Dairy bankruptcies are growing in Colorado
For the Fence Post
The dairy industry is showing signs of coming out of the dumps it’s been in for almost a year, but there remain questions about how many of them might survive.
At least six dairies have filed for Chapter 11 bankruptcy protection and more may come, according to the Associated Press. Those filings, for the most part, became necessary when New Frontier Bank of Greeley collapsed, and then the milk market followed suit. Chapter 11 allows those dairies to keep control of their operations while they attempt to reorganize operations and find new financing.
Four of the known filings include Diamond D Dairy of Longmont, Johnson Dairy of Eaton, Podtburg & Sons Dairy of Greeley and TV Dairy of Fort Lupton. They were financed by New Frontier. Nichols Dairy of Canon City and Daisy Lane Dairy of Cope relied on other banks.
Bill Wailes, head of the animal science department at Colorado State University and former dairy extension specialist, said as many as 10-15 other dairies could file for bankruptcy before everything shakes out. Those, he said, also were financed by New Frontier.
In August, the Federal Deposit Insurance Corp. conducted a national auction of $445 million in New Frontier loans. Another auction is scheduled Sept. 29.
“A lot of those guys who bought those loans are liquidators. So the only way these dairies can protect themselves from being liquidated is file for bankruptcy,” Wailes said.
Colorado Commissioner of Agriculture John Stulp told the Denver Post that loans were bought at huge discounts at the FDIC auction. Some, he said, may work with borrowers to restructure payment plans, but it’s not known how many.
“The process is starting – but some of the details we’ll never know because they end up in private transactions,” Stulp told the Post.
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President Biden released a fiscal year 2022 discretionary budget request that includes $27.8 billion for the Agriculture Department, a $3.8 billion or 16% increase from the 2021 enacted level.