Kleinpeter Farms Dairy has dropped the price of its milk for the second time in the first quarter, and the company says it will reverse a 2.5 percent pay cut instituted in October. Effective April 1, the price the Baton Rouge-based dairy charges stores for a gallon of milk was cut by 9 cents a gallon, a reduction that follows a price drop of 6 cents a gallon in February.
The price cuts come at a time when the dairy’s approximately 200 employees are working for salaries that were decreased by 2.5 percent last October during a period of belt-tightening that included staff reductions. In October, Kleinpeter Farms President Jeff Kleinpeter told ABiz the salary cuts were necessary to avoid price increases because the price of raw milk was rising, and he vowed to restore employees' pay rates should the business climate change.
Kleinpeter now says increased efficiencies and the dedication of those employees have resulted in cost savings the company is able to pass along to consumers right away, and he hopes to bring employees' full salaries back in July. “We’ve pulled together and made it happen, and we have a bit more work to do before we can restore pay rates to our team, but we are really optimistic that this will happen within a few months,” Kleinpeter says.
Kleinpeter says while the company never had a formal hiring freeze, staff was reduced through attrition, job consolidation and natural turnover.
In October, he told ABiz that in his 25 years at the company this type of across-the-board cut has been put in place five times — and that the policy has worked well for the business, employees and customers each time.
“I can tell really quickly when sales slow up, and when they do, we simply consolidate a couple of routes, freeze wages, and wait until things pick up,” Kleinpeter said at the time. “We are very quick to do that, and nimble on our feet, which many of the ‘big boys’ are not.”
Since then the company has hired an extra truck mechanic and extra loading dock supervisor and has promoted some milk and ice cream managers. “So we are adding people in the ways that benefit us the most and moving in a positive direction,” Kleinpeter says.
Kleinpeter Farms has its own dairy farm and also buys milk from 20 other Louisiana Family farms. The federal government sets the price that Kleinpeter pays for raw milk; the price changes each month, the company says, and varies depending on many worldwide factors. Those factors include the availability and price of replacement cows, and the price of feed grain, fuel and corn.
When the price of raw milk drops, the federal government does not require processors like Kleinpeter to pass cost savings along to its stores, but Kleinpeter is lowering prices in hopes that stores will pass the savings on to consumers.
“We can’t tell the stores what to charge for our milk, but we do hope the vast majority of our customers will notice the difference in the checkout line,” Kleinpeter says.