BOISE, Idaho (AP) -- Cattle and dairy officials in Idaho say dairies and ranches could have a tough time getting financing if the Idaho Supreme Court upholds a district court's decision putting feed producers ahead of a bank in recovering debt from cows sold at a south-central Idaho dairy that defaulted.
The Idaho Business Review reports (http://wp.me/p2XDCg-kaE) that the Idaho Supreme Court plans to review the May decision by the Twin Falls County district court involving the Green River Dairy. However, a hearing date hasn't been set.
"The impact to the dairy industry is significant," said Dan Steenson, an attorney who works with the Idaho Dairy Association. "If this lien under these statutes extends to cattle, it may affect the banks' willingness to give them loans to operate."
Dan Allred, CEO and President of the Idaho Agricultural Credit Association, said banks would have difficulty making loans to financially weak operations without the certainty of having first priority on the cattle financed by the bank.
Typically, feed producers sell to cattle operations on credit, and are paid when dairy farmers or ranchers sell milk or beef.
Darwin Olberding, a lobbyist and farmer working with the Idaho Grain Producers Association, said that when ranchers or dairy farmers can't pay, there are usually debts owed to multiple parties. He said it can be tough on feed providers when they aren't paid after a default.
"It sure hits a guy hard when it hits, because it's usually for one or two hundred thousand (dollars)" Olberding said.
Steenson said a 1983 law made clear that banks received first priority in recovering debts, but a 1989 amendment to the law made that less clear.
Olberding said feed producers have been consistently beaten in court though the law appears to give feed producers some standing in recovering the cost of their feed.
Information from: Idaho Business Review , http://idahobusinessreview.com/
Copyright 2012 The AP.