A Reading business has received a $393,597 state grant from the Pennsylvania Dairy Investment Program for a plan to produce baby formula using milk from Pennsylvania cows and sell it domestically and internationally, ideally in China where there is a strong market for the product.
The China connection is not yet ironed out, but if it happens, it would require the factory to ramp up to full capacity, a move that could have a statewide impact on the dairy industry.
At full capacity, the factory would require 970 million pounds of wet milk a year said State Rep. Thomas R. Caltagirone, a Reading Democrat who toured the factory and wrote a letter of support for the project under the name Enchanted Acres Farm Inc.
“The commonwealth’s total milk production in 2016 was 10.8 billion pounds,” Caltagirone said in the letter written to Russell Redding, the state secretary of agriculture in which Caltagirone asked for help getting a permit from China for the company to sell there. “This means the Reading facility alone will require almost 10 percent of the commonwealth’s total milk production.”
The grant was given to “Enchanted Acres Farm Group LLC doing business as Simpler Way Nutritionals LLC,” located at the former Luden’s factory on North Eighth Street.
Reading business operator, Kelley M. Huff and George Lutz, a bankruptcy attorney, signed the grant application.
Huff has operated businesses at the factory under several names.
The factory was purchased in 2011 for $900,000 by Enchanted Acres Farm Inc. in partnership with a company named after the factory address: 200 North 8th Street Associates, with Huff as president of both companies.
Both companies filed for Chapter 11 bankruptcy in 2018 with Lutz handling the filings.
In an email Huff said these were completely different corporations with different structures than Simpler Way Nutritionals.
“Simpler Way Nutritionals was created as a sales and marketing mechanism to help source dairy ingredients for child nutrition and nutraceutical products and be an asset to private label customers looking for those products,” Huff wrote in a later email. “Enchanted Acres Farm Inc. will be one of many processors that Simpler Way Nutritionals will interact with. Simpler Way Nutritionals will have separate leadership and a board to oversee the corporation functions and day to day operation.”
Under the name 200 North 8th Street, the factory property is delinquent on its county, city and school property taxes, owing nearly $58,000 for 2017 and nearly $52,000 in 2018.
Berks County has accepted a quarterly plan of $31,978.62 per payment to pay off 2017. Adherence to this plan prevents the property from going to tax sale, a representative in the Berks County Tax Claim Bureau said.
During the bankruptcy, a detailed appraisal valued the factory, as of January 2018, at $3.4 million.
According to the grant application, the company currently produces infant formula under its own brands and as a copacker for other brands.
The company wants to begin sourcing its dairy powder from Pennsylvania sourced milk, which will require the company to develop a facility with spray drying equipment.
Simpler Way Nutritionals will also seek organic certifications.
“We are excited by the Gov. Wolf’s team endorsement of our plans. We look forward to working with the teams on the State, County and Local levels. The support has been overwhelmingly positive,” Huff said in an email.
