Michigan AG: Dairy Farmers Caught Up in Dean Foods Bankruptcy

The Attorney General said Dean Foods is demanding that dairy farmers who directly supplied it milk to repay part of what Dean paid the farmers before it went bankrupt.

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LANSING, MI — The Michigan Department of Attorney General and the Michigan Department of Agriculture and Rural Development (MDARD) recently learned that Dean Foods, the largest dairy processor in the United States, sent notices to a handful of Michigan dairy farmers who direct-shipped their milk to a former Dean dairy plant in Michigan’s Upper Peninsula. The notices demand the return of money paid to them by Dean in the months leading up to the company’s bankruptcy. The company filed for bankruptcy in November 2019.   

The notice is an attempt to force those dairy farmers who previously direct-shipped milk to Dean Foods to repay a portion of the amount Dean paid the farmers during the 90-day period before Dean filed for bankruptcy. While this action is a common practice under bankruptcy law, not all amounts paid in the normal course of business are subject to such claims.

The issue was brought to the attention of Attorney General Dana Nessel last week by state Sen. Ed McBroom, R-Vulcan, who represents a few dairy farmers who direct-shipped milk to a Dean Foods plant in Marquette and may be affected. These farms are not represented by either the Michigan Milk Producers Association or the Dairy Farmers of America co-ops. A dairy inspector from MDARD  is personally reaching out to these farmers to provide them with information on how to respond to the Dean notice.  

“We are disappointed that hard-working dairy farmers and their families are put in the position of having to incur costs, either in paying the amount demanded or from obtaining legal counsel to defend themselves – and I want to personally thank Sen. McBroom for bringing this issue to my attention,” said Nessel.   

“Michigan’s dairy farmers provided milk in good faith fulfilling their contract with Dean Foods,” said Gary McDowell, MDARD director. “It’s disheartening that the company is now questioning those payments made to farming families.” 

“These U.P. dairy farms, and many others like them throughout Michigan, have suffered greatly during the coronavirus pandemic,” said McBroom. “Now, again, through no fault of their own, they are being punished for simply and responsibly doing their jobs to provide healthy products to consumers. I appreciate the Attorney General and MDARD taking an interest in this unfortunate situation and am hopeful it can be resolved without further harming these small family farms.”  

Dairy farmers with legal questions should consult their private legal counsel. 

Questions regarding the Dean Foods notice can be directed to Jeff Haarer in the Agriculture Development Division of MDARD at 517-896-2236.   

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