Thursday, 26 February 2009
Sarah Palin's Dairygate
Dairygate is a very complicated story. Researching it made me dizzy, so I'll try to keep it as concise as possible and provide links for further reading. I could be here all night and not make much sense at all. So what's new? Most of the accounts concerning Sarah's gates seem to elicit the same question, "Does this make any sense to you?"
Take a deep breath, here we go!
In 2007, the state Board of Agriculture and Conservation (BAC) considered a request for $600,000 to the state for a review of the operating expenses of the Matanuska Maid Dairy, an unprofitable state-owned business. Milk prices were too high and competition from national brands was impossible to match. The Alaska Creamery Board, a sub-committee of the BAC, which oversaw the dairy and made the request, met in May and discussed privatizing or possibly closing the dairy. It subsequently voted to close it, and on June 13 the Board rejected Sarah Palin's public request that it keep the dairy open, saying it stood by its decision to close the dairy plant as of July 7.
On June 18, Palin fired the entire membership of the BAC, and replaced them with an assortment of Mat-Su Valley residents, all without any experience in running a dairy, but with family or business connections with the Valley's milk producers, which then installed itself as the Creamery Board, and voted to keep the dairy open for 90 days while reviewing options. The loan was immediately approved and payments to the milk farmers connected to the Board continued uninterrupted. On August 29, 2007, Palin announced that the business could not be made profitable and would be offered for sale. It had suffered $300,000 losses. She said that the board could use the $600,000 help with the transition to a private operator.
On December 7, with a required minimum bid of $3.35 million for the dairy, no bids were received and all dairy operations were scheduled to close later that month. Two of the Valley's dairy farmers came forward and offered to lease the equipment to start their own dairy and a further grant of $200,000 was made available to them, provided they started production at the now renamed Matanuska Creamery by the end of December. They only started operations in March 2008, but received the grant anyway. Matanuska Creamery is owned by one of the biggest milk farmers in the area, Kyle Beus, and Robert Wells, a Mat-Su Borough Assemblyman, who is also president of Alaska Farmers and Stockgrowers Inc.
On top of the two grants provided by the state, Ted Stevens arranged a $634,000 USDA grant for Beus and Wells' new venture, Matanuska Creamery, in March of 2008.
Between September and November 2008 Matanuska Creamery applied for a further loan from the state. After much wrangling over personal guarantees, which were removed in a meeting on November 21, the Board, which is comprised of Governor Palin's appointed friends and neighbours, ended up voting to give the Mat-Su Valley business a $630,000 loan. The BAC approved the unsecured operating loan fully knowing that the business did not have the cash flow to make the payments.
Matanuska Creamery didn't have a very good start. 30,000 pounds of cheese in their cold storage, which had already been sold in "cheese futures" deals without insurance, were found to be contaminated with e.coli, listeria and staph and had to be thrown away. Matanuska Creamery made a loss of $250,000.
This is an extremely simplified account of all the shenanigans that went on in the transition from state owned MatMaid to privately owned Matanuska Creamery.
The cost of privatizing MatMaid cost the state of Alaska more than $1,4 million so far. Add the $634,000 in federal grants and the costs are astronomical, considering that it was seen as a failed operation as far back as April 2007.
Hey, it's only taxpayers money and it keeps Sarah's pals in Wasilla and Palmer in business, so what seems to be the problem?
For further reading, click here.
If you want to read loads of posts about it, go to Andrew Halcro's blog and search Mat Maid or Matanuska Creamery.