FALMOUTH, Maine — The Falmouth-based organic milk processor Maine’s Own Organic Milk announced Friday morning that it will shutter its operations because of obsolete equipment and the steep cost of building a new packaging facility in central Maine.

“While we have worked tirelessly to find an alternative solution, including the possibility of building a new facility in central Maine, we realize these options are not possible in the short time frame needed to keep the retail brand viable,” said CEO Bill Eldridge in a letter announcing the closure. “Therefore it is with deep regret that we announce the end of MOO Milk as we know it.”

Eldridge said in a telephone interview that Stonyfield’s yogurt-making facility in Londonderry, New Hampshire, has agreed to buy all of the milk from his company’s 12 member farms for the next three months, while MOO Milk arranges long-term contracts for member farmers with Stonyfield, Organic Valley, Oakhurst and others. He said the company also is focused on finding longer-term contracts elsewhere for its member farmers.

Wednesday was MOO Milk’s last production day.

The decision to close came after studying what it would take to upgrade MOO Milk’s production facilities. Eldridge said an engineering feasibility study showed the company could be profitable with construction of new processing equipment, costing tens of millions of dollars. But he said donated equipment it has used to process about 8,000 gallons of milk weekly was “on its last legs,” and the risk was too large to take on a massive investment while MOO Milk’s existing facilities were shaky.

“It became more and more obvious that we could not continue processing and not be concerned with some sort of catastrophic failure,” Eldridge said. “If we started to build a plant costing tens of millions and we had a catastrophic failure, it would have left us high and dry.”

And that’s the dire situation that gave the company its start, by a group of 10 farmers in Washington and Aroostook counties who lost contracts with H.P. Hood Inc. in 2009. They were left searching for a market for their organic milk and decided to form MOO Milk as an L3C, allowing the company to receive grants and endowments like a nonprofit or a co-op.

The farmers who supplied the company most recently are in the northern, Down East and central parts of the state.

Since it started production in 2010, MOO Milk has processed all of its milk at Smiling Hill Farm in Westbrook, using a carton filling machine decommissioned by Oakhurst and donated to MOO Milk. Smiling Hill uses separate equipment for its milk packaged in glass bottles and is not affected by the shutdown.

Eldridge said he doesn’t think the shutdown speaks to broader problems for the organic milk industry or for the experiment MOO Milk pursued of trying to build a regional brand supplied by a host of independent farmers.

“We were done in not by the marketplace but by the fact that when we got started, we couldn’t afford anything and had to put together a virtual company with whatever we could get for equipment,” Eldridge said. “And, eventually, old equipment just dies.”

In his letter, he said that the company has enough money to pay its creditors.

“We have adequate cash on hand to honor all of our current financial commitments,” said Eldridge, “and while demand for our milk has been stronger than ever, we simply lost the ability to process our milk, which effectively puts an end to the MOO brand.”

Almost a year ago, the company announced a $3 million anonymous donation through the group Slow Money Maine that its leaders expected would keep it operational for the foreseeable future. With that donation, MOO Milk also repurchased equity stakes it had given to its original members, eight of whom had left and split around $100,000 for their shares of the company.

Eleanor Kinney, a member of Slow Money Maine and investor in MOO Milk said at the time that the money would be used to boost the company’s marketing budget.

The company had struggled in the past, and in 2011, it nearly closed because of high organic milk prices and a shortage of cash on hand.

As of last year, it was purchasing around 11,000 gallons of milk per week from its members.

The company’s effort to provide processing for organic dairy farmers received attention and praise from beyond Slow Money as well. In 2012, the farm was the subject of a documentary titled “ Betting the Farm.”

In its four years of operation, Eldridge said he thinks the company achieved something unique to Maine, and he will continue to stay involved with the agriculture sector, which he thinks could be a more substantial driver of the state’s economy.

“Maine is where there is available agricultural land for production,” he said.

The company has five employees in Maine, one salesperson in Massachusetts and an office in Falmouth.

Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.