A Franklin County creamery has closed amid a state financial investigation, but all of the company’s supplier farmers have new markets for their milk.
Chambersburg-based Trickling Springs Creamery shut down its processing plant on Sept. 27, and closed its three retail outlets on Oct. 5, according to the company’s Facebook page.
Trickling Springs, founded in 2001, was a fixture in the local food scene, selling organic and non-GMO lines of milk, including some products bottled in glass.
The company — which received an Outstanding Organic Processor Award from Pennsylvania Certified Organic in 2015 — had a retail location in Chambersburg, Pennsylvania, and two outlets in Washington, D.C.
Its products were sold throughout the Mid-Atlantic by restaurants, farm stores, food delivery services and Wegmans supermarkets.
In promotional materials, Trickling Springs touted its local farmers, who were expected to use grass-fed, heritage-breed cows.
The company said it paid farmers above-average prices to maintain high standards for their milk.
Since 2017, the creamery’s 22 organic dairy farms had been a reserve pool of Organic Valley, shipping their milk to Trickling Springs but being paid by the co-op.
Organic Valley is continuing its relationship with the Trickling Springs farms but is sending the milk to other plants.
When the marketing arrangement was started two years ago, the creamery had decided not to use direct-shipping organic farmers anymore, and Organic Valley was hoping to help the processor and its farmers prosper.
“At the time, there was a real concern that these farmers would be dropped without a marketplace,” said Travis Forgues, the co-op’s executive vice president of farmer affairs.
Organic Valley is not currently seeking new farmers in any part of the country, Forgues said.
Jacob Horst, a dairy farmer from Hagerstown, Maryland, is grateful the creamery’s closure didn’t force him to scramble for a new market or sell his cows.
“It’s sad, but it could have been worse,” he said.
Horst is part of the Organic Valley pool, and his milk is now going to a plant in Winchester, Virginia.
In 2016, Horst said, Trickling Springs started sending milk checks late — one week, two weeks, eventually a month behind schedule.
Organic Valley got him paid up within three months of stepping in.
Despite the financial instability, Horst said Trickling Springs offered excellent dairy products.
He sold some of them himself at a farmers market in Virginia alongside the grass-fed beef and pastured poultry from his farm.
Those other products helped Horst get by when his milk checks were late, but “I’m not ready to drop the organic milk,” he said. “That’s our mainstay.”
Horst and his wife still have seven of their 11 children living at home.
Horst couldn’t find a replacement product that checked all the boxes of Trickling Springs glass-bottled milk.
But after polling his customers, he settled on something pretty close — a pastured-based, non-GMO milk from Deliteful Dairy in Williamsport, Maryland.
The former Trickling Springs organic farms still face a little uncertainty.
Horst said Organic Valley is planning to evaluate the situation after 30 days to see if the farms will become regular co-op members.
Horst also said he’d heard that, leading up to Trickling Springs’ closure, two farms had still been directly supplying the creamery with milk for its non-GMO line.
Those farms, he said, had been picked up by the Lanco-Pennland cooperative.
The co-op didn’t respond to a request for comment.
Shannon Powers, an Ag Department spokeswoman, declined to identify the co-ops that accepted the Trickling Springs farms because the arrangements are private contracts.
But she said that two co-ops had taken on all the Trickling Springs farms, including the pair of independent producers.
The Pennsylvania state government has responded vigorously to the needs caused by Trickling Springs’ closure.
In a rare move, the state Milk Marketing Board plans to make a claim against Trickling Springs’ milk dealer bond.
By law, the bond must provide security equal to one month’s purchases from Pennsylvania farmers. The money is used to pay farmers when their buyer fails to pay.
Trickling Springs has informed the board that it will not be able to pay farmers for milk received in September.
The amount of money the farmers will get has not yet been determined.
This is the first time the agency has claimed a milk dealer bond in over 20 years, according to board Chairman Rob Barley.
In conjunction with several employment agencies, the Department of Labor & Industry has offered assistance to the workers at the creamery’s Chambersburg plant.
Some 53 of the 106 employees took up the department’s offer, spokeswoman Theresa Elliott said.
The Pennsylvania Ag Department received notice in early July that the creamery would close in 90 days.
The agency worked to find out which farms were affected and determined that all the farms had new markets lined up, Powers said.
In Maryland, where Trickling Springs had only a few farms, an Ag Department spokesman did not respond to questions about that state’s response to the closure.
The most serious state action involving Trickling Springs began well before the company announced its closure.
In November 2018, Pennsylvania’s Department of Banking and Securities proposed thousands of dollars in fines for the creamery and its owners.
The agency alleged that the company had defaulted on promissory notes it had issued, and that the creamery had not given investors key details about its shaky financial health.
From February 2015 to October 2017, the creamery sold at least 110 investors on 175 promissory notes totaling $7.8 million, according to the agency.
The owners — Philip Riehl, Gerald Byers, Elvin Martin and Dale Martin — face 370 counts of violating the Pennsylvania Securities Act.
If found in violation, they could be ordered to return investors’ payments, be barred from selling securities in Pennsylvania, and be forced to pay the cost of the investigation plus up to $100,000 per violation.
The agency held an administrative hearing on the case in July but has not yet reached a judgment, spokeswoman Dulcey Antonucci said.
A receptionist at Trickling Springs directed questions about the company’s status to a spokesman, who did not return a phone call and email.
In a Facebook post announcing the shutdown, Trickling Springs thanked its employees and customers but did not mention the financial investigation.
A Different Day
For the farmers involved, the Trickling Springs closure went much differently than Dean Foods’ decision last year to cut more than 100 farms, including 42 in Pennsylvania.
The latter move gave families 90 days to find a new market at a time when milk prices were particularly weak and processors were hesitant to add volume.
“Today supply is a little more in line with the demand,” said Jayne Sebright, executive director at the Center for Dairy Excellence.
Sebright offered assistance to all the Pennsylvania farms in both the Dean and Trickling Springs situations, though the creamery’s farmers already had new arrangement lined up.
The Trickling Springs closure is a reminder that dairy farms can lose markets no matter if their buyer is national or local, conventional or organic.
At least this time, the farmers had a relatively soft landing.