Larry Peter, owner of Spring Hill Jersey Cheese, on Monday confirmed he's negotiated a deal to buy Petaluma's historic creamery, a move farm leaders hail as a positive development for Sonoma County's $360 million dairy industry.
Peter, a Petaluma dairy farmer and cheesemaker known for his progressive marketing, said the deal is expected to close escrow in 80 days. Immediately after taking ownership, Peter said he plans to start making cheese from milk produced by his own Jersey cows and from milk purchased from other dairy farmers in Sonoma and Marin counties.
Peter said purchasing the old creamery in downtown Petaluma will allow him to expand his Spring Hill Jersey cheesemaking operations while saving a bit of Sonoma County's agricultural history.
"I wanted to do this so dairy farmers will have a place to haul their milk, which is the reason the cooperative was founded in 1913," said Peter, 45. "It's a way to keep agriculture and the dairy industry part of Sonoma and Marin counties."
Neither Peter nor Dairy Farmers of America, the Kansas City, Mo.-based cooperative that owns the creamery, would disclose the selling price. But industry sources put the price at between $5 million and $6 million.
"In an era when agricultural production facilities are declining, it's tremendous news to have Spring Hill Jersey Cheese step in to keep the creamery operating as a processor of local milk," said Lex McCorvey, executive director of Sonoma County Farm Bureau. "This will save jobs. It's good for agriculture and the community."
Peter runs a Jersey cow dairy on Spring Hill Road in the Two Rock area west of Petaluma. He makes 20 types of specialty cheeses, including his Jersey yellow cheddar, Portuguese and jack. He's a savvy marketer who was one of the artisan food producers interviewed by Martha Stewart during one of the domestic diva's visits to the North Coast.
When Dairy Farmers of America announced in May it was closing and selling Petaluma's largest milk processing facility, the news was viewed as another blow for Sonoma County's struggling dairy industry. The creamery, which covers four acres of downtown real estate, stretches several blocks along Western Avenue in west Petaluma.
Because of rising real estate values and the site's downtown location it seemed unlikely that the 91-year-old creamery would continue as a milk processor. But Dairy Farmers of America officials said Peter's dairy background was an important consideration in selling him the plant.
"From the beginning we've always said it was our goal to find a buyer who would process milk at this plant," said Petaluma native Ralph Sartori, director of regulatory affairs and manufacturing for Dairy Farmers of America.
Dairy Farmers of America is the nation's largest dairy cooperative, with member farms throughout the country. A story in the Chicago Tribune last week reported that Dairy Farmers of America is under investigation by the the antitrust division of the Department of Justice for allegedly trying to corner the raw milk market in several regions including Louisiana and Florida.
On May 4, Dairy Farmers of America made the surprise announcement it would close and sell its Petaluma milk plant, which produced 100,000 pounds of cheese each day. The last gallon of milk went through the plant on June 18, when most of the cooperative's 75 employees lost their jobs.
Sartori is among the 12 employees remaining in Petaluma.
Dairy Farmers of America continues to market the milk for 45 dairy farmers, representing about half the dairy farms in Sonoma and Marin counties.
Since the Petaluma plant closed in June, milk from those dairies has been sent to processing plants in Fairfield, Turlock, Tracy and other locations in Northern California.
"The transition has been very smooth in sending milk to other plants," said Sartori.
Peter said the purchase includes two brands, California Gold and Petaluma Cheese, which he plans to revive. These brands were developed by the California Cooperative Creamery, which merged with Dairy Farmers of America in 1999.
Peter said he will buy all the additional milk he needs from the Sonoma-Marin dairies that are members of Dairy Farmers of America.
Michael Marsh, executive director of Western United Dairymen, said reopening the Petaluma plant is a positive development for the region's dairy farmers. He said there is more competition for milk when there are a number of local processors.
Clover-Stornetta Farms in Petaluma is the other leading dairy processor in Sonoma County. Clover-Stornetta produces a range of dairy products, using milk from 16 dairy farms in Marin, Sonoma and Mendocino counties.
Milk is Sonoma County's second largest agricultural industry after wine grapes. The value of milk leaving farms was $90 million last year, a figure that grows to more than $300 million a year in economic activity when processing and related industries such as feed mills and dairy supply companies are included.