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Michigan dairy farmers caught up in Dean Foods bankruptcy

Michigan dairy farmers caught up in Dean Foods bankruptcy

The Michigan Department of Attorney General and the Michigan Department of Agriculture and Rural Development (MDARD) recently learned that Dean Foods, the largest dairy processor in the United States, sent notices to a handful of Michigan dairy farmers who direct-shipped their milk to a former Dean dairy plant in Michigan’s Upper Peninsula. The notices demand the return of money paid to them by Dean in the months leading up to the company’s bankruptcy. The company filed for bankruptcy in November 2019.

The notice is an attempt to force those dairy farmers who previously direct-shipped milk to Dean Foods to repay a portion of the amount Dean paid the farmers during the 90-dayperiod before Dean filed for bankruptcy. While this action is a common practice under bankruptcy law, not all amounts paid in the normal course of business are subject to such claims. 

The issue was brought to the attention of Attorney General Dana Nessel last week by state Sen.Ed McBroom, R-Vulcan, who represents a few dairy farmers who direct-shipped milk to a Dean Foods plant in Marquette and may be affected. These farms are not represented by either the Michigan Milk Producers Association or the Dairy Farmers of America co-ops. A dairy inspector from MDARD is personally reaching out to these farmers to provide them with information on how to respond to the Dean notice.

“We are disappointed that hard working dairy farmers and their families are put in the position of having to incur costs, either in paying the amount demanded or from obtaining legal counsel to defend themselves and I want to personally thank Sen.McBroom for bringing this issue to my attention,” said Nessel.

“Michigan’s dairy farmers provided milk in good faith fulfilling their contract with Dean Foods,” said Gary McDowell, MDARD director. “It’s disheartening that the company is now questioning those payments made to farming families.”

“These U.P. dairy farms, and many others like them throughout Michigan, have suffered greatly during the coronavirus pandemic,” said McBroom. “Now, again, through no fault of their own, they are being punished for simply and responsibly doing their jobs to provide healthy products to consumers. I appreciate the Attorney General and MDARD taking an interest in this unfortunate situation and am hopeful it can be resolved without further harming these small family farms.”

Dairy farmers with legal questions should consult their private legal counsel.

Questions regarding the Dean Foods notice can be directed to Jeff Haarer in the Agriculture Development Division of MDARD at 517-896-2236.

The American Farm Bureau Federation is also standing up for the dairy farmers affected by this.

According to Michigan Farm News, almost 500 dairy farmers nationwide who once sold milk to Dean Foods received the letters threatening legal action unless they refund money legitimately earned prior to the bankruptcy filing. 

American Farm Bureau President Zippy Duvall was critical of what he called “predatory lawyers for bullying dairy farmers at a time when many are struggling to keep their farms running.”

“It’s ludicrous to suggest the meager profits from regularly scheduled and routine milk sales — sales that are heavily watched and regulated by the federal government — were outside the regular course of business,” Duvall said. “Someone needs to have the farmers’ backs, and I’m proud to say AFBF is stepping-in to do just that.”

AFBF sent a letter to ASK LLP, the St. Paul, Minnesota, law firm managing the Dean Foods estate calling for an immediate reversal of their “predatory shakedown” and threatening potential legal action if the firm fails to withdraw the letters sent to farmers.

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