By Tom Downey, MMPA Chief Financial Officer
In 2021, MMPA continued strengthening our overall financial position in a variety of ways, an accomplishment the entire MMPA staff contributed to. Though I recently joined MMPA as chief financial officer earlier this year, in this time, I have enjoyed working alongside MMPA’s staff, board of directors and independent auditors to ensure your cooperative is in good financial health.
In the past year, we marketed 4.7 billion pounds of milk, a 3 percent increase year-over-year. Despite the growth in volume, we were able to reduce our controllable costs relative to last year by undertaking multiple expense rationalization exercises. These expense reduction efforts were accomplished via teaming across multiple MMPA departments and represent a significant win given the current inflationary environment.
Looking towards our balance sheet, we have reduced our debt to the lowest level in the past 10 years while also continuing to increase our equity position. Driven by the health of our balance sheet, MMPA made a strategic decision to reduce our net savings in 2021 relative to historical targets which allowed MMPA to return more cash to our members.
MMPA’s long-term debt to equity ratio, an industry standard used by lenders to determine the risk associated with lending to an entity, is extremely strong relative to other market participants. You can think of this value as how much of the co-op’s assets are owned by our members, versus how much is owned by our lenders. Our current debt to equity ratio poises us for future growth, ensuring that we’ll be able to have access to capital markets to facilitate growth opportunities.
As a result of reducing controllable costs and strengthening our balance sheet, the market adjustment was reduced compared to the previous fiscal year. MMPA also paid $23.6 million in producer incentives, returned patronage of $1.4 million to members and distributed 2011 equity of $4.2 million.
During fiscal year 2021, we saw a tightening of the milk market relative to recent historical levels. A number of market dynamics contributed to this tightening (labor shortages, the Glanbia plant reaching full capacity, etc.), but the reduction in available supply has allowed additional plant capacity providing greater flexibility to service our customers.
Overall, MMPA is in a solid financial position that sets us up for future success. Our entire team will continue to take deliberate and measured actions to ensure that we continue to market our members milk to the greatest advantage possible. Thank you to all MMPA members for the opportunity to work for and serve you. I’m excited for what the future has in store.
This article was originally published in the January/February 2022 issue of the Milk Messenger. Subscribe »