Industry leaders shocked by former Humboldt Creamery CEO’s disappearance and cooperative’s financial woes

Originally published in the "4-30-09" issue.

(Editor’s note: This is the second half of a story begun last week about former Humboldt Creamery CEO Rich Ghilarducci.)

Lifetime Ferndaler Cheryl Etter, who taught at Fortuna High School from 1967 to 2003, recalls that Rich Ghilarducci, 49, was a student in one of her freshman classes.

“He was one of the nice kids…an amiable, nice, kid,” she said in a phone interview from her Ferndale home. “I just liked him.” Etter said she saw him infrequently as an adult and had no comment on recent events at Humboldt Creamery.

“I haven’t seen him as an adult except to say ‘Hi,’” she said.

Meanwhile, Michael Marsh, CEO of Western United Dairymen, spoke with The Enterprise from his Modesto office.

Marsh said that about 90 percent of Humboldt Creamery’s dairies belong to his organization, which dates back to the 1930s and represents some 1,100 dairies in California. Marsh said that, even though Western United Dairymen has not received monthly dues from the creamery’s dairies “since this whole thing started,” his organization will continue to provide its services to members as long as necessary. Those services include state and federal lobbying activities on behalf of dairy producers, a variety of communications products, print and electronic, and direct services including individual dairy economic analyses and litigation support.

“It seems like they’ll have their fair share of that,” he said, referring to litigation support.

Marsh said bankruptcies are nothing new in the dairy industry but that he’s never seen one quite like the bankruptcy unfolding at the creamery.

“…frankly this is the first case I’ve heard of where the person in the case did not take money,” he said.

Marsh said his dealings with Ghilarducci were positive.

“I often used Rich in a dairy leader’s program because of the creamery’s innovative improvements in the marketplace,” he said, noting the creamery’s expansion into the premium ice cream market and various types of processing in its research and development. “Everything seemed to be working,” he said, “then Rich disappeared.

I can imagine the betrayal his friends in the creamery must feel,” he added. “It was shocking to me.”

Marsh said that he hopes the creamery will get back on its feet.He said it will be challenging given its remote location, the lack of alternate processors nearby, and the worldwide dairy recession. “Or depression,” he said, noting that over the past year milk has fallen from 20 dollars/hundredweight 100 pounds) to 10 dollars/hundredweight. He said that feed costs remain high because of corn-based ethanol production, adding that feed costs continue to be a dairy farmer’s single biggest expense.

Citing Nestle’s decision a couple years back to locate a dairy processing facility in Indiana instead of in its first choice – Northern California – Marsh said California’s business climate is also inhospitable.

“Other states rolled out the red carpets, and California rolled out the red tape,” he said, noting that Indiana’s permitting process was 45 days in comparison with California’s then-six-year process.

Marsh said he’s visited the creamery and was impressed with its operation. “It’s a really good plant,” he said.

Chief Operating Officer Jim Tillison of the National Milk Producers Federation in Arlington, Virginia, confirmed that Humboldt Creamery has belonged to the voluntary organization since its inception in 2003 through 2008, when the creamery stopped paying its dues. Membership dues for dairies are 10 cents/hundredweight per month.

Tillison said that his organization provides a variety of benefits to dairies, including entry into the international powder milk and cheese markets and a year’s production costs if a dairy goes out of business and liquidates. These benefits, however, are not available to members who stop paying monthly dues.

Tillison declined to comment on any of his business or personal dealings with Rich Ghilarducci.