Commentary: Humboldt Creamery case shows Farm Bureau in action

Issue Date: March 10, 2010

By John Vevoda

About this time a year ago, dairy farmers in Humboldt County got the first of several unpleasant shocks. Humboldt Creamery, where I and most other dairy farmers delivered our milk, went into bankruptcy.

The bankruptcy posed many challenges for the dairy producers who relied on Humboldt Creamery to process and market our milk. Those challenges compounded when we faced an unexpected lawsuit from the state of California. But that's when I saw again just how effective Farm Bureau can be at solving problems for its members.

I am a long-time Farm Bureau member and a new CFBF board member representing Humboldt and Del Norte counties.

As members, we know that Farm Bureau is out on the front lines every day, working diligently on our behalf in Congress, in the state Capitol, representing us in court and working with the media. And Farm Bureau also works to solve the real, day-to-day problems facing farmers and ranchers.

In a bankruptcy like the Humboldt Creamery case, the assets of the insolvent corporation are frozen. The freezing of the creamery's assets meant that various fees and assessments owed to the California Department of Food and Agriculture weren't being paid by those handling the bankruptcy. That included assessments for marketing and promotion programs, fees for milk inspection and funds paid into the milk pooling program.

Now remember, all the dairy farmers had had all those fees deducted from our milk checks, and therefore, the producers themselves had paid all that was owed. However, due to a quirk in the law, farmers can be held liable a second time for monies already paid, if they were never paid over to the department.

Nine months rolled by and, while I was out of town one day, my son called to inform me that we had received notice from the state attorney general that we were being sued for nonpayment of the unpaid fees and assessments. I was dismayed and shocked that the dairy producers of Humboldt Creamery were being sued for this money that had already been paid through our association.

Would I have to pay the state twice? And would I and my fellow farmers have this added expense at a time when the dairy business is struggling?

While attending my first CFBF board meeting in Sacramento, I shared my story. Shortly thereafter, I was contacted by CFBF to see how they might help. Farm Bureau worked with me to see if a settlement agreement could be negotiated with the department. Personally, I did not want to pay any of the fees a second time, but I also wanted to put this issue to rest as soon as possible.

Farm Bureau began working with CDFA, to see if there was another solution to the problem. Several settlement ideas were put forward and I shared these with the dairy producers in my area. Without getting into great detail, we were able to put together an arrangement that would substantially reduce the amounts owed, waive most penalties and interest owed, provide for payment over a two-and-a-half-year period and delay the first payment until later this year. Our obligations were reduced by about 75 percent and we were given a generous time schedule for payment. Most importantly, it was a way to get the lawsuits behind us.

Once the settlement agreement was in place, it was time for action in the county. The settlement agreement had a deadline for acceptance and we needed to get the word out and the necessary paperwork into the hands of our dairy farmers. Our Humboldt County Farm Bureau coordinated an effort to do just that. Over the weekend after the agreement was reached, we produced information packets with the essential materials regarding the settlement and several of us delivered them to all the affected dairy producers.

Most of the farmers accepted the solution that was developed and offered through the work of our county Farm Bureau and CFBF, and I for one am very pleased with the outcome. This was a clear case of Farm Bureau delivering real value to our members in a very short period of time.

So remember, membership in Farm Bureau does not cost—it pays. It is an investment that will return dividends in the future. And next time you face an issue in your business and wonder where you can turn, contact your Farm Bureau and just see what they can do.

(John Vevoda, a dairy farmer from Ferndale, represents Humboldt and Del Norte counties on the California Farm Bureau Federation Board of Directors.)

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