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Storm a Big Blow to Dairy Operation's Finances

January 8, 2014

Indiana's Fair Oaks Farms is taking a $400,000-$500,000 loss each day for milk that doesn't make it to the marketplace.

FAIR OAKS, Ind. — The cows are braving the cold at Fair Oaks Farms, but the milk they're producing is going down the drain.

The deep freeze ground distribution to a halt at the northwest Indiana agribusiness, which operates a popular tourist attraction off Interstate 65. Even in the winter, families passing through Indiana on their way to Chicago or Louisville, Ky., stop to see cows being milked or calves birthed.

Fair Oaks Farms' dairy trucks were left stranded in northern Indiana, Indianapolis, Kentucky and Michigan after treacherous conditions forced the closure of I-65 and Interstate 94 on Sunday and Monday. I-65 reopened Tuesday morning.

Meanwhile, the dairy cooperative's 35,000 cows didn't stop producing milk on Fair Oaks' 10 member farms.

"The loss is substantial in the case of Fair Oaks Farms," Mike McCloskey, chairman of the board, told the Journal & Courier. "We don't stop milking. Unfortunately, we have to let the milk go down the drain because capacity for storage on the dairy farm is full. Because the trucks can't come back to pick up the milk, we don't have a choice but to continue to milk the cows — because they need to be milked."

The company is taking between a $400,000 or $500,000 loss each day for milk that doesn't make it to the marketplace, McCloskey said.

"We're dealing with a quarter of a million gallons a day that will be lost," McCloskey said. "Maybe a little more if things don't get a little better."

On the bright side, the cows have not suffered.

"The cows are in great shape," McCloskey said. "They don't mind the cold, and they're happy if they're milked. All we're seeing is an unfortunate economic loss."

Catching up will be a slow process. Even though I-65 has reopened, travel conditions are far from ideal.

"We'll probably continue to have to allow some of the milk to go down the drain," McCloskey said. "As trucks start filtering through, we'll start delivering milk. ... We don't want to put our drivers at risk, so although the freeway may be open, we do understand how dangerous it is."

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