Bongards Creameries lands $81 million NMTC allocation for expansion
The Baker Tilly Capital team helped Bongards Creameries receive an $81 million New Markets Tax Credit (NMTC) allocation to finance their desired expansion and equipment upgrades, allowing them to stay competitive in the marketplace.
Client need
While the dairy industry has grown by 4.5% nationally over five years, Minnesota growth has remained relatively unchanged. Nearly four of every 10 family dairy farms have disappeared in the last five years as small farms struggle to compete with larger corporate operations.
To stay competitive, Bongards Creameries, a 115-year-old farmer owned cooperative, had set their eyes on expansion and equipment upgrades for their cheese and whey processing facility in rural Perham, Minnesota.
As a cooperative, almost all of Bongards’ capital is profits that have been allocated to members, which is not permanent equity and must be distributed back to members. As a result, Bongards balances the capital needs with that of the members (farmers), who struggle with their own capital needs. Accordingly, Bongards faced financing limitations needed to support the investment required to stabilize the plant’s operating position and allow for future growth.
Baker Tilly Capital solution
The Baker Tilly Capital team helped Bongards receive an $81 million New Markets Tax Credit (NMTC) allocation to finance their desired expansion and equipment upgrades, allowing them to stay competitive in the marketplace. The NMTC provided the capital needed to expand and continue to serve member farms and provide positive economic impact in the rural community.
Results
With our NMTC solutions, Bongards is able to:
- Support over 165 jobs, 100% quality with full benefits and 100% accessible to individuals with only a high school diploma
- Forge partnerships with Minnesota WorkForce Centers and Minnesota Department of Veterans Affairs to employ unemployed and individuals with barriers to employment
- Support over 267 family-owned farms
The funding will allow Bongards to increase production capacity, improve efficiency and quality, and increase milk purchases while improving outcomes for regional farmers. The project is expected to create/retain 165 good paying quality jobs and stimulate 389 indirect jobs that support operations.
Bongards’ expansion will allow growth by almost one-third of its current production, from 4.1 million pounds per day to 5.4 million pounds. This comes at a time when the region suffered the loss of a creamery just three hours from the Perham facility, leaving 40 Minnesota and Wisconsin dairy farms without buyers for their milk. 98% of Bongards’ 267 farm cooperative members are family-farms, one of which underscored the importance of Bongards’ expansion to their family’s farming operations.
For more information on this topic, or to learn how Baker Tilly’s NMTC specialists can help advance your next community improvement project, contact our team.