With some of the territory’s more established businesses – like St. Thomas Dairies – finding it hard to stay open, factors such as increasing utility costs and undercapitalization contribute to the struggle.
One of the most recent examples is the shut down of Trans Caribbean Dairy Corp., doing business as St. Thomas Dairies, which officially closed its doors on March 1. The official announcement was made through the V.I. Department of Labor, which issued a press release on Feb. 28 stating that counseling and employment services were being made available to the dairy’s employees.
Trans Caribbean’s St. Croix counterpart, Island Dairies, shut down in late 2011, with owner David Schuster citing among the reasons an increase in the price of raw materials, the inability to compete with lower priced imported products and a monthly utility bill of $22,000. In 2005, the government failed to assist the dairy in obtaining a Grade A certified label on its milk, which also kept the company from being able to sell milk to cruise ships.
St. Thomas Dairies lost its contract to sell milk to the cruise ships in 2003 for the same reason and, from that point, their shutdown has been gradual. Beginning as early as 2008, the company said rising energy costs and other factors put a stop to their Crystal Ice making business.
More recently, the company announced last October it would no longer be selling milk in island stores because it was stopping production and distribution of milk in half and full gallons. At the time, Fred Hintz, president of Trans-Caribbean Dairy Corp, said in a press release that one of the primary reasons for the shutdown was “ever increasing electricity costs.”
Cassandra Dunn, director of communications V.I. Water and Power Authority, said that while the utility is “saddened, like others in the community, that St. Thomas Dairies is closing, WAPA “worked with the customer over many months.”
“We’re aware that the high cost of energy is a factor,” Dunn said, adding that “while it’s not our policy to make public our customers’ accounts, we can no longer afford to provide services when customers are not paying month to month. We were forced to cut our losses.”
The dairy’s final goodbye came just a few months ago, announcing that it would be fully ceasing its operations and delivering the last of its supplies by March 4. The Source was unable to reach Hintz for additional comments, but interviews published in other media sources have him once again discussing high utility bills, along with outstanding receivables from agencies such as the Education Department, as the top contributing factors for the dairy’s decline.
Education officials have not directly addressed the outstanding figure, but instead said that they have worked to keep current – or at least make sure they were no more than a month behind – on the bills to St. Thomas Dairies, which, since the shutdown of Island Dairies, also included providing milk to schools on St. Croix.
After the shutdown was announced last month, the Education Department said that its supply from St. Thomas Dairies would last until about March 13 and, after that, it would be switching to shelf-life, or nonrefrigerated, milk while officials began the process of reaching out to other suppliers.
Education’s most recent contract with St. Thomas Dairies began in October 2012 and was supposed to expire in September 2013. According to figures provided by the department, the dairy supply was 10,000 pouches of milk per month for the St. Croix District and 8,000 a month for St. Thomas-St. John, at a cost of 48 cents for nonflavored milk and 50 cents for flavored milk on St. Croix and 45-cents for nonflavored milk and 46 cents for flavored milk for St. Thomas-St. John.
Finding a supplier that will provide the milk at a similar or lower cost is now one of the issues moving forward for Education, which said in a statement last week that it would be soon be soliciting bids from potential companies for the 2013-14 school year, which will cover all flavors of milk, including shelf-life and fresh milk.
In the statement Education officials confirmed that, for the remainder of the 2012-13 school year, “the National School Lunch Program, School Breakfast Program and Summer Food Service program within the territory would be receiving Ultra High Temperature (UHT) 1-percent white low-fat milk that will be purchased from the U.S. Department of Agriculture will Commodity Entitlement Funds.”
The UHT milk has a shelf life of six months and will be stored at the School Food Authority warehouses in each district and then distributed to schools. The statement also said that the School Food Authority’s facilities do not “have the storage capacity, vehicles or manpower to accommodate the more delicate fresh milk.”
The department’s new school lunch menu, which is based off of federal nutrition guidelines, requires schools to offer at least two milk choices: fat-free (unflavored or flavored) and unflavored low-fat milk. A waiver has been sent to the USDA requesting approval for the schools to serve only 1 percent low-fat milk.
The statement also said that juice will be served in the cafeterias twice a week, while water will be available every day.
As the department begins the process of looking for another milk supplier, the dairies’ facilities on St. Thomas are barren – even the award winning Udder Delight stand. Employees there said before the shutdown that Udder Delight should only be closing temporarily, with a possible re-opening date to be announced in the future.
Meanwhile, on the other end of the island, another long-time St. Thomas business, Marina Market, has also closed its doors. And while no one would comment officially on the record, sources close to the business also spoke about mounting electricity costs as a contributing factor to its shutdown. The Source was referred to attorney Steve Russell for an official statement but was told that he could not currently comment on the matter.
In the case of Marina Market, Dunn said that WAPA also worked with them and that the grocery store was not in danger of being disconnected at the time they closed.
And months before the popular grocery shuttered its operation, the shelves were more and more empty. Shipping freight costs have also increased over the years due to the same increased fuel costs.
