Dean Foods fails to make Federal Order Payment

With milk prices crashing nearly 40% due to the impact of the coronavirus, dairy producers have been struggling to keep afloat. Unfortunately the news got even worse.

According to USDA, Dean Foods failed to pay its Producer Settlement Fund (PSF) obligation to at least four Federal Milk Marketing Orders (FMMOs) for April 2020 milk production. Dean Foods missed its April 12 payment deadline for the Appalachin, Florida, and the Southeast FMMOs and the April 15 deadline for the Midwest FMMO which includes dairy producers across Wisconsin and Minnesota, northern Iowa and Illinois and parts of North and South Dakota.

According to Michigan Farm News, Mideast FMMO Market Administrator Sharon Uther declined to comment on whether or not Dean Foods had made good on its payments due to dairy farmers in the seven other orders. 

USDA officials noted that when PSF monies are not sufficient to make full payments, it results in reduced milk prices paid to all dairy farmers pooling in a given FMMO. So not only did farmers producing for Dean Foods fail to receive payment, the shortfall from the Dean Foods estate will also impact all cooperatives, independent producers and handlers in the affected FMMO.

USDA officials say they recognize the significance of this non-payment and is working with the Department of Justice in an attempt to recover those monies as part of the Dean Foods estate.

According to the news report, should the PSF payments be recovered from the eventual Dean Foods bankruptcy settlement, full payments will be distributed back to producers.

Dairy Farmers of America purchased the lion's share of Dean Foods assets on May 1 and should assume financial responsibility for PSF payments for May 2020 and beyond.