Walmart Ditches Dean as Milk Industry Struggles

Dean Foods is shutting down plants after losing its biggest customer.

It’s being called a “milk crisis,” the result of a supply chain domino effect that started with Walmart and is bowling over milk producers and farmers alike.

The Louisville Courier Journal is reporting that the local Dean Foods will need to let go more than 60 workers when it shuts down its plant this Fall, which is one of seven total that Dean will shutter. The reason? The company is losing its biggest customer – Walmart.

Dean has been providing private label milk for years, sold in Walmart under their house brand Great Value. But in March, Walmart announced they’d be taking milk production in-house, opening a massive dairy processing facility in Fort Wayne, Indiana.

The business Dean is losing is somewhere in the 95 million gallon range, and its impacting their raw milk suppliers in a big way. The processor reportedly had to kill contracts with more than 100 farmers and while some of them have picked up business elsewhere, there are many who haven’t and are expected to have to exit the milking business altogether.

Gerry Francisco, VP of the local teamsters union, told the Courier-Journal that they were a bit perplexed by Walmart’s move. Besides the fact that there is currently a national oversupply of milk, driving down prices, but also, to quote Francisco, it’s Walmart’s habit to “generally squeeze suppliers" rather than doing the manufacturing themselves.

And while Walmart’s added operation will mean more jobs in its own right, it’s unlikely to be an even trade. Dean Foods reportedly offer such solid pay and benefits that they’re coveted – often positions haven’t opened up there unless someone was retiring. Since Walmart has a reputation for ultra-low wages, the 200 jobs it says it will add in Fort Wayne might not be comparable to the ones being vacated by Dean in Louisville.