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$10 million bank loan helps local cheesemaker refinance, expand

The milk trucks are making stops at the Petaluma Creamery on Western Avenue once again, thanks to Two Rock-based Spring Hill Jersey Cheese, which recently reopened the facility to churn out condensed and powdered milk.

?We?re using milk from local dairies,? said Larry Peter, owner of Spring Hill Jersey Cheese. ?We might have some milk coming from out of the area, but we?re trying to get it mostly from local dairies. That?s the idea ? to support the local dairies.?

Spring Hill Jersey Cheese purchased the plant in 2004, but operations were shut down after a few months due to a dispute over a milk supply agreement. Peter was able to secure a loan for more than $10 million from Bank of the West to refinance the purchase of the creamery and provide the family-owned company with operating capital to expand its gourmet cheese business.

Bank of the West, the nation?s third-largest agricultural lender, expressed confidence in Spring Hill Jersey?s Cheese?s future.

?Specialty and organic food segments have seen strong growth as consumers become more health conscious and more sophisticated about food,? said senior vice president Dean Cardoza, regional head of agricultural banking for Bank of the West. ?High-end specialty producers like Spring Hill build their market share through farmers? markets, local groceries and other non-traditional venues ? and Spring Hill is well positioned to gain from this trend.?

The Petaluma Creamery first opened its doors in 1913 as the Petaluma Cooperative Creamery, established by 33 Sonoma and Marin country dairy farmers. After a fire destroyed the processing plant in 1975, the co-op changed its name to California Cooperative Creamery. Shortly after that, the Clover brand name was purchased to form Clover-Stornetta Farms. The California Cooperative merged with the Dairy Farmers of America in 1998, but in 2004, the creamery shut its doors and laid off all its employees.

Now reopened, the creamery has contracted with local and out-of-county dairies to buy approximately 90,000 pounds of milk a day. In addition, 30 of the former DFA employees have been rehired.

The Petaluma Creamery is expected to provide a boost to the local dairy industry by creating a new market. The plant will produce organic powdered whey, used in many processed foods, along with organic and regular condensed skim milk, cream and butter. Plans are in the works to add cheese to the product lineup.

?I think it?s really beneficial to have as many processing facilities available as possible for the agricultural community,? said Sonoma County Farm Bureau executive director Lex McCorvey. ?We work in concert with our processors, and it?s extremely valuable to have that local connection so that we can have locally produced and processed products available for local consumers. I think the reopening of the Petaluma Creamery will help in the sustainability of our local dairies, which have had very tumultuous times in the last few years due to rising operation costs and such.?

There are also economic and environmental advantages to having the creamery back up and running.


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