In recognition of your time, we’ll attempt to summarize recent events or actions making dairy headlines and reported in our weekly digital newsletter, Progressive Dairy Extra. Then we’ll try to put that news into perspective and briefly describe how it might affect you.
DEAN FOODS BANKRUPTCY PROCEEDINGS
Legal proceedings concerning the Chapter 11 bankruptcy filing and future of Dean Foods continued to unfold.
As we reported previously, Dairy Farmers of America (DFA) and Dean Foods announced an agreement for DFA to acquire a substantial portion of Dean’s assets and business for a base purchase price of $425 million.
A motion to consider the DFA-Dean asset purchase agreement (APA) and establish bidding procedures and timelines was planned on March 12. However, that hearing was deferred until March 19, after Progressive Dairy’s deadline.
Under that motion, DFA would become the “stalking horse bidder” to acquire 44 of Dean’s 57 facilities and other business assets. The agreement also proposed timelines and procedures for the bidding process and potential bankruptcy auction.
Prior to the original March 12 hearing, several objections to the APA, timelines and procedures were raised by various parties. Among those was an ad hoc committee representing a broad cross-section of U.S. dairy cooperatives, collectively representing more than 3,000 member dairy farms who produce nearly 10% of the U.S. milk production. Co-ops include: Lone Star Milk Producers Inc., Agri-Mark Inc., Cayuga Marketing LLC, Cobblestone Milk Cooperative Inc., and Maryland & Virginia Milk Producers Cooperative Association Inc. (One co-op represented on the committee, Michigan Milk Producers Association, abstained from joining the objection.)
The committee expressed concerns related to DFA, market consolidation within the dairy industry and the impact on DFA’s competitors. The committee also cited potential antitrust issues, with the risk that the sale will be denied, in whole or in part, by the U.S. Department of Justice (DOJ). The objection also discussed bid protections afforded to DFA in the event the DFA/Dean sale doesn’t come to fruition.
The committee asked the court to deny designating DFA as the stalking horse bidder or, alternatively, modifying bidding procedures to create a dual-track auction process identifying back-up bidders for individual auction lots in the event that DOJ does not provide the necessary regulatory approval for the sale to DFA.
In a separate docket, Maryland & Virginia Milk Producers Cooperative Association Inc. and Southeast Milk Inc. (SMI) filed additional objections.
Another objection was filed by an “official committee of unsecured creditors” with even more assertions. It alleged the proposed process appeared to have been singularly focused on obtaining a bid from DFA without regard to the pursuit of other strategies, such as selling assets on a regional basis and/or the separate sale of Dean’s fluid milk and frozen product businesses. It said bidding procedures established in the DFA/Dean agreement gave DFA unfair advantage over other potential bidders in multiple aspects.
Lawyers for Dean (aka Southern Food Group LLC) rebutted the objections and procedures in a 252-page docket filed on March 12, at Progressive Dairy’s deadline. For its part, DFA also defended all aspects of the APA and procedures.
“We recognize that there are a lot of parties interested in the outcome of this hearing – for many different reasons,” said Monica Massey, executive vice president and chief of staff, DFA. “While some are concerned about their own financial stake, we are focused on protecting and preserving family farms across the country. Our main focus has always been to maintain milk markets and limit the disruption to the industry.
“(We) believe that we have reached a deal that is fair and reasonable for all and that will ultimately benefit all dairy farmers, as no one has a greater interest in preserving and expanding milk markets than we do,” she said.
Based on a previously announced timeline (which could be modified on March 19), the deadline for interested parties to furnish information to be considered a potential competing bidder for any or all assets identified in the DFA-Dean agreement, or to be considered a potential bidder for assets not part of the agreement, was scheduled for March 31.
The deadline for potential bidders to submit qualified competing bids for either assets covered under the agreement, or those outside the agreement, is April 13. If there are competing bids, an auction would be held sometime in April. A hearing to approve the sale would be held April 27.
Check Progressive Dairy’s website for updates as they become available.
DAIRY MARGIN COVERAGE PROGRAM
In early March, U.S. Rep. Tom Emmer (R-Minnesota) introduced legislation amending the Dairy Margin Coverage (DMC) program. The bill (H.R. 6111) would allow dairy producers participating in the DMC program the option of making a one-time update to their milk production history.
The bill has been referred to the House Committee on Agriculture.
With improvements made in the USDA’s dairy “safety net” transition from the Margin Protection Program for Dairy (MPP-Dairy) to the DMC program, one disappointing feature for many dairy producers was how milk production history was determined. Approved in the 2018 Farm Bill, DMC used the highest amount of milk marketed annually during the years 2011, 2012 and 2013 as a baseline. In subsequent years, producers were allowed to adjust the history to reflect any increase in the national average milk production.
If approved, DMC participants could elect to use the annual milk marketings during the full calendar year prior to enactment of the amendment.
The bill would help the DMC program become more reflective of a dairy operation’s current production and provide a more accurate representation when covering a producer’s DMC margin.
NEW I-9 FORM
We reported it previously, but here’s a reminder that the U.S. Citizenship and Immigration Services (USCIS), which administers the nation’s immigration system, released a new version of Form I-9 for employers to verify the identity and employment authorization of their employees.
The new version contains minor changes to the form and its instructions. The changes clarify who can act as an authorized representative on behalf of an employer, clarifies acceptable documents for Form I-9, updates the process for requesting paper Forms I-9, updates USCIS website addresses and updates the Department of Homeland Security privacy notice.
Employers may use the previous form until April 30, 2020. After that date, they can only use the new form with the “10/21/2019” date (located in the lower left corner of the form). USCIS provides details on its I-9 Central website (I-9-central), including a webinar.
In addition to using the new I-9 form, if you’re going through your human resources/employee files, the Society for Human Resource Management (SHRM) offers some additional advice. Employers often hang on to old I-9 forms too long or destroy old forms too soon, according to Allen Smith, SHRM manager of workplace law content.
Attorneys cited by Smith recommend that small employers keep three I-9 binders: one for employees who need to be reverified, one for employees who do not need to be reverified and one for former employees. Former employees’ I-9s should be removed only if the forms are older than three years from the date of hire or one year from the date of termination, whichever date is later.
Don’t keep I-9s in the same location as other personnel records. Doing so increases the risk of mistakenly destroying other records or providing the government with more than the I-9 records if Homeland Security Investigations or another agency conducts an onsite audit.
Read more on handling Form I-9 records at New edition form I-9.
- Progressive Dairy
- Email Dave Natzke