I guess this is the definition of "third party risk." One of the major milk processors in the United States Dean Foods filed for bankruptcy. That left a lot of Dairy Farmers scrambling to find another milk processor. I am sure many dairy farmers that sold milk to Dean Foods were wondering if they would get paid for some of their milk. Milk trucks pick up the milk at least every other day. When I was a dairy farmer every two weeks I would get paid for the milk produced the previous two weeks. I trusted my milk processor that I would get paid.

I may prepay fertilizer at my supplier and trust that next spring they will spread the fertilizer on my farm. I haul beans to the elevator, when I have the contract filled I trust that the elevator will pay me for the beans. But, what if the elevator or supplier files bankruptcy? I guess the term is "third party risk." In many cases no one knows that the business may be having financial problems until it is too late.

There are many Minnesota and Federal laws that have been passed to try and protect farmers from getting caught in a bankruptcy. However, it still occurs and many times some type of fraud or illegal activity is involved but not always. The Dean Foods bankruptcy has a new twist I have never heard of before. Lawyers representing Dean Foods and the bankruptcy have sent letters to their former dairy farmers demanding legal action if they do not "refund" some of the money they were paid for their milk before the bankruptcy filing.

The article I was reading quoted one dairy farmer that was supposed to come up with $50,000 dollars. I am sure the amount was determined by how much milk they produced. The last few years have been tough with really low milk prices and something like this makes it much worse! One would think at the very least a dairy farmer would have to hire a lawyer to try and fight the issue. So, it was nice to see the American Farm Bureau Federation has stepped in to help.

"Shame on these predatory lawyers for bullying dairy farmers at a time when many are struggling to keep their farms running," said AFBF President Zippy Duvall. "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. Put plainly, your letters are a predatory shakedown, written in legalese. Someone needs to have the farmers backs, and I am proud to say AFBF is stepping in to do just that." I hope there are other farm groups willing to do the same!

STOP: 8 Things to NOT do in Minnesota

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