Darigold Cuts Milk Payments Amid Processing Plant Cost Overruns

PASCO, Wash. — Darigold has reduced milk payments to its farmer members by 20% to 25% to cover cost overruns on a new processing plant under construction in Pasco. The cooperative announced this significant cut, starting mid-April, in a letter from Chairman Tim Kuenzi.

The payment decrease, amounting to $4 per hundredweight, will impact farmers through at least the end of June and likely throughout the remainder of the year. Darigold plans to allocate $2.50 of the cut toward completing the Pasco plant, which is about $300 million over its $600 million budget.

Kuenzi explained that the remainder of the reduction would help offset operational losses. Members will be regularly updated on the situation, as the cooperative will review the payment cuts monthly.

Construction on the processing plant began in 2022, with plans for it to be fully operational by early 2024. However, delays have pushed the expected opening to mid-2025, according to sources acquainted with the project’s status.

Chris Arnold, a spokesman for Darigold, noted in an email that members support capital investments, suggesting that progress on the Pasco facility is ongoing.

With around 300 members across Washington, Oregon, Idaho, and Montana, Darigold plays a critical role in regional agriculture. Jason Vander Kooy, a dairy farmer and cooperative member from Skagit County, shared that while higher beef prices have eased the impact, the payment cuts could significantly affect his operations. ‘It’s a big deal. There are a lot of guys who don’t want to quit farming, but can’t keep farming if this continues,’ he said.

Other members echoed similar concerns, noting the financial strain of persistent payment reductions. Yakima County dairy farmer Dan DeRuyter reported a loss of nearly $5 million due to previous cuts, asserting that the situation is ‘awful’ for producers trying to stay afloat.

John DeJong, from Whatcom County, has been shipping milk to Darigold for 75 years. He reflected on the reliability of the cooperative but expressed frustration about the reductions, saying, ‘The deduction has eliminated investment. We’re more in survival mode.’

As farmers brace for continued financial strains, the Washington State Dairy Federation warns that the situation is exacerbating existing challenges in the dairy sector. Policy director Jay Gordon stated, ‘We are hearing from producers occasionally that this is a tough situation.’

In light of the rising costs associated with the Pasco plant and the reduced payments for milk, many farmers are left hoping for a resolution and a return to more stable income levels.