announced it will end production this month.

“What’s happened to the company has been devastating,” president Reagan Wood said Monday.  “The community and the employees have been impacted, and we did everything we could to not have that happen.”

More than 15 people will lose their jobs because of the closure, Wood confirms, but the company will continue to operate in a different form.  It will now get its cheeses from other Idaho manufacturers, and package that cheese at its facility in Salt Lake City, Wood says. 

It’s a common business model, and one the company has moved toward for years, now.  There was no other option, Wood says, for a relatively small creamery such as theirs.

“Running a small business, making the same cheese that the big business makes — at the small business, your cost is much higher,” Wood explains.  As a result, Nelson-Ricks Creamery Company years ago began buying, packaging and selling cheese from large producers to offset its creamery’s higher production costs.

The company did other things, too.  It tried to diversify its offerings by producing specialty cheeses, but that effort foundered as the recession made consumers more price-sensitive.

Ultimately, Wood says, it was the recession that brought the most formidable challenge.  The company’s longtime lender decided not to renew the creamery’s line of credit.  That meant the company had to operate on a cash basis to pay workers and purchase milk from Idaho dairies.

“We’ve experienced some losses in the last three years,” Wood explains.  “And the banking industry has had some changes to where they’re not willing to lend money to a 100-year-old company that has little or no debt.”

As for the company’s “Idaho Cheese” brand cheeses, promoted by the Agriculture Department’s Idaho Preferred program, those will continue to be available at Wal-Mart stores across southern Idaho. The milk will still come from Idaho cows. The cheese will still be made by Idaho manufacturers.  Nelson-Ricks Creamery Company will still cut and package it at their facility in Salt Lake City before it’s sold in Idaho Wal-Mart stores.

“The volumes aren’t big enough to support a company,” Wood says of the sales program.  “It will grow, but in and of itself, it’s not enough volume to keep one plant in operation.”

The Nelson-Ricks Creamery, founded in 1907, will get its last milk deliveries October 13.

Comments

  • Clancy

    This is the all too common race to the bottom. The little guy is pressured into lowering prices below cost in order to gain these sales/contracts. While Walmart looks good for “Buying local” , they are actually doing a disservice to the concept of sustainability. Most corporations tout sustainability and how they are doing good for the environment and local communities. Sustainability for this creamery and other small businesses(farms) should include the environmental fluff and ways to keep them in business. A race to the bottom creates short term profits and does nobody good besides the corporation as the lower cost are rarely past on to the consumer.

  • http://www.facebook.com/people/Kevin-Newton/100000478773725 Kevin Newton

    This is how Wall Street and the banking sector in America tries to create jobs … by denying credit to a 100-year-old company that has little or no debt. Thanks for nothing, a$$holes!

  • disqus_M7byfgKxre

    hate to see it go but unless a business is expanding rapidly or just plain dying they should be able to operate a positive cash flow. And blaming the recession is not the whole answer. ps F walmart

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