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Pactiv Evergreen blamed for milk carton shortages in schools

The paper mill at the heart of Canton stopped producing paper in May. A Shot Above photo The paper mill at the heart of Canton stopped producing paper in May. A Shot Above photo

There’s no use crying over spilt milk, but a shocking report suggests that Pactiv Evergreen failed in its analysis of market demand for the paperboard produced in its Canton mill, contributing to a nationwide shortage of milk cartons in schools and leading some to believe the company needn’t have halted operations in Canton earlier this year, throwing hundreds out of work. 

The story, first reported by Joel Burgess in the Asheville Citizen-Times, says that school systems from California to New York are having a hard time stocking half-pint milk cartons, which are required by federal authorities to be part of school lunches for millions of children.

Exclusive reporting by The Smoky Mountain News of the company’s closing announcement included statements by then-Vice President of Beverage Merchandising Byron Racki, who told workers gathered at a meeting on March 6 that not only would it be too expensive to upgrade the 115-year-old mill, but also that market demand had “gone to hell.”

“When decisions are made on Wall Street, they have long lasting impacts and consequences,” said Zeb Smathers, mayor of Canton. “The decision to close Pactiv Evergreen in Canton, we heard the reasons why and a lot of it was based upon money and market, and now we’re seeing how it goes from Wall Street to Main Street. On a deeper level, for many kids in our public school system the ability to access food and milk, especially young elementary kids — that may in fact be the only nutritious meal they have their whole day.”

An Oct. 25 memo issued by the U.S. Food and Nutrition Service, a division of the Department of Agriculture, contradicts Racki’s latter assertion in no uncertain terms.

“USDA’s Food and Nutrition Service (FNS) is aware that schools in multiple states are experiencing milk supply chain challenges related to packaging issues,” wrote Tina Namian, director of FNS’ school meals policy division.

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The memo goes on to empower state agencies with some flexibility with what FNS calls a “temporary emergency.”

A CNN story from Nov. 9 cites an official from a Pennsylvania-based dairy owner who said she was blindsided by the carton shortage, which would affect not only schools but also nursing homes and correctional facilities. Although she wouldn’t name the supplier, CNN says there are only a few companies in the U.S. that produce the cartons.

Another milk vendor, New Jersey-based Cream-O-Land, was less discrete.

“Unfortunately, effective immediately, you may begin to experience milk shortages and/or changes to your orders,” said Scott Stoner, vice president of operations, in an undated statement on the company’s website. “Pactiv Evergreen, which supplies cartons to Cream-O-Land Dairies and other milk processing companies across the United States, is experiencing major production issues. These production issues have depleted most of our half pint (8 oz) and 4 oz carton supply.” 

Stoner said that Cream-O-Land, which serves customers in the northeast as well as in Florida and the Bahamas, was notified by Pactiv Evergreen in September — less than four months after production ceased in Canton — that it would supply less than 50% of Cream-o-Land’s packaging needs.

A spokesperson from Pactiv Evergreen told CNN on Nov. 9 that the company “continues to face significantly higher than projected demand.” 

The company now faces lukewarm financial figures, according to a Nov. 3 release. For the third quarter of 2023, net revenues were down 3% compared to the second quarter, and down 14% compared to the third quarter of 2022. Net income of $28 million for the third quarter of 2023 was just $28 million, compared to $175 million in the same period of 2022.  

According to Burgess’ story, spokespersons from Asheville City Schools and Buncombe County Schools said they were experiencing isolated issues and were working through them. In Haywood County Schools, Director of School Nutrition Allison Francis said that problems were ultimately minimal.

“We are still able to get milk,” Francis said. “We’ve been shorted on our chocolate, which the majority of students prefer. We can still get milk, just not chocolate.”

Francis added that the supplier, PET Dairy, has been in constant communication, letting her know about shortages in advance, so the school can consider ordering more plain milk to ensure there’s enough for everyone.

The milk carton shortage is yet another blow to the reputation of Pactiv Evergreen, which has been neither forthright nor forthcoming in communicating its situation over the past year.

By many accounts, the company’s exit from the community after 115 years has been a fiasco.

Federal, state and local officials received no warning of the March 6 closing announcement, which left educational institutions, governments and nonprofits scrambling to provide for soon-to-be unemployed workers.

The town’s waste water is treated by a Pactiv Evergreen facility on mill grounds. The closing leaves the town two years to figure out a solution (see CANTON, p. 9).

Stock sales by top executives four days before the announcement, first reported by SMN, totaled more than $660,000 and were seen as a grave insult to workers, who were given less than three months’ notice that they’d soon lose their jobs and only one week’s severance pay for each consecutive year worked at the mill.

A property tax appeal sought by Pactiv Evergreen in late May, which would have led to a dramatic reduction in the amount the company owed to the town and the county for its sprawling 185-acre campus, took all of 25 minutes to be rejected by county tax officials.

Pactiv Evergreen’s lack of support for workers led to a health care coverage crisis that forced some to reschedule doctor’s office visits and skip doses of medication.

Smathers wouldn’t opine on the tragic insinuation that company officials could have based the mill’s closing on a false premise. He did, however, continue to maintain faith in the mill’s workforce, many of whom are part of families that had worked at the site over generations.

“This is less about whether the mill was wrong and more about how right the mill workers were from day one, about everything,” he said. “They were right about what would happen if Pactiv Evergreen were to halt production, they were right about the quality of the Haywood County product they made and they were right about how many lives would be affected by the closing, well beyond Canton city limits.”

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