Bongards Creameries Closes Financing From National New Markets Fund

NNMF Invests $17.5M in New Markets Tax Credit Financing for Minnesota-based Dairy Co-Op Benefitting 267 Small and Family-Owned Farms

PERHAM, MINNESOTA – National New Markets Fund, LLC (“NNMF”), an affiliate of Los Angeles-based SDS Capital Group, has invested $17.5 million of its New Markets Tax Credit “(NMTC”) allocation into Chanhassen, MN-based Bongards Creameries (“Bongards”).

Bongards is a farmer-owned co-op that relies on its 267 member farms (98% family farms) to provide milk for its cheese and whey products. As a result of the investment, Bongards’ milk intake capacity will increase by almost 1/3, from 4.1 million pounds per day to 5.4 million pounds per day.

The cumulative local employment impact of the Bongards expansion is substantial. While Bongards will add an estimated 22 new full-time jobs to its existing base of 143 employees, the impact on the member farms is much more sizable. By purchasing and processing more milk from its member farms into higher profit margin products, it is anticipated that the member farms will add up to 260 full-time farm jobs to their existing 1,000 employees.

One of these 267 farm co-op members underscores the importance of this processing expansion relative to their family-farm operations. “My family has owned our farm for five generations. The expansion of the co-op’s 1.3 million-pounds-a-day processing capacity is going to enable us to go from 500 cows to 1,200 cows and likely hire four people over the next few years,” said Kraig Krienke, Bongards Patron and co-op member. “We are grateful that programs such as NMTCs are supported by our taxpayers and government to help small farms like ours.”

The NNMF investment utilizes capital from the NMTC program, created by Congress in 2000 and administered by the U.S. Treasury Department. Investment groups, such as NNMF, compete to be selected to receive NMTC awards each year. The selected “allocatees,” in turn, sell the tax credits to institutional investors; the proceeds from the tax credit sale are then used as part of the investment into projects benefiting low-income communities – such as the Bongards’ expansion.

“The New Markets Tax Credit program has been and continues to be instrumental in our ability to provide the maximum value for the milk of our members, while ensuring we are building a
cooperative that will be here for future generations,” said Bongards Chief Financial Officer, Chris Freeman. “The NMTC allocatees that have partnered with us understand the need to support our farmers and build for the future. They are wonderful partners in our mission of long-term success and service to our farmer owners.” 

The Bongards project is critical to the dairy production industry in Minnesota. During the past five years, the industry’s processing capacity in the state has experienced little to no growth, while nationally the industry grew at 4.5% during the same period. Nationally, family farms have struggled to compete even with co-ops: Nearly 4 of every 10 dairy farms have disappeared in the last five years as small farms have struggled to compete with larger corporate operations, according to Agri-Pulse.

“The local economic benefit resulting from the Bongards expansion cannot be underscored enough,” said Deborah La Franchi, President, National New Markets Fund. “Family farms have truly struggled in America over the past decades. This NMTC financing enables more than 267 small and family-owned farms located in Minnesota to become more financially sustainable and to create more local employment. NNMF’s focus is to stimulate manufacturing projects, so we are proud to support Bongards’ growth through our NMTC investment.”

Bongards received the NNMF allocation as part of a complex $81 million New Markets Tax Credit financing package. Dudley Ventures is the investor purchasing the NMTCs from each of the participating NMTC allocatees: NNMF, Mascoma Community Development, Waveland Community Development, Rural Development Partners, and DV Community Investment. 

“Dudley Ventures is pleased to support Bongards’ expansion and upgraded production lines through our New Markets Tax Credit equity investment,” said Kyle Koupal, Vice President of Investments with Dudley Ventures. “At Dudley, we are committed to supporting economic development and investing in projects that create quality jobs and impact their communities.”

About Bongards Creameries 
In 1908, a group of enterprising farmers in Bongards, Minnesota formed the Bongards cooperative with the goal of crafting premium dairy products with the superior quality area families deserved. As a farmer-owned co-op with over a century of cheese-making expertise, Bongards can meet all cheese category needs with an assured supply chain, a broad selection, and the know-how to create products to your exact specifications. As a global cheese supplier to companies large and small, Bongards produces millions of pounds of natural cheese, process cheese, imitation cheese, and whey each year. Bongards brings you the experience to deliver consistent, high-quality cheese in the quantities your business demands. Bongards is headquartered in Chanhassen, Minnesota and has 3 production facilities located in Bongards, Minnesota, Perham, Minnesota, and Humboldt, Tennessee.

About National New Markets Fund, LLC
National New Markets Fund, LLC ( founded in 2005, has invested $752 million (48 investments) of its New Market Tax Credit allocations into projects located in the Great Lakes region and the Deep South. Each investment has provided critical community services or quality jobs to high-distress communities – such as hospitals, charter schools, and food banks, as well as job-creating manufacturing expansions. In 2013, NNMF narrowed its focus to invest only in manufacturing and food-processing companies (23 companies total). This more focused strategy centers on creating quality jobs for the local residents of these impoverished communities – both rural and urban. SDS Capital Group, the parent of NNMF, is a pioneer and national leader in impact investing. SDS’s founder launched SDS in 2001 with a vision of creating a platform of impact funds that would attract and engage the private-sector in the battle against poverty. Today, SDS’s platform includes five distinct impact fund strategies ($1.3 billion current asset under management; additional $1.1 billion exited), with its direct investments having helped support the creation of over 25,000 jobs and over 6,500 low-income or permanent supportive housing units throughout the US.