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Archive for Tuesday, September 24, 2013

Iwig Family Dairy seeking $650,000 in donations to stave off liquidation

September 24, 2013

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Marty Falkenstein, a manager for the Iwig Family Dairy store in north Lawrence, stocks the refrigerator on Tuesday. The dairy hopes to raise $650,000 through online donations to pay off debt.

Marty Falkenstein, a manager for the Iwig Family Dairy store in north Lawrence, stocks the refrigerator on Tuesday. The dairy hopes to raise $650,000 through online donations to pay off debt.

The milk is still fresh, but the financial situation at Tecumseh-based Iwig Family Dairy is souring.

The family-owned dairy that operates two retail stores in Lawrence is turning to an Internet campaign to try to raise $650,000 in donations to stave off a potential bank-ordered liquidation.

"We need to get out from underneath the bank," Tim Iwig, owner of the dairy said Tuesday after announcing that he had started a campaign on the fundraising site indiegogo.com.

Iwig said his Topeka-based lender is being pressured by the Farm Service Agency to liquidate the dairy's 108-acre farm and 65-head of dairy cattle. Iwig Family Dairy has been under bankruptcy protection since November, but he said he's now been informed that he needs to come up with money to pay off the bank by late October.

Iwig said a combination of a two-year drought that greatly increased feed costs for his cattle and the lack of federal disaster assistance for the dairy industry has been tough on his farm, which is more than a century old.

"The federal government is making grain farmers wealthier than they ever have been, but there is no program for dairy," Iwig said.

So Iwig said he hopes that loyal customers of the dairy, which serves its milk in glass bottles and uses an old-fashioned pasteurization process, will step forward and make donations.

"We need to pull some money together in October," Iwig said. "We don't need to pull it all together by then, but we need to make a really good start on it. What we really would like is to talk with an investor who could work with us and get us to a point that we need to be with this business."

Iwig said he thinks there's a strong market for his company's milk because the slow, low-heat pasteurization process produces a milk that is easier for people to digest and retains more of milk's natural health benefits.

"If we could have more money for marketing, we could really let consumers know the difference in our milk," Iwig said. "Then I think we would take off."

Currently, the company has a Topeka store, a store at its Tecumseh dairy grounds and two Lawrence stores — one at 19th and Massachusetts and its newest location at 622 N. Second St. in North Lawrence.

Iwig said the North Lawrence location is slowly building a following, and he said he would like to replace his 19th and Massachusetts store with a new location in West Lawrence. He said the company also would like to open a store in Manhattan.

But the first order of business is taking care of the bank. Iwig said he thought he had developed a business plan that would allow the company to emerge from bankruptcy in a stronger position. But that plan revolved around winning a contract to take grain waste from Topeka's Frito Lay plant to feed his dairy herd. When Iwig lost out on that feed supply, he started looking for less traditional methods, including the idea of a donation campaign.

"I have customers say all the time that they don't want to lose us," Iwig said. "They don't know what they will do if they can't buy milk from us, and they really love our ice cream. I know it is a lot of money, but you never know. We'll put it out there and see where it goes."

People looking to donated can go to the campaign page at indiegogo.com/projects/last-dairy-standing

Comments

Jujubeee 6 months, 2 weeks ago

The entire IWIG dairy will be closing on October 15. They made an announcement via facebook yesterday. Great coverage, Urinal World...

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Richard Heckler 6 months, 2 weeks ago

The 19th and Mass store will be closing. However the North Lawrence Store will still be open for business. Local veggies,Tofu and other local products will be available.

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jjinks 6 months, 3 weeks ago

I would like to make a couple of suggestions to the Iwig dairy business. 1) Location is a big plus, downtown Lawrence is not where people go to buy groceries and neither is North Lawrence. 2) A very good business practice is the art of advertising, I had never even heard off Iwig Dairy until I read this story. There may be some big reasons this dairy is not making the money that it should but I am going to try their products this week and see if they are worthy of a donation, but then buying their product is a donation isn't it, I'll be killing two birds with one stone so to speak.

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Jason Johnson 6 months, 3 weeks ago

I'm tired of people looking for bailouts. (private or government)

If your business is going to fail, then you're doing something wrong. Either adapt or get out.

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Carol Bowen 6 months, 3 weeks ago

I don't know anything about farming, but this statement caught my eye: "The federal government is making grain farmers wealthier than they ever have been, but there is no program for dairy," Iwig said. There has been a lot of debate over the farm bill, but I did not read that congress removed or reduced subsidies (welfare) for corporate farms. So, why would Iwig's request sound like charity rather than subsidy?

On another note, we buy milk from this dairy, because it's easier to digest. I thought I was lactose intolerant, but it must be something in mass produced milk products that is not digestible. If Iwig's folds, I will be out of a dairy source. There are probably others who are not aware of this option.

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patkindle 6 months, 3 weeks ago

it sounds like they have a great product, just not enough customers to support the business the way the want to run it

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Richard Heckler 6 months, 3 weeks ago

For those who love local fresh milk buy more and eat their ice cream. Their chocolate milk is to die for.

The 19th street store keeps local produce and Central Soy Tofu on hand.

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oletimer 6 months, 3 weeks ago

typical "natural" food supply situation. Everyone screams for natural food products, but no one wants to pay the extra money it takes to purchase the product. Today's screwed up society wants everything for nothing. You are used to going to wally world, where they dictate to their suppliers what they will pay for their products. No where else in the country can anyone get away with that. Enough of you screamed for the type of milk Iwig has, making them think they actually had a market. Yet no one wants to pay the extra money for that product. This is exactly why small business is doomed in the United States.

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Topple 6 months, 3 weeks ago

I'd try their milk if there was a location closer to West Lawrence. As it stands, I'm not driving all the way across town to get milk. I really dislike traveling Mass St., so unless I'm already over there, it's unlikely I would visit.

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Justin Roberts 6 months, 3 weeks ago

No doubt they have a great product. If you have ever had there milk you can taste the difference. Unfortunately a great product doesn't always make a business profitable. I hope they receive enough donations to pay off the bank loan but I fear it is only delaying the inevitable.

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KUGreenMachine 6 months, 3 weeks ago

Just think if they had the same protection that liquor store owners have, where large grocers weren't able to sell milk! Then they wouldn't have any issues with having to go out of business!

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KUGreenMachine 6 months, 3 weeks ago

They wouldn't be out of business if they would have figured out the whole part of delivering the milk to stores. When you go 6 months of shorting store's orders and leave their shelves empty that store is likely to find another supplier of glass bottle milk, which they have.

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consumer1 6 months, 3 weeks ago

Bye bye!! My friend told you what the financial problem was, but, you didn't want to hear it.

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billybob1 6 months, 3 weeks ago

Just another poorly run Kansas business.

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John Pultz 6 months, 3 weeks ago

We used to buy lots of Iwig milk when it was at Hy-Vee. Unfortunately, as I understand it, Iwig stopped distributing through Hy-Vee and maybe some other large grocers. The did this because the financial numbers didn't work out well when they sold through the grocers. Iwig instead began concentrating on selling through their own stores so that they would not have to sell to the grocers at wholesale prices. While this may make sense in terms of numbers. it certainly led our family away from the milk, We just don't have time to make another stop in our busy days.

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Slowponder 6 months, 3 weeks ago

This story misses alot. The Iwig Bankruptcy has a plan that has been denied confirmation and the bank, Kaw Valley Bank in Topeka, has been granted relief from stay to foreclose in state court. Assuming Iwig owes KVB $650k, they need the $$ to pay them off and then deal with the other objections in their bankruptcy case from Westar and some small fed agency called the IRS.

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Matthew Herbert 6 months, 3 weeks ago

I will continue to donate to their fund the same way all consumers donate to a private business- by purchasing their product. They can expect another $4 from me today in fact.

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roadwarrior 6 months, 3 weeks ago

Seems there are several options beyond just donations. Maybe time is too much of an issue. Contracts for purchase could be used at the bank to show steady flow of income at a measurable level. I thought at one time they were selling through the grocery stores, that had to be a contract and was handy too. Maybe also, contracts from individuals - "buy a years supply, up front". Didn't really hear what they were offering in exchange for the "donation". I do hope they can get themselves an investor and start picking up some contracts.

0

myjaan2007 6 months, 3 weeks ago

And the guy Chad Lawhorn is not a good editor. How can agree to write a such thing like that? May be Chad can donate all the money to them. Or ask Brownback for that....hhahahahaaaaaa

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myjaan2007 6 months, 3 weeks ago

Are you kiiding me? Does money grow on tree? How about donating some money to those, who can barely eat? These people are greedy. How do they pay rents, if they did not have any money? This is totally a hoax. I know they have a store in Topeka, which does very well. I have had bad experience shopping there few times. My question is to them and all: "If your store is going to hell, why not shut it down and let other entreprenuers start a new business." If they needed money that bad, why they opened another store? Jjust think guys before you donate any money. It would be wrong to say IWIG milk is the best. There are other brand organic milk available. Do not fall for this crap. Westar energy just increased the rate. We need money to pay the bill. Will IWIG lower their milk price for us? No. I do not think so. This is insanity asking for money from the customer.

2

thelonious 6 months, 3 weeks ago

I hesitate to even comment on this situation, as I find it kind of sad, but I have a High School friend in Central Missouri who runs a 3rd generation dairy farm with his brother and his brother's sons, and they simply do not have these problems. At all. Also, I am an accountant. I feel bad about this situation, but I can say this - there is something wrong with this picture. I won't speculate beyond that, the rest of you can fill in the blanks, but something does not add up. It may be as simple as the demand for traditional dairy lessening as consumers switch to almond milk and soy milk, and the marginal traditional dairy producers who expanded too fast and took on too much debt get pushed out first. It's the way things work - you can fight it all you want, but you are better off figuring out a way to adapt. Unfortunately, the Iwig Dairy's time may be up. Better for them to accept that and figure out a way to move on than drag out the pain, but that is just my opinion and I do not know any specifics about their situation.

1

Al Deathe 6 months, 3 weeks ago

Why dont they just ask the City of Lawrence for a loan like the shelter did, best rates around!

4

Ron Holzwarth 6 months, 3 weeks ago

The sheer scale of the amount of money the Iwigs are trying to raise boggles my imagination. My grandfather's ranch was rather large, I'm not sure exactly what the size was, but I believe it was in excess of 640 acres, that is, one square mile. And it was riverbottom land, ideal for cattle. There was a large barn, outbuildings, and a ranch house on it. It sold something like 8 years ago for only $125,000. I was very surprised, and I was told that was all that the ranch was worth. Because it was so far from any city, of course.

The Iwig's own only 108 acres, which in other areas of the midwest, is just about nothing at all. That is, it is less than 6% of the area of my grandfather's ranch. But, it is near larger cities, and there are two factors that drive up the price of land under the circumstances that the Iwigs face. One is land speculators, and the other is hobby farmers. Working in tandem, they drive up the price of farm and ranch land considerably.

So, without accounting for the increase in farm and ranch land lately, is their land really worth over 16 times the value of ranch land in western Nebraska? Even if it is, that leaves approximately $500,000 unaccounted for.

Do they really have something like $400,000 to $500,000 in assets beyond the value of the land and outbuildings?

But that is dodging the two real questions:
1) What is their land actually worth in today's market?
2) What is the value of the other assets of the Iwig dairy operation?

It would take a careful inventory and accounting to answer those two questions. And, I tend to think that the Farm Service Agency has already been through those two questions, and concluded that the Iwig's efforts would be better spent elsewhere.

As an aside, Westar (WR) has been in the news a lot lately. If a person were to invest $650,000 in WR, the combined dividends and increase in stock value would pretty much equal a return of $26,000 per year, without putting forth any effort at all.

2

appleaday 6 months, 3 weeks ago

Too bad their last name isn't Compton or Fritzel.

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Stacy Napier 6 months, 3 weeks ago

They should ask the city for a Loan.

0

Richard Heckler 6 months, 3 weeks ago

IWIG milk products are good. Yes we buy it frequently and we make our own yogurt from this desirable product.

We want them to stay in business.

3

Bob Forer 6 months, 3 weeks ago

Looks like they have raised $500 so far. I have no problem with them asking for donations. But the amount seems untenable. I am sure there are folks who would donate if they felt the family had a realistic chance of raising the money requested. But $650,000 seems like an absolute pipedream.

Large scale farms are in. There is a reason there is only one small family dairy left in the area. The small dairies cant' compete with agribusiness. While their milk is of a better quality and healthier, apparently there are not enough customers to support it. Sadly, I think that is not only a reality, but a insurmountable obstacle that the family cannot overcome.

BTW, anyone know how much a gallon of their milk costs. Just curious? I suspect it is more than the agribusiness milk.

1

cowboy 6 months, 3 weeks ago

Seems a classic sad story of hanging on too long , refusing to give up. Sad but it happens .

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Ron Holzwarth 6 months, 3 weeks ago

A bank will work with any viable business, that's just the way it is. But, if a business does not appear as though it will ever be profitable enough to pay off the operating loan, the bank is going to want its money one way or another, in the interests of its depositors and investors.

It's the same way with your house mortgage. If you can't keep up with the payments, the bank is going to do something to limit its losses. Usually it's a foreclosure, and then a sale at auction.

I wonder, how many homeowners facing foreclosure make a public plea in the newspaper for donations to save their home from the consequences of not making timely payments?

If I were a banker, I would seriously wonder about a business that was not able to pay off the business loan - in over 100 years.

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Keith Richards 6 months, 3 weeks ago

They have gone to the trough a few too many times. I don't understand the point of donating money, potentially a lot of it, with no return on your investment.

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cowboy 6 months, 3 weeks ago

Bout time to pack it in Iwig

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