A local family farm that has produced milk for generations will have to shut down its dairy operations if they don’t find another milk buyer after a national dairy company ended contracts with about 100 farmers nationwide.

Martin Van Buren was the president of the United States when the Kelsay family was granted land to farm in Johnson County in 1837. Joe Kelsay is the sixth generation in the family to farm the land east of Interstate 65 and south of Worthsville Road, which has had a herd of dairy cows going back at least 100 years.

While the farm also grows corn, soybeans and wheat, the dairy operation has always been key to their identity, Kelsay said. The dairy operation, which brings in about $1.5 million in sales each year, makes up about two-thirds of their farming revenue, he said.

For more than two decades, Kelsay Farms has sold 100 percent of its milk to the same buyer, Dean Foods. But in February, Dean Foods announced that it was going to end its contract, meaning the farm will need to quickly find a new buyer or stop its dairy operations completely, Kelsay said.

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“It is an emotional consideration,” he said. “We built our ID around being a dairy farm.”

During his initial round of calls while looking for a new buyer, Kelsay got a lot of “nos” and a few “maybes.” However, he recently began conversations with a couple of dairy co-ops that he believes could lead to a new milk contract, averting the need to close down the farm’s dairy operations.

“There certainly is a level of relief,” he said. “Anxieties are dropping a little.”

About 100 farmers in Indiana, Kentucky, Pennsylvania, Ohio, New York, Tennessee, North Carolina and South Carolina were notified that their milk contracts were going to be canceled, with milk purchases ending May 31, Dean Foods spokesperson Reace Smith wrote in an email. The decision to end the contracts was based on factors including a drop in milk consumption, continued increases in milk production and the introduction of additional milk plants, Smith wrote.

Walmart is opening its own dairy processing operation, with a plant opening this summer, reducing its need for Dean Foods’ products. That was one of the first locations Kelsay checked with to see if they were buying milk, but was told the plant already had all the contracts it needed.

Now, Kelsay Farms and 26 other dairy farmers across Indiana, are all in the same situation, with a need to find a new buyer for all of their milk, said Doug Leman, the executive director of Indiana Dairy Producers, which has been monitoring the situation.

“If someone wants to help the industry out, the best way to help is to buy that extra gallon of milk, buy cheese,” he said. “We need to consume these products.

“Milk being a perishable commodity, it doesn’t take a lot of extra milk for it to be too much, a little over production can be an issue.”

Kelsay Farms has had a good relationship with Dean Foods for more than 25 years, and Kelsay understands and respects why they had to choose to end contracts, he said.

“They have tough choices to make,” he said. “I don’t hold hard feelings for Dean Foods.”

“It’s a challenging time to be in the business.”

For more than two decades, a semi-truck carrying about 6,000 gallons of milk would go from the Whiteland farm every other day to Dean Foods’ processing center. Some of the milk would be sold directly as milk, and some was used in products ranging from ice cream to butter, Kelsay said.

Because of the cost of maintaining dairy operations, which includes feed and supplies for the cows and paying employees who milk and care for them, if they don’t have someone to sell milk to, the farm will have to sell their cattle and equipment after May 31, he said.

That means selling 750 cows, along with equipment and feed, Kelsay said.

In early May, Kelsay will need to decide whether to cancel thousands of dollars in contracts for feed and other materials for the dairy operation. If he doesn’t find a buyer for 6,000 gallons of milk every other day, he will need to notify suppliers that he no longer needs those shipments and then work to sell off the dairy operation.

And with Dean Foods having canceled about 100 contracts, he’s not the only person searching for a new buyer or potentially selling animals, Kelsay said.

A dozen employees and several family members work on the farm. But the dairy operations are the part that is most labor intensive, meaning they may have to let employees go, many of whom have worked on the farm for decades, Kelsay said.

“They are like family,” Kelsay said.

Without the dairy operations, their focus would go towards growing crops such as wheat, corn and soybeans on their 2,200 acres of land, he said.

Kelsay said he isn’t sure what the next weeks and months will bring, but is relying on his faith to get through the situation.

“God has a plan,” Kelsay said. “Sometimes I just have a hard time figuring it out.”

By the numbers

The Kelsay family has farmed in Johnson County for six generations. Here’s a look at their current farm operations:

Size: 2,200 acres

Number of milking cows: 400

Total number of cattle: 750

Gallons of milk per day: 3,000

Milk sales per year: $1.5 million

Author photo
Jacob Tellers is a reporter at the Daily Journal. He can be reached at jtellers@dailyjournal.net or 317-736-2702.