District court divvies up $285,000 in California case


Capital Press

The National Milk Producers Federation has settled a legal dispute over payments to an indebted California dairy farm.

The federation's Cooperatives Working Together program had agreed to pay out about $285,000 to the Coelho Dairy in Merced, Calif., in return for retiring a herd of 240 cows.

The program is intended to reduce overall U.S. milk supplies, thereby stabilizing prices to farmers.

After the federation agreed to the payment, feed suppliers and other creditors asserted multiple claims on the herd-retirement funds, alleging the dairy owed them more than $670,000 altogether.

Since the federation could not verify which claims were valid or which creditors had priority, the funds were turned over to a federal district court in California.

As part of the settlement agreement, approved by a federal district judge on Oct. 2, the A.L. Gilbert Co., a dairy feed manufacturer, will receive about $163,000 of the herd retirement funds.

Another creditor, Valentino Rocha, will receive about $108,000, and nearly $14,000 will be returned to the CWT program in compensation for legal costs.

The program is also freed from any liability arising from the case.

Many California dairy farms have taken on tremendous debt in past year, with producers experiencing average losses of about $100 per cow each month through mid-September, said Michael Marsh, CEO of Western United Dairymen.

Production costs have now fallen to about $14 to $15 per hundredweight of milk, down from more than $18 per hundredweight earlier in the year, he said.

Meanwhile, milk prices are expected to top $12 per hundredweight in November, up from $10 per hundredweight earlier in the year, Marsh said.

"It seems the losses are smaller," he said.

Even so, the levels of indebtedness in the industry are continuing to weigh heavily on feed suppliers and other companies that cater to dairy farms, he said.

"It still is an issue. Folks just got so far behind, they're not caught up. The financial hole that we've got here is like a huge crater," Marsh said.

Problems in the dairy industry have a chain reaction on suppliers and their workers, aggravating unemployment in several areas, he said. "It ripples throughout the community."

Staff writer Mateusz Perkowski is based in Salem, Ore. E-mail: mperkowski@capitalpress.com.

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