Friday, September 26, 2008

Dairygate: Alaska Governor Sarah Palin And The Matanuska Maid Dairy Debacle; Is The State Of Alaska Getting "Creamed" Financially?

While reviewing public comments to a number of Sarah Palin stories in various venues, I've noticed that a number of people, particularly those living in the Lower 48, are expressing the desire for information regarding the Matanuska Maid Dairy "reorganization", dunned by some as "Dairygate". To paraphrase the Daily Kos, just because it wasn't perceived as a scandal upon occurrence doesn't mean the information is not relevant now. And as the McCain-Palin campaign progresses, and the abuses of Troopergate continue to mount, Dairygate warrants renewed attention.

What is needed is a brief but cogent summary of the events associated with Dairygate. And a comment posted to Andrew Halcro's blog provides the foundation for such a summary. After cleaning up some of the syntax and removing some of the more flagrantly partisan references, here is my version of the summary:

Summary of Events: In May 2007, the Alaska Board of Agriculture and Conservation (BAC), in concert with The Creamery Corporation, decided to close down the 70-year-old Matanuska Maid Dairy. The board took the decision after learning that it was necessary in order to protect the only real shareholder, the State of Alaska, from further losses. Although the Dairy's CEO had long petitioned the State of Alaska to privatize the Dairy, the state chose to ignore him.

Shortly thereafter, Governor Palin, her husband Todd, and media folks showed up at the Northern Lights Matanuska Maid facility without an appointment and wanted a tour. The governor was apparently aware that, at the very same time, the CEO was attending a pivotal board meeting about the dairy's future just across town. The board was debating whether to use a $600,000 state grant to keep the dairy going, or stop the bleeding, cut their losses, and shut the dairy down. An individual named Kris Perry was keeping an eye on the pivotal meeting while the Governor's entourage was at the Matanuska Maid plant.

However, there was an additional problem. Homeland Security, USDA, FDA, and the state of Alaska Department of Environmental Conservation (DEC) have strict regulations regarding food sanitation and safety. Many in the Governor's entourage were dressed inappropriately, including the wear of flip-flops and open-toed shoes which are normally forbidden in the processing areas. It is widely perceived that Governor Palin was actually at the Dairy to "congratulate the employees" as part of a photo opportunity designed to enable her to claim ownership of "saving the dairy".

As soon as Kris Perry learned of the decision to shut the dairy down, the Palin entourage immediately departed the premises, even though they were advised the CEO was on his way to meet with them. As a result, the local media, particularly KTUU Channel 2 and the Anchorage Daily News were led to believe that the Governor's party was "stood up", and published stories reflecting that line of thinking. Of course, this was not true, but the Palin Administration used it to its advantage.

Subsequently, the decision was taken to shut the Dairy down. However, Governor Palin decided to resurrect it under a slightly different name (Matanuska Creamery), completely purging the existing BAC, creating a replacement Creamery Board, and hiring prominent Mat-Su Valley real estate dominatrix Kristan Cole, a noted "Palinbot", to head it up, despite her complete lack of any dairy experience (in the Palin Administration, ideology often trumps competency). Cole then advised the new board members that they had just 20 minutes to vote Franci Havermeiester, a longtime Palin acquaintance, into the position of Director of Agriculture should they wish to sit on the board. Cole asked this despite the fact that there were at least 20 much more qualified candidates, many with strong backgrounds and degrees in agriculture. Havermeiester's father-in-law is also the largest dairy farmer in Alaska, which immediately triggered "conflict of interest" questions.

The above summary of events is now considered the beginning of the looting of Matanuska Maid. By neglect, state officials, unwittingly abetted by syncopathic media coverage, allowed assets of the ARLF, the Creamery Corporation Funds, the State Grants, and the Federal Grants to be transferred to a private company: Matanuska Creamery-Valley Dairy Inc - Kyle Beus - Karen Olsen - Lee & Rob Wells. By not doing their homework, our state may give out yet another handout. The Kristan Cole contingent have not had Alaskan agriculture in mind, and may have actually worked against agriculture by defaulting on loans.

In contrast, another dairy outlet in Fairbanks has provided a better business model. They produce and process their own milk. They have a stake in their business, and have received no handouts. But that didn't matter to the new regime at Matanuska; after Kristan Cole took charge of the creamery, cutting costs like travel and working lunches, she inserted a 50% increase paid to farmers for their milk, just after criticizing management for not honing in costs. Mind you, the dairy was failing, yet she increased the price paid to farmers for their milk. Shortly thereafter, she touted a $64,000 profit. Initially this was good news, but just weeks later, the other shoe dropped, and the dairy incurred the largest loss ever recorded in its history.

Meanwhile, the Cole contingent was still looking for a scapegoat for the dairy bailout. So, after Cole took charge and presided over the largest loss in the Dairy’s history, the Legislative Budget & Audit (LBA) Committee approved an audit on Matanuska Maid. In short order, Cole requested her own financial review to be conducted, and once again, made the decision before she had board approval. Although Cole's review found no wrong doing by management, the LBA found questionable practices by Cole's handling of Matanuska Maid #1. LBA has two more pending audits (#2 & #3) regarding Matanuska Maid. Their next meeting is scheduled for Monday September 29th.

Note that the original comment from which the above summary was drawn was critical of the Mat Maid deal. Consequently, the reader may find it useful to review media coverage of the events to obtain a more balanced perspective. A large index of Anchorage Daily News stories on Matanuska Maid can be found HERE. In addition, there are several Mat-Su Frontiersman stories, from June 2007, August 2007, November 2007, and March 2008. And you can review all of Andrew Halcro's posts on Mat Maid HERE, bearing in mind that Halcro is also critical of the deal.

Other useful sources of information and analysis include,,, and TalkingPointsMemo (a good summary).

But also making this issue newsworthy once again is the fact that the resurrected version of Matanuska Maid is also encountering financial problems, as exposed by Andrew Halcro in his latest post. According to Halcro, the new Matanuska Creamery, started with $650,000 in taxpayer money from the federal government and helped along with the state owned equipment taken from the former Mat Maid dairy, now appears to be headed in the same financial direction as its predecessor. Many people warned about this economic repeat for a dairy that had no business going into business on the taxpayers dime. Inside sources say the Matanuska Creamery is having trouble paying bills, farmers are screaming they are not being paid for their milk and some are suffering because they don't have the cash for the grain to feed their cows. Halcro also references a recent Wall Street Journal article which questions Palin's commitment to fiscal conservatism in the wake of the Mat Maid bailout. You can read the rest of it THERE.

So here we go again. Just like pouring old wine into new bottles - has no effect on the wine. This is no different than the Bush Administration asking the American taxpayer, via Congress, to allocate $700 billion to bail out the mortgage industry just so the rich can create yet another bubble to enrich themselves and suck us dry in the process.

1 comment:

  1. Excellent article in a condensed form! this ranks right up there with Troopergate!