Pandemic

USDA Announces Improvements to the Dairy Safety Net and New Pandemic Market Volatility Assistance Program

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First steps in over $2 billion package of assistance for dairy farmers
Burlington, VT, Aug. 19, 2021 — The U.S. Department of Agriculture (USDA) today announced the details of the Pandemic Market Volatility Assistance Program as part of meetings with farmers and a tour of farms with Senator Leahy. In June, Secretary Vilsack committed to providing additional pandemic assistance for dairy farmers in an exchange at a hearing with Senate Appropriations Committee Chairman Leahy. Through the program, USDA will provide about $350 million in pandemic assistance payments to dairy farmers who received a lower value for their products due to market abnormalities caused by the pandemic. The assistance is part of a larger package including permanent improvements to the Dairy Margin Coverage safety net program.

“The Pandemic Market Volatility Assistance Program is another component of our ongoing effort to get aid to producers who have been left behind and build on our progress towards economic recovery,” said Agriculture Secretary Tom Vilsack. “Family dairy farmers have been battered by the pandemic, trade issues and unpredictable weather and are the life-blood of many rural communities throughout Vermont, the Northeast and many other regions. This targeted assistance is the first step in USDA’s comprehensive approach that will total over $2 billion to help the dairy industry recover from the pandemic and be more resilient to future challenges for generations to come.”

Senator Patrick Leahy (D-Vt.), the chairman of the Senate Appropriations Committee and the senator with the most seniority on the Agriculture Committee, said: “I thank Secretary Vilsack for directing this assistance to small dairies in Vermont and across the country, just as he told me he would when we spoke earlier in the summer. This will help to make up for losses suffered by these family farms due to the pandemic and together with the positive adjustments to the Dairy Margin Coverage Program will be good news for farmers go into the fall.”

Under the Pandemic Market Volatility Assistance Program, payments will reimburse qualified dairy farmers for 80 percent of the revenue difference per month based on an annual production of up to 5 million pounds of milk marketed and on fluid milk sales from July through December 2020. The payment rate will vary by region based on the actual losses on pooled milk related to price volatility. USDA will make payments through agreements with independent handlers and cooperatives. Handlers and cooperatives will distribute the monies on the same basis July – December 2020 payments were made to their dairy farmer suppliers and a formula set by USDA. USDA will reimburse handlers and cooperatives for allowed administrative costs.

USDA will contact eligible handlers and cooperatives to notify them of the opportunity to participate in the Program. USDA will distribute payments to participating handlers within 60 days of entering into an agreement. Once funding is provided, a handler will have 30 days to distribute monies to qualifying dairy farmers. As part of the program, handlers also will provide virtual or in-person education to dairy farmers on a variety of dairy topics available from USDA or other sources. A handler will have until March 1, 2022 to directly provide educational opportunities to dairy farmers.

Additional details about the program are available and will be updated at the AMS Dairy Program website.

The program is part of $6 billion of pandemic assistance USDA announced in March to address a number of gaps and disparities in previous rounds of assistance. Other pandemic assistance to dairy farmers includes $400 million for a new Dairy Donation Program to address food insecurity and mitigate food waste and loss; and $580 million for Supplemental Dairy Margin Coverage for small and medium farms.

Outside the pandemic assistance, USDA will also make improvements to the Dairy Margin Coverage safety net program updating the feed cost formula to better reflect the actual cost dairy farmers pay for high quality alfalfa. This change will be retroactive to January 2020 and is expected to provide additional retroactive payments of about $100 million for 2020 and 2021. Unlike the pandemic assistance, this change will also be part of the permanent safety net and USDA estimates it will average about $80 million per year or approximately $800 million over ten years for dairy headed into the upcoming Farm Bill. Full details on these additional actions to support dairy farmers will be provided when regulations are published in the coming weeks. Dairy farmers should wait until these details are available to contact their local USDA Service Center for more information.

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