A group of feed sellers is attempting to recoup loans from a bankrupt Idaho dairy, arguing that repayment of feed debts shouldn't be considered secondary to bank loan repayments. Bob Naerebout, executive director of the Idaho Dairymen’s Association, fears that the lawsuit could have detrimental effects on farmers' ability to borrow from banks. “It has the potential to lower the value of what you can borrow based on cattle,” he said to The Times-News.

The question is whether Idaho law (Idaho Code 45-1802) states a lien by a feed seller attaches only to the actual feed sold, or if it also attaches to the livestock that eat the feed.

The case has its roots back in 2008 and 2009, when Green River Dairy, owned by Herculano and Frances Alves, took out 10 loans with Farmers National Bank with their dairy’s cattle as collateral.

Court records state several feed sellers sold hay and wheat to the dairy to be used as cattle feed.

Later, Green River Dairy defaulted on its loans with Farmers. The bank then took possession of the cattle and sold them through an auction, raising $211,957.58.


With money still owed the feed sellers, they sought part of the proceeds, arguing their liens should not become invalid just because the feed is eaten. Twin Falls County 5th District Judge G. Richard Bevan ruled in favor of the feed sellers, denying Farmers’ claim that its lien on the dairy’s cows took priority over the feed sellers’ liens.

Farmers appealed the decision to the Idaho Supreme Court.

The Times-News reported that Green River Dairy owes Farmers about $2,616,008.24 and owes the feed sellers a total of $185,404.71. PD

—From The Times-News (Click here to read the full article.)