Borden Dairy Co, one of the oldest and largest dairy producers in the United States, has filed for bankruptcy, becoming the second major dairy company to do so within months.
Borden, which has been in operation since just before the U.S. Civil War, has been in financial trouble for some time. Borden's problems can be traced back to 2017, where the company obtained $275 Million in loans to support operations. From 2017 on, Borden would experience continual financial losses. Borden's filing states an intent to remain in business throughout the bankruptcy process, while there was no statement in the filings if Borden plans to continue operations after bankruptcy, the company issued a statement saying that it intends to use the process to shed debt and better re-organize itself for "long-term success."
Borden's woes can be attributed to the same issues faced by contemporary Dean Foods (OTC: DFODQ); declining milk sales. U.S. milk consumption has dropped 6% since 2015, with per-capita consumption of milk down 40% since 1975. "While milk remains a household item in the United States, people are simply drinking less of it," Borden CFO Jason Monaco said, "In parallel, since the turn of the century, the number of U.S. dairy farms has rapidly declined." True to Monaco's statement, US dairy farming has been struggling for some time. Many dairy farmers have been struggling to break even due to a volatile market and other factors. The volatile market that has been causing woes for dairy farmers and has led to both Dean Foods and Borden declaring bankruptcy had been influenced by the increasing prominence of milk substitutes, and the decreasing prominence of liquid milk as a result.
The troubles faced by Borden are worrying for the company, but it is also not the first bout of financial stress the company has struggled with. Before the beginning of its more recent troubles, which began in 2017, the company faced unintended consequences stemming from a series of purchases made in the 1980's, which left it struggling financially. Borden was eventually bought by KKR, and over time was slowly downsized with many components being sold off.