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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To Be “Milk” or Not to Be? That is the Question!

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UPDATE: Comment Period Extended Until October 11!

August 27th is Deadline for Comments to FDA on Milk Standards of Identity

Background Information for the purpose of preparing public comments to the FDA concerning Standards of Identity for Milk

 

On March 29, 2018, FDA introduced the  “FDA Nutrition Innovation Strategy,” a comprehensive effort to review labeling of foods and an impact on human health, particularly in relation to preventable and chronic diseases.

“An almond doesn’t lactate, I will confess.”  And with those words, FDA Commissioner Scott Gottlieb, in a July 17 report by Politico,  amped up the debate about the relabeling of plant beverages which label themselves as ‘milk,’ which many believe are misleading and deceptive.

Although firm enforcement of FDA standards of identity should have been implemented several decades ago when “Plant Beverages” or “Nut Milks” first began to creep onto ‘dairy’ shelves, they were not.  No one knows the reasons why, but here we are, now with a debate and labeling examination which will cost taxpayers – and companies – millions of dollars.  Here’s some background:

A History:

First, it’s helpful to actually read and know about the standards as they exist:

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Standards of Identity for ‘Real Milk” were established in 1938 in the Federal, Food, Drug, and Cosmetic Act.

Part of the controversy results from the “real” vs. “processed” (aka ‘fake/faux ) nutritional properties of real milk.  The Wisconsin Agriculturist, in a July 23rd, 2018 article written by Fran O’Leary,  describes it this way:

Real milk provides eight times more naturally occurring protein in every glass, is wholesome and simple, and is a minimally processed beverage. Real milk also has no added sugar. The sugar in real milk is lactose, which is a naturally occurring sugar. Many types of nondairy milk, such as almond milk, contain sugar. Tell that to your friends and family members who believe otherwise.”

The Wisconsin Agriculturist concludes that article by quoting an emphatic statement from the American Dairy Coalition, which reminds real dairy advocates:

“It is crucial the dairy industry speaks up on the issue,” the American Dairy Coalition said in a statement. “We can no longer stand by” and allow plant-based beverages to be labeled as milk.

On July 26, 2018, the FDA released an official statement concerning its reasoning and approach to re-working milk / dairy labeling standards.

This statement occurred in conjunction with a July 26, 2018 Public Meeting to Discuss FDA’s Nutrition Innovation Strategy.   Several industry stakeholders went on the record with comments at that meeting, and those comments can be accessed via links here. 

Public comments on the FDA Nutrition Innovation Strategy will be taken until August 27, 2018.  (Update / 3rd week of August:  comments now taken until Oct. 11.)  Comments can be posted at this docket folder. (Electronic – OR – written/mail delivery submission is acceptable!).   It is particularly important for dairy FARMERS – those whose livelihood depends most directly on the sales of milk from their farms – to comment either individually, and via any producer organizations of which they are members!!

A Kathleen Doheny Article from WebMd:
“[Gottleib] . . . said the agency has ”probably not” been enforcing the standard of identity — and as a result, this nonenforcement has become the standard.”
– Agency will be ‘modernizing’ the standards of identity
– Comments expected be taken for a year
– Intentions to enforce standard of identity

The article also notes that plant / nut beverage sales increased 61% from 2012-2017, while Real Milk sales decreased 15%.

This proliferation of plant-based beverages has led to sales of those products which are expected to reach over $16 Billion (in US Dollars, but referring to the total world market value)  by the end of 2018.  That competition is in two forms: 1) dollars which have been removed from dairy communities & economies across the United States, and 2) Hundreds of Millions of gallons of real milk from real cows which no longer has a home, and has led to a long cycle of depressed prices which is steadily killing rural economies.

Much of that market displacement – and resultant stress on rural economies –  is believed to be because plant “milk” is a term which cannibalizes and preys on the goodness of natural milk, and the proven knowledge milk is natural protein source, readily absorbed by the human body.  

Spirited Plant-Based Advocacy Organizations and Individuals will challenge Real Dairy / Real Cow-Goat-Sheep-Mammal Advocates:

It should go without saying, but never doubt that those organizations and businesses who continue to build their financial empires while opposing the enforcement of standards of identity of “Real Milk”  will be relentless and tireless in their fight to bend the narrative in their favor.

A collaborative editorial in a Boulder, Colorado, web-based publication, advocates for the blurred lines and gray areas which are the basis for the advocacy of truth-in-labeling for those who believe traditional standards of identity exist for a reason.  Their citations to many will be questionable, and in some cases, outdated in their accuracy, particularly in the Greenhouse Gas Emission discussion.   At least one commenter suggests alternative beverages be called ‘milk substitutes.’

The Good Food Institute, whose website has the tagline “Creating a healthy, humane, and sustainable food supply,’ has already submitted this letter on July 23rd, before the July 26th hearing.

Food Navigator, in an article written by Elaine Watson, relays views of a firm which recently raised $24 Million to commercialize ‘animal-free proteins.”  According to the article, the company ‘takes food grade yeast, and adds DNA sequences . . . which instruct the yeast to produce the proteins found in milk.”

[Note: Admittedly, this technology is morbidly fascinating, but also gives real meaning to the terms “Sci-Fi Food” and “Frankenfood.”  We really, really need to ask ourselves:  just because we can – should we?”] 

 

Dairy Farming: continued decline, will it stabilize, or more consolidation?

It is no secret that the dairy farming industry is in a sea change of transition from smaller (400-head or smaller) herds to large herds of 1000 cows or more. And with that change, rural ag economies, the agribusinesses and services which serve those dairy farms are at risk themselves.

From New York, to Virginia, to Georgia, to Wisconsin, and to other regions, reports of dairy farms exiting from the industry are almost of epidemic proportions.  If these were job losses from a ‘factory in a big building’ closing, the public outcry would be deafening. However, because dairy is so scattered across the landscape and not contained in a single building like an industrial building, the loss of these economies is often a silent erosion that gets little public notice.

One example of some of the abuse that has occurred:

From The Cheese Reporter: Sunflower Butter!  A bid request from the USDA itself

But let’s give credit to #TraderJoes, who actually has an acceptable label on their plant beverages!  Kudos to them, and I’ll be back in their stores because they get it right! This is an example to others that it can be done!

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Additional Links to Consider (and look for others to be added before Aug. 27th!):

From Feedstuffs:  Gottleib:  “FDA . . . is invariably likely to get sued”

For now, please begin to do your homework, and draft your comments.   It could be as simple as “Real Milk comes from Cows, Goats, Sheep and other mammals.  Make this simple, and have “MILK” be labeled that way!”

From the American Dairy Coalition – Background & bullet points:

You can save time, and comment via electronic means directly to FDA via the portal.  As you do this, please remember your comments may be able to be viewed by the public.

And here’s a link to the portal to comment by October 11 deadline – Comment here.

  • As of 5:00 pm on Monday, August 20, 496 comments were received.
  • As of 11:59 pm on Sunday, August 26, 2,303 comments had been posted.

Please make sure that by late evening, on Monday, August 27, and now on October 11, your voice will be among them too.

#MilkTruthMatters  #IdentityMatters  #RulesMatter

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