Dean Foods (Estate) Makes Payment of April Settlement Checks to Previous Dean Independent Producers

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UPDATE – JUNE 9th, 2020:  Southeast area farmers, previous Dean Independent producers, report that they have received funds for their April Settlement milk checks via electronic deposit into their bank accounts.   This action follows several letters from producer organizations both to the Court and to the Committee for Unsecured Creditors.

Please scroll for letters from Zippy Duvall, President of the American Farm Bureau Federation, and H. Barlow, Executive Secretary of the Kentucky Dairy Development Council (KDDC), which were sent to the Court. 

The Pennsylvania Milk Marketing Board was also active in the process to recover those payments to producers. Read more about their efforts here.

On behalf of the (former) Dean independent producers, we say “THANKS” to the Honorable Judge David Jones, the Court, Dean Foods estate officials, and to all who advocated on their behalf.

At this time, it is not known if dairy co-ops or the FMMO Producer Settlement Funds have received the balance of the funds owed to them by the Dean Foods Estate.

 

Letter from Zippy Duvall, President, American Farm Bureau, to the Court and Dean Foods (Estate) Officials

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Letter from H. Barlow, Executive Secretary, KDDC, to the Court:

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The story as first reported:

 

Payments to Farmers Late at Best, in Question for the Future

A May 13, 2020 memorandum from USDA-Agricultural Marketing Service, Appalachian Order, reads as follows:

TO:  Regulated Handlers

FROM: Harold H. Friedly, Jr., Market Administrator, F.O. 5

SUBJECT: Producer Settlement Fund Non Payment

On May 12, 2020, Dean Foods, DIP (debtor-in-possession), a regulated handler on the Appalachian Order, did not pay its obligation to the Producer Settlement Fund (PSF) as required by Federal Milk Marketing Order regulations. USDA recognizes the significance of this non-payment and is continuing to work with the Department of Justice to attempt to recover these monies as part of the Dean Foods, DIP, estate.

When payment is not made to the PSF, Federal Milk Marketing Order regulations prescribe procedure for how the remaining marketwide pool monies should be distributed to handlers (1005.72).  When PSF monies are not sufficient to make full payments to handlers, the Market Administrator shall reduce uniformly such payments to handlers due a payment from the PSF.

Accordingly, for milk pooled on Order 5 during April 2020, payments to handlers from the PSF have been reduced pro rata.  Should the PSF payments be recovered from Dean Foods, DIP, Estate at a later time, full payments will be distributed.  In the meantime, Federal Milk Marketing Order regulations provide for reduced payments to producers from regulated handlers who did not receive full payment from the PSF (1005.73(c)). Consequently, the enforced minimum payments to producers will be at the pro rata amount.

USDA will continue to monitor the situation and work to assist the dairy industry. Additional information will be provided as it becomes available to all market participants. Please feel free to contact Jason Nierman, via nierman@malouisville.com, or (502) 499-0040, ext. 222, if you have any questions.

The memorandum also had this addendum included:

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This schematic explains workings of a Producer Settlement Fund:

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News could not have come at a worse time:

From an industry viewpoint, this non-payment could not come at a worse time for the farmers themselves.

When monies are received by the Producer Settlement Fund, they in turn are paid back out to handlers (co-ops or agents), who then distribute the money to farmers, paying them for milk sold (see the diagram above).  This process is highly regulated by FMMO rules, and has proven to be predictable, and reliable for decades.

Farmers then use their money to pay bills to any number of agribusiness and service firms with whom they do business.   Since this process has been so reliable, most farmers have set-up automatic withdrawals to pay supply companies.  Farmers will now be dealing with any issues related to those automatic withdrawals and any repercussions due to lack of funds. Agribusinesses will lose money as well, and incur any number of extra costs.

Ravaged by a myriad of challenges due to Covid-19, farmers are facing financial stress of an untold magnitude, and many multi-generational farms with long histories of serving consumers are at risk of being lost. The mental health and fortitude of those farmers is a prime concern across the country, due to the stresses which were already in place. Many fear that this news could catalyze additional health issues in farm communities.

An industry insider, who asked not to be identified, said this Dean Foods payment to the PSF could normally be in a range from $160-$250 million, affecting dairy co-ops, individual farms and the communities they serve in many states.  (Note – this figure will be verified and updated if needed – Covid 19 has changed almost everything.)

 

PERPLEXING:  WHY did this happen given Chapter 11 processes?

This payment, which is a regular course of business in both a predictable amount and timing in getting farms and co-ops paid for milk,  had regularly been made by Dean Foods during the course of the Chapter 11 proceedings.

Therefore, it stands to reason that attorneys, accountants, and consultants representing Dean Foods should have budgeted and accounted for these payments as Dean Foods books were closed out over the course of the next few months. In the last months of the process, fluid milk sales were up substantially according to many sources, which should also have added to Dean Foods income.   (An email inquiry to an attorney representing Dean Foods in the proceedings has not received a response as of this posting.)

This gets even more perplexing since farmers were named as critical vendors in the early days of the Chapter 11 process.  Dean Foods officials filed motions, which were granted by the Court, to ensure that those payments were indeed accomplished. It was believed those financial obligations to farmers for products delivered would have been honored until the last payment was due.

Impact on an individual farm:  During this payment cycle, any single farm would be due payments from thousands of dollars to even hundreds of thousands of dollars, depending on the size of the herd.

POSSIBLE SOLUTIONS OR HOPE AHEAD?

At this time, this is a profound question with unknown answers.  Some of those answers might be:

  • Payment to Settlement Funds in all FMM Orders might come at one of the later dates in this payment cycle, being only a few days late
  • Payment to the Producer Settlement Fund might come later, as accounts receivable from product and property sales come into the Dean Estate
  • Payment to farmers might not come at all, which is a bitter pill to swallow at this juncture in history.

Whatever the answer is, farmer co-ops and individual farmers deserve that answer, and deserve it quickly.  Perhaps a projected payment schedule could be stated by the Dean Foods Estate officials.  Even if it’s a worst case answer, to know what that answer is will honor the dignity of earnest farmers who deserve an answer so they can make some possibly excruciating decisions,  instead of ‘the system’ tap dancing around farm families like performers on a Broadway stage.

According to the Dean Foods / Southern Foods Group, LLC Chapter 11 website, two additional Omnibus Hearings are scheduled for May 20 and June 24. 

One dairyman has often said “The dairy industry at the grass roots level is a dairy community full of really good, decent people who want to earn an honest living and contribute to their communities. However, those good people often have to endure some very wicked events.”

Dean Foods has historically paid its ‘independent producers’ well, which is much appreciated.  It is sincerely hoped that Dean Foods closes its chapter on a better note than this non-payment, and quickly rectifies this payment shortfall to farmers.  For the sake of the mental and physical health of many farmers and their families, lets hope they do just that.

 

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Dean Foods Sells Majority of Assets to Dairy Farmers of America (DFA) & Prairie Farms

 

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DALLAS  – May 1, 2020  – Dean Foods Company (“Dean Foods” or the “Company”) today announced that is has completed the previously announced sales of substantially all of its assets, including the sale of the assets, rights, interests, and properties relating to 44 of the Company’s fluid and frozen facilities to subsidiaries of Dairy Farmers of America (“DFA”).

Dean Foods also announced that it has completed the sale of the assets, rights, interests and properties relating to eight facilities, two distribution branches and certain other assets to Prairie Farms Dairy. The Company also completed the sale of its facility in Reno, Nevada and its “Berkeley Farms” trademark and related intellectual property to Producers Dairy Foods.

These transactions follow a Chapter 11  process which began with a filing under the official name of Southern Foods Group, LLC, on November 12, 2019 in the US Federal Bankruptcy Court, Southern District of Texas, Houston. As early as the day the Chapter 11 was announced, DFA was named as the leading contender to purchase the company.  The Honorable Judge David Jones has served as  the presiding judge.

At the current time, three additional hearing dates are posted on the Epiq website which has been housing the dockets and filings of the proceeding.

  • May 11, 2020: Governmental Bar Date
  • May 20, 2020: An Omnibus Hearing
  • June 24, 2020: An Omnibus Hearing

The process has taken place during a time of monumental chaos in agriculture and dairy created by shifts in consumer behavior exacerbated by the Covid-10 Pandemic.  As consumers followed “Shelter At Home” guidance issued across the country, fluid milk sales rose astronomically for 2 months.  Although they have leveled off a bit, fluid sales are still at much higher levels than in recent years.

The stage seems to be set for  the new owners to capitalize on consumer sentiment to reinvigorate fluid sales of the Dean brands, which have risen considerably during the past two months.  It is not known if  the new owners will maintain,  consolidate, or alter brands as they assume the reins.

“We are pleased to complete these transactions which maximize value for our stakeholders and will enable substantially all of our businesses to continue operating and serving customers across the country,” said Eric Beringause, President and Chief Executive Officer of Dean Foods.

“Our team has put in considerable work over the last several months to find the right partners for our assets that would enable them to continue to succeed while preserving the most jobs possible and to ensure a smooth transition for our customers and partners.

The completion of these sales is a testament to our employees’ efforts. I also want to thank our entire team for their commitment and dedication to Dean Foods not only over the last several months, but over the past several years.  Their hard work has helped Dean Foods build and grow brands and products that customers love, and I feel fortunate to have had the chance to work side-by-side with this extraordinary group.”

The Company also announced that as part of the US Department of Justice’s (“DOJ”) approval of Dean Foods’ transaction with DFA,  DFA has entered into a Consent Decree with the DOJ under which DFA has committed to hold separate and ultimately divest the dairy processing plants located in DePere,WI, Franklin, MA, and Harvard, IL together with certain assets related to the operations at each plant.

Upon closing of these sales, Mr. Beringause has stepped down from his role as President and CEO.

As previously announced on April 4, 2020, the U.S. Bankruptcy Court for the Southern District of Texas (the “Court”) also approved the sale of Dean Foods facility in Miami, Florida to Mana Saves McArthur, LLC, for $16.5 million. The company anticipates completing the transaction early next week.

As previously announced on April 30, 2020, Dean Foods completed the sales of the Company’s Uncle Matt’s business to Harmoni, Inc., and of its Hilo facility and related distribution branches on the Big Island, Kauai and Maui, as well as a license to the Meadow Gold Hawaii brand name and related intellectual property, to MGD Acquisition, LLC.

Additional information is available on the restructuring page of the Company’s website, DeanFoodsRestructuring.com.

In addition, Court filings and other information related to the proceedings are available on a separate website administered by the Company’s claims agent, Epiq Bankruptcy Solutions LLC, at https://dm.epiq11.com/case/southernfoods/dockets, or by calling Epiq representatives toll-free at 1-833-935-1362 or 1-503-597-7660 for calls originating outside of the U.S.

Davis Polk & Wardwell LLP and Norton Rose Fulbright are serving as legal advisors to the Company, Evercore is serving as its investment banker and Alvarez & Marsal is serving as its financial advisor.For Court filings and documents:

To read more about the Department of Justice report – a posted news release:

1 May 2020:   Justice Department Requires Divestitures as Dean Foods Sells Fluid Milk Processing Plants to DFA out of Bankruptcy  – Department Also Closes Investigation into Acquisition of Other Dean Plants by Prairie Farms.

The DOJ news release closes with these words:

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Eric Welsh, Acting Chief, Healthcare and Consumer Products Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 4100, Washington, DC 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the Northern District of Illinois may enter the final judgment upon finding it is in the public interest.

Sources: Business Wire, News Releases, and Industry Reports

Recipes-In-Love: Crafting Happy Hearts & Magic Memories (Thanks, KG!)

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“Food is symbolic of love when words are inadequate.” – Alan D. Wolfelt

 

What a world we’ve lived in the past six weeks!  When COVID-19 began sending the United States into a terrific tailspin of re-aligning our daily lives, whoever would have thought that our world would almost have totally changed in a period of six weeks.

 

Our life’s priorities have been realigned, and some of that is not all bad.  Spending more time at home has caused us to get reacquainted with our cookbooks and cookware, and revisit things in the kitchen.  In an effort to find some semblance of comfort, we’ve gone digging into recipe boxes for those beloved family-favorite recipes  which remind us of better times and bring back warm and happy memories.

 

And so, I’ve called upon Kathy Dougherty to help share some comfort with the rest of us through her recipes.  Kathy and her husband Blan are long-time, 3rd generation members of AgCentral Farmers Co-op, a farm-supply cooperative based in Southeast Tn.  Kathy is known to be one of the best farm cooks in all of the Southeast, and is infamous for her contributions to her community through agricultural boards, school boards, and education organizations.  (I’m also blessed to call her a dear friend!)

 

She loves creating memories with her family through cooking and her recipes, so she was a natural to call on for this first ‘recipe’ post – we surely hope there are more to come.  First, let’s meet her family –

 

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On the left, you find Kathy and Blan with granddaughter, Willow.  And on the right, daughter Betsy with husband Russell, and their sons Ryland and Cameron.  Kathy enjoys crafting recipes and creating memories for and with them all!

Kathy is also famously known for referring to Russell as her “Son-In-Love.”  That term of endearment is the inspiration for this post, and what is hoped to be the first of others like it  – “Recipes-In-Love.” 

So therefore, Russell and Kathy’s relationship is the catalyst for the first recipe we share – “Son-In-Love Brownies.”  According to Kathy, these are his favorite brownies, and once you taste them, they might become your favorite too!  They’re pretty easy to make, but the flavor is as gourmet as any you will find at an upscale bakery!

 

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Son-In-Love Brownies

1 box of regular brownie mix*

2 “Giant” size Symphony candy bars with toffee and almonds
Mix brownies as directed on the box. Pour half the mixture into a 9″ x 13″ pan.
Break the Symphony bars into pieces along perforations.
Place in the pan on top of the brownie mixture.
Cover with the remaining mixture. Gently smooth over candy pieces.
Bake according to the directions on the box, adding 5-10 minutes to baking time.
*We prefer just a plain chocolate brownie mix. (from Kathy)

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Of course, Brownies are always better with milk, and Mayfield is a favorite milk in the Dougherty household!  And why not drink it out of a fancy spring glass to lift your mood?

Million Dollar Cheese Dip     (A local-centric version)

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Million Dollar Cheese Dip
Green onions to taste, chopped, to add color and flavor
8 ounce Shredded Sharp Cheddar
1 1/2 cup mayonnaise
1/2 cup real bacon bits
1/2 chopped, toasted pecans
Mix all ingredients together and chill at least two hours before serving. Serve with your favorite crackers. (We like the Pretzel Flips and Ritz.) Easily doubled.

Willow’s Crispies

Scroll on down for a favorite treat of Kathy’s grandaughter, Willow!
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Willow’s Crispies
1 box cake mix*
1 1/2 cups Rice Krispies
1/2 cup melted butter
1 egg
Combine all the ingredients. Roll into 1″ balls
Place 2″ apart on a cookie sheet.
Bake 10-15 minutes at 375 degrees.
Keep tightly closed to keep them crisp.
*We like lemon cake mix, devil’s food cake mix and strawberry cake mix.
Coconut cake mix is good too then substitute 1/2 cup of coconut for 1/2 cup of Rice Krispies.
Look for a future photo of Willow’s Crispies!

Additional Recipes:  (but no photos at this time!)

Biscuits and Gravy Casserole

1 pound sausage, cooked and drained
1 package Pioneer Gravy mix
1 cup shredded Cheddar cheese
6 eggs, beaten
1/2 cup milk
1 can Pillsbury Grands biscuits
Preheat oven to 350 degrees.
Make the gravy according to directions on package
Cut biscuits into 1″ pieces and line the bottom of the pan. Spread cooked sausage over the biscuits. Sprinkle cheese on top.
Beat the eggs with the milk and pour over biscuits and sausage.
Pour gravy over all. Bake 30-35 minutes.
Can be refrigerated and baked the next morning.

Tammie Fruit Salad  (Yes, that’s the correct name!)

1 can pineapple tidbits, drained
1 large can Mandarin oranges, drained
Cherries, (if you like them) drained
1 can peach pie filling
2 bananas, sliced
Any other fresh fruit you like such as strawberries and blueberries.
You can also add 1/2 cup coconut. I add about 1 cup toasted, chopped pecans.
Best made the day before.

Willow’s Baked Corn Casserole

1 15 ounce can whole kernel corn. Do NOT drain.
1 14 ounce cream corn
1/2 cup sour cream
1/4 cup melted butter
2 eggs, beaten
1 box Jiffy cornbread mix
Combine all and pour into a 9×13 dish.
Bake 350 degrees for 35-45 minutes.
These recipes are some of Kathy’s favorites!  We hope you enjoy them as much as Kathy’s family has!  And – we look forward to sharing some of your favorites in the future!
Recipes-In-Love.  Creating Warm Memories and Happy Hearts! One Serving at a Time!
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New ‘LOCAL’ Brand in the Mountain South – Thanks, Food City & Milkco!

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Went to a Food City store and what did I see?

A New Brand of LOCAL Milk looking back at me!

 

In a month of challenging news centered on COVID-19 and how it is affecting farms across the country, a once-every-10 days trip to a grocery store offered a bright spot in an otherwise difficult time frame.

 

‘Southern Dairies’ is a new brand of milk making its way onto Food City shelves!  This carton was a sight for sore eyes, particularly when I saw the words  “We support LOCAL dairy farmers!”  And then, I saw the milk plant #37-82,  a milk plant I and many others in the South are familiar with – the Milkco plant at Asheville, NC.   The cost on this day (Friday, April 10, 2020)  was $2.99 / gallon.

 

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Because I’m fairly familiar with farms whose milk is delivered to certain milk plants in the southeast, this made me extremely happy!  That milk plant receives the majority of its milk from farms in northeast TN (from Knox County to Johnson County), southwest VA, North Carolina (central to western NC), SC, and north GA.

 

I have many, many friends whose milk is bought by Milkco, and this is another opportunity for their milk to be available to regional/local consumers!  Truly, this is a case of a milk plant located in the mountain south, purchasing from farms in the south, and delivered to food retailers in the South!  That’s a whole lotta local $$ circulating in the area economy!

 

Food City has collaborated with the Milkco plant before, as they have sourced their Food Club (private label) branded eggnog from them in past holiday seasons.

 

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There were  other brands of gallon milks on the Food City Dairy Case shelf at the time of this visit:  Mayfield is another brand of milk processing milk from southeast dairy farms, with a plant in Athens, TN.    The ‘food club’ brand is bottled at the Superior Milk plant in Canton Ohio, sourcing milk from farms in that regions of the country.

 

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Food City is a grocery store chain of approximately 130 stores located from Southwest Virginia to Eastern KY, through East TN and into North GA.  This is a chain I know well, since I am frequently in their stores, and I know vegetable growers who sell produce at Food City.    This chain, like many,  has been challenged with all of the panic buying experienced by many groceries across the country, with shortages at times.  The ‘new normal’ has still not settled in, but things are better than at the beginning of the pandemic hoarding.

Read some related articles about the effect Coronavirus buying had on Food City:

 

Read More about Food City in general:

 

None of us in farming, food, or the supply chain have any idea what the ‘new normal’ will be when the Coronavirus is more under control and life gets back into more of a predictable routine.  While it is hoped sales of Southern Dairies branded milk take off like a rocket, that too is unknown at this point, and we’ll have to wait and see what other varieties or flavors of milk make it into retail channels.  But shelf space and access to consumers, ever how much it is, is a great beginning!

 

Food City and Milkco have teamed up to give dairy farmers who operate farms in the southeast something to be proud of when they walk into a Food City – that’s their milk on that shelf!   And this won’t only help local dairy farmers, this will help other farms in the area who grow grains which help feed those dairy herds, it will help local agribusinesses who serve those dairies, and it will give a sense of pride to local southeast communities.

And for that, many farms and agribusinesses in the southeast are grateful for this ‘carton of hope’ at Easter Weekend, 2020. 

Southern Dairies, you have our prayers and our support for a successful brand launch and future!

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Dean Foods Files Bids; DFA successful for most of assets, Court must approve bids

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Attorneys representing Dean Foods in their Chapter 11 proceedings have filed two highly anticipated notices of bids and bid results with the US Bankruptcy Court for the Southern District of Texas, Houston Division.
The notices are Document 1270, Notice of Bid Results, and Document 1271, Notice of Bids.
The Court has a hearing scheduled for April 3, 2010, for the purpose of hearing any objections and furthering the sale process.     Any objections to a Sale Order or a Sale Transaction must be filed by April 1, 2020 at 12:00 pm, CST.
Dairy Farmers of America, Inc. has been announced by Dean Foods as the successful bidder for the great majority of Dean Assets.   This includes 8 facilities situated in the following southeast locations:
  • Athens, TN  (Mayfield)
  • Birmingham, AL (Ice Cream)
  • Nashville, TN  (2 plants – Purity and Country Delite)
  • High Point, NC
  • Winston-Salem, NC
  • Spartanburg, SC  (Pet)
  • Orlando and Orange City, FL  (TG Lee)
Prairie Farms Dairy, Inc. has filed bids which were successful for the Birmingham Fluid Plant (Barber’s), the Hammond Louisiana plant, and the Customer list related to Louisville, KY facility.  Prairie Farms also successfully bid on several plants throughout the Midwest.
The McArthur Dairy assets have a successful bid from Mana Saves McArthur, LLC.
Alternative bids were stated in Document 1270. MD-VA Milk Producers was the Alternate for High Point, NC. OP Church Street Property, LLC, is listed as an alternate for the Country Delite property in Nashville.
Details of various Bid offers for plants across the country can be found in a number of documents at the Epiq Southern Foods website.
The “Notice of Bid Results” – 6 pages long – is posted below:
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Did anyone ever ask the Shelf Stocker? (About handling fluid milk, that is)

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Did anyone ever ask the Shelf Stocker?  When it comes to milk cartons, that is.

It’s been a busy past few months for dairy farmers and dairy industry associates all over the United States.  Whether it’s called conference or summit or convention,  dairy folks across the United States have been in session after session in the months from November to March, sometimes (often!) referred to as “Meetin’ Season.”

I can’t remember a session for the past few years where the term ‘innovation’ hasn’t been used.  Sometimes, the term refers to new dairy products, but it is used equally as much in reference in packaging and handling for milk and other dairy products.

Balancing the costs associated with bringing milk and milk products to market along with visual elements which attract consumer purchases is like walking a high-wire across the Grand Canyon.  With dependable fluid milk sales losing market share to the ‘newest and shiny’ dairy toy, every level of the supply chain is in perpetual review.

On the way back to the ‘home office’ after one of those winter dairy meetings,  I stopped by a grocery store to grab some milk. (Whole milk, if you must know, and a brand in a yellow jug which I know comes from many farms in my area).

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As I often do, I just stood there evaluating the dairy case – fluid milk.  There were private label commodity milks from far away (over the ‘within 400 miles “Local” definition’ in the 2008 Farm Bill), a branded local milk, high-margin blended milks, and fake milks which are trying to convince consumers they are better than real, whole, milk.  Additionally, all of the ‘fakes’ (aka plant-based beverages) do nothing for farms and the farm economy in our southeast area of the US;  the crops or products used in them cannot be traced to a farm in the southeast.

While I was looking at the case, a very pleasant young man, the stocker clerk for the evening, brought out several cases of the yellow jug to place in the shelves.  Those yellow jugs are delivered in the plastic, open top milk crates which are as popular for home decor as for milk deliveries.

He then brought out some of the far-away jugs shipped in brown cardboard cases. In many dairy discussions with farmers, industry folks indicate that the brown cardboard is preferable to the traditional crates. Notice I said ‘industry folks.’

So, I just asked the clerk, a young man on the front line of consumer connections and milk sales,  if he would answer a question for me, and he politely said “Sure, if I can, ma’am.”

My question to the stocker:  From your perspective, do you prefer the cardboard carton, or the plastic milk crate?

The stocker clerk’s response was this: “I prefer the plastic crates.  For one thing, they are sturdier than the cardboard.  And also, their open top saves me time – I don’t have to cut open and fold cardboard boxes for bundling. I just reach in and get cartons and put them on the shelf.”

He went on to tell me of several times the cardboard cartons had weak spots in them, and extra care was required in handling.  He even had a cardboard carton break open one time, and jugs of milk fell out, crashed open, and milk went everywhere – including all over him.  (Anyone who’s had milk spill on them can identify with the dilemma, why you want to get it cleaned up quickly, and the extra time it takes to make sure you get all of it!)

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His response made sense to me – lots of sense, actually.  And anyone who has ever figured ‘time as money’ is likely to think it makes sense, too.  Those plastic milk crates actually still have some positives, and we need to remember that. They are appreciated by some folks, and their reasons make common sense. (Not to mention the physical benefits, since you get a bit of a workout while moving those cartons!)

In a society where we far too often see those on the frontlines of any type of ‘work’  never asked what they think about a situation, it is all too believable, too.

Has anyone ever considered the perspective of stocker clerks everywhere who do the actual work of getting milk on shelves, or has anyone ever done a ‘study’ or survey about what they would recommend?  Should their thoughts count on what is best for fluid milk and helping it re-gain traction?

The concept of moving more fluid milk is on smart dairy people’s minds, because it is generally the product which can be brought to market most quickly and at the least cost. For years, it has been the predominant product and ‘cash cow’ of the dairy processing industry – and it is being left behind in promotion and other aspects of cost of bringing milk to market.

Some have predicted that there may be a recession in 2020 at some point, and if that does happen, are we prepared to see dairy product prices decline by 20-40%? 

If comsumer pocketbooks are stretched by a recession, which category of milk sales will decline the fastest?  Will it be those higher priced milks, or even the fake milks / alternative beverages?  Or would such an event drive consumers back to basic milks, which are nutritional powerhouses in their own right?

There are many thoughts and opinions on how to best move more or recapture fluid milk, and there are many thoughts on which of the many attributes of whole milk are the best and should be promoted the most.  (That is another discussion for another post, or yet another convention to attend!)

But for now the question is: How often do we really consider the opinion of those who are actually doing the ‘physical work’ on getting milk to consumers?  If the “Learn by Doing” motto of 4-H is true, then there is much wisdom in all of the clerks who have ever placed milk on a shelf!  And I’m betting they’ve spoken with many consumers along the way, too.

I, like many have more questions than answers, and there are others who will say that other means of milk movement have their own merits.

I’m not suggesting companies which use the cardboard cartons change their way of doing things – that obviously works for them, and any company which sells fluid milk is a benefit to dairy farmers everywhere!  One of those in particular, another which serves a lot of southeast dairy farms, is about an hour from my location.

But I will say that a simple question asked of a pleasant young man sure gave me a new perspective.  I learned a lesson, and the conversation  made me think about things a bit differently.  I hope it’s made you think, too.

And ‘thinking differently’ – on all levels of people along the supply chain – is the first step to a brighter milk tomorrow.  The dairy industry is desperately searching for that brighter tomorrow.

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Borden Files Chapter 11; Moves to Protect Farmer Payments for Pre-Petition Milk; Interim Motion Approved on Jan. 8th

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UPDATE: Jan. 9th:  The Court issued an Order, posted late on Jan. 8th, which did indeed authorize Borden to pay independent farmers and co-ops, but there is some leeway as to the amount those producers and handlers might be paid.  Independent producers especially are encouraged to read the full 7 pgs. of the Order found here (you may also download and print), and perhaps consult with an attorney for interpretation and clarification.  Some situations may differ per state laws and milk bonding statutes.

Dave Natzke, Progressive Dairyman, has also published a report of the hearing with added information from the courtroom, which may be read here.

 

Borden Dairy Company, et al.,  now becomes the 2nd major dairy company within two months to file for Chapter 11 Bankruptcy to reorganize their financial structure.  Dean Foods, the nation’s largest processor of fluid milk, filed for Chapter 11 protection in November.

The Borden Chapter 11 filing caught many grass-roots dairy farmers off guard, especially due to renewed optimism due to recent new product introductions under the leadership of Tony Sarsam.

Progressive Dairy published an informative report written by Dave Natzke, Editor.

Borden Dairy  issued the following press release about the filing, which can also be accessed on the web:

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When a milk-purchasing company announces bankruptcy, the first question that grass-roots farmers and rural communities is concerned with is “Will those farmers get paid for ‘pre-petition’ milk?”  (That is the milk delivered in the period prior to the filing for which the farmer has not received payment.)   Payment for milk delivered from the day of filing forward is generally protected by the Court.

Normally, independent farmers, those who sell milk directly to a plant or company, and who are not members of a milk cooperative, are left holding the bag, and don’t get paid, because they are generally considered ‘unsecured creditors.’  Some states, but not all, have ‘milk bonding’ statutes, which protect payments to farmers to some degree; some states may protect payment for all or a significant portion of the milk delivered, while others may have bonding statutes which cover only a tiny portion.

In this Borden Dairy Chapter 11 process, the company has filed a Motion with the Court to ask that the Company be allowed to complete those payments to those independent farmers and five milk cooperatives. This Motion was scheduled to be heard as part of the “First Day Hearings” on January 7th, but at the writing of this blogpost, (midnigh/early am, Jan 8th) an Order has not been entered which will actually permit that to happen.  An Order must be entered on the Court’s Docket which will finalize payment.

The documents below, on page 3, paragraphs 7 and 8, note that Borden purchases raw milk from ‘approximately 262 independent family dairy farms’ and ‘five farmers’ cooperatives; collectively, those farmers and cooperatives are called ‘Milk Vendors.’  They also detail the normal times of payment.

The Borden Chapter 11 proceeding is legally known as Case 20-10010-CSS, and is being heard in the United States Bankruptcy Court for the District of Delaware.    Below are the 7 pages of Document 11 in the above captioned case, titled “Declaration of Jason Monaco in Support of Debtors’ Motion for Authorization to Pay Critical Vendors,” which is the Motion asking for payment to farmers.

Affected parties residing in or operating farms in the states of Mississippi or Texas likely need to pay special attention to a Footnote (3)  at the bottom of Page 3. Such parties may need to have this Document 1, along with other documents in this case reviewed by an attorney for interpretation, and have such a qualified attorney determine how this footnote may affect their farming operations.

NOTE:  The author of this blog is not an attorney, and any information posted SHOULD NOT be considered legal advice, only observations. These public documents are posted for information purposes only; it will be up to individual farms affected in this matter to consult attorneys to review their legal rights.

 

Here are the pages of Document 11, the Motion requesting payment to farmers:

 

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Any updates of significant events and/or official rulings by the Court will be added or noted when they are available, as will additional information related to this process.

NOTE:  The AUTHOR of this blog IS NOT AN ATTORNEY, and any information posted SHOULD NOT be considered legal advice. These public documents are posted for information purposes only; it will be up to individual farms affected in this matter to consult attorneys to review their legal rights per their individual situations.  The author has experienced a milk company bankruptcy as a producer, so therefore is familiar with the process from a farmer/producer perspective

 

ON A PERSONAL NOTE:  As Borden now joins Dean Foods in Chapter 11 proceedings, this is the second Financial Reorganization/Bankruptcy filing of a major purchaser of fluid milk in the United States within two months.  Many, many family farms will be affected to some degree by these proceedings, no matter if a farm is an ‘independent’ or a member of a cooperative. In turn, the rural communities across the country in which those farms are located will be affected as well.  May I ask that anyone who is a Believer in a Higher Power please join me in keeping the entire US Dairy Farm industry in your collective prayers?  Thank you for doing that!

May God Bless our Dairy Farms, and our Farming Communities!!

 

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Dean Chapter 11 – HUGE Step 1: Company Steps Up and Will Honor Previous Obligations to Farms

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A HUGE first step will take place in the Dean Foods Chapter 11 Bankruptcy proceedings.
Dairy Farmers will get their payments for milk delivered in the month prior to the date of the Bankruptcy Filing, an almost unprecedented event.  This news was confirmed by a Dean Foods source familiar with the situation on the evening of Thursday, November 14th.
Dean Foods announced on Tuesday, Nov. 12th, 2019, that it had initiated Chapter 11 Bankruptcy in the United States District and Bankruptcy Court, Southern District of Texas, Houston.
From the moment that filing became known, farmers, who are generally seen as unsecured creditors in a milk company bankruptcy, were extremely concerned that they would never receive payment for a month’s worth of milk. In hard dollars, this would be equal to tens of thousands of dollars to multiple hundreds of thousands of dollars, depending on the size of a producer’s herd.
In this case, officials in the Milk Procurement Division of Dean Foods advocated on behalf of payment for their producers.  In a court document titled  “Docket 29, Declaration of Robert Bruce Matson In Support of Debtors Motion to Pay Critical Vendors,”  Matson, Dean’s Senior Director of Milk Procurement, lays out a brilliant and passionate case on why these farmers deserved payment.
Nationwide, this would have been a loss of several millions of dollars scheduled to flow into dairy farm communities across the country. Those monies in turn would pay farm employees, pay feed bills, machinery repair bills, and a host of other expenses related to farm business operations.
These payments are known to apply to independent producers who contract directly with Dean Foods – it is not yet verified if this also applies to co-op handlers.  That will be clarified as quickly as possible.  Also needing more certain clarification will be payment for Nov. 1-11 milk deliveries to milk plants.  With the Nov. 12 filing date, all deliveries from that day forward will be secured as the company works through the Chapter 11 process.
The ability to make those payments, along with flexibility on how to make those distributions, was enabled by Court Orders entered on Wednesday evening, Nov. 13th, in US Bankruptcy Court, Southern District of Texas.
From that point on, it was up to Dean Foods officials to make determinations on what portions of the Settlement payment would indeed make their way to farms.
In an unprecedented bankruptcy in the dairy and food industry, an even rarer occurrence has taken place with this full payment being delivered to what the court defines as an unsecured creditor. Classification as ‘critical vendors’ helped achieve that end.
Officials at Dean Foods deserve an extraordinary amount of credit for taking farmers into consideration in their court documents and pleadings and getting this money to them which will be crucial for ongoing operations as the company determines a future.  If you have the opportunity to say “Thanks” to any of them, please do so.
While we are a very long way from a more stable future in this Chapter 11 Reorganization of the country’s largest milk processor, this is a HUGE first hurdle to cross.
Before this very complex bankruptcy is over, there will be many ups and downs, good days and bad days, and unexpected twists and turns. But on this Day 3 of Bankruptcy proceedings, many farm families are breathing a lot easier.
We hope for a brighter future for both farmers supplying the plants, and the employees processing and distributing the milk.
This will be a ‘one step at a time process.’  More information will be shared as it becomes available
Timeline thus far in a rather fast-paced and frenzied week:
  • Tuesday, Nov. 12th: Bankruptcy documents filed
  • Wednesday, Nov. 13th:  Court pleadings and Orders entered for ongoing operations
  • Wednesday, Nov. 13th: By close of day, over 125 document filed on court’s docket in less than 48 hours.
  • Thursday, Nov. 14th: Word received farmers would receive payment for their previous month’s milk.
  • Monday, Nov. 18th: Payments expected to be delivered to farmers
We are most thankful to a God who has answered many prayers with this news. The prayers for wisdom and guidance continue as we work to a more stable future.
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Dean Foods Files Chapter 11 Bankruptcy: News. Producer Questions. FAQ Sheets

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UPDATE – posted 6:35 pm Tues, Nov. 12:  “Emergency Relief Has Been Requested. A Hearing will be Conducted on this Matter on November 13, 2019 at 2:30 pm [CST] in Houston Tex.”   This information per court documents, TXSB.

Dean Foods, the nation’s largest processor of fluid milk, has filed Chapter 11 Bankruptcy in the Southern District of Texas. According to a company news release, Dean Foods states the company is working toward an ‘orderly and efficient sale of the Company.”

In the same release, Dean Foods also states it is “engaged in advanced discussions with Dairy Farmers of America, Inc. (“DFA) regarding a potential sale of substantially all assets of the Company. If the parties ultimately reach agreement on the terms of a sale, such transaction would be subject to regulatory approval and would be subject to higher or otherwise better offers in the bankruptcy.”

Related to the announcement, Dean Foods cancelled its regular Quarterly Earnings Call, which was scheduled to occur at 9:00 am on the morning of Nov. 12.

Information about the actions and proceedings can be accessed at http://www.deanfoodsrestructuring.com.

The major concern for dairy farm communities – especially the farmers, and  related agribusinesses and community small businesses across the country who serve those farmers – will be how independent dairy farms, who ship directly to Dean Foods plants, will be affected, treated, and compensated during the Bankruptcy proceedings.  Those detailed answers are not available at the time of this initial posting (11:50 am, EST, Nov. 12).

At this time, there are more unanswered questions than answers, and no doubt there will be many anxious farmers and co-ops around the country who depend on milk checks from Dean Foods.  It will take time for accurate answers and solutions to be found as this process works through the reorganizational Bankruptcy process.

For now, here are some FAQ sheets, as posted at http://www.deanfoodsrestructuring.com:

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Here is the related News Release as posted at http://www.deanfoodsrestructuring.com:

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As the news broke on the morning of November 12, here are some additional links from financial news outlets:

From ‘Seeking Alpha’: Initial (breaking) News Release – Dean Foods Files Chapter 11; posted at 7:09 am  – with a link to the news release below:

From ‘Seeking Alpha’: Dean Foods Company Initiates Voluntary Reorganization with New Financial Support from Existing Lenders, a posting with these bullets:

  • Company secures commitments for $850 Million in DIP Financing to Support Operations
  • In Advanced Discussions with Dairy Farmers of America Regarding a Potential Sale
  • Business Continues Regular Operations; Customer Receiving Uninterrupted Supply of Dairy Products as Normal

From ‘Seeking Alpha’: Dean Foods EPS misses by $0.72 – posted at $9.38 am

More information will be posted as it becomes available.

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AFBF FMMO Reform Working Group Announces Report & Recommendations

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American Farm Bureau released the report of its FMMO Working Group on Wednesday, Oct. 2nd.
The group was formed following a recommendation by voting delegates to the 100th AFBF Convention in January that “the organization convene a Farm Bureau- and producer-led coalition to review methods to restructure and modernize the current Federal Milk Marketing Order system.”
The group began meeting in June with both on-site meetings and conference calls. They heard from a variety of speakers, from the Federal Market Administrator’s office to several industry representatives from differing sectors.
The southeast area was represented by  dairy farmers Steve Harrison (TN), Everett Williams (GA) and Joe Paul Mattingly (KY), along with Brandon Cobble (TN), who served as one of a few Farm Bureau staff representatives to the working group.
 

“What next?” is the obvious question following the release of the AFBF Working Group report.

According to  AFBF’s Chief Economist, John Newton,  “Farm Bureau members will need to review the information, modify or add ideas, and submit resolutions.”  He notes that the report “will not automatically be considered, nor will it automatically go into Farm Bureau policy.

In other words, and in keeping with Farm Bureau procedure, members must take action.

Look for additional information offered in future posts.

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