As U.S. bankruptcy courts in Ohio, Michigan, and Indiana continue to wend their way through the remains of what once was planned to be a string of Dutch-run megadairies across the Midwest, court-appointed receivers in Michigan are capitalizing on the high value of agricultural land to try to recover some of the funds lost on a number of defaulted dairy loans.
More than 417 prime agricultural acres in Lenawee County’s Ogden and Medina townships are to go on the auction block at 6:30 p.m. Tuesday at Christian Family Center in Adrian as part of a court-sanctioned sale to recoup more than $9 million owed by Midwest AG Investments LLC, the real estate subsidiary of Wauseon-based Vreba-Hoff Dairy Development LLC.
An additional 370 agricultural acres in St. Joseph County, Michigan, is to be auctioned at 1:30 p.m. Tuesday as part of the same effort.
The sales are the latest efforts to find repayment solutions for a dozen or more megadairy farms that declared bankruptcy in 2009 and 2010 in and around Michigan, Ohio, and Indiana. As a result, several agricultural lending institutions lost tens of millions of dollars.
Dozens of Dutch farmers bought into what they thought a decade ago was a profitable dream of opening and operating lucrative megadairies in the Midwest and employed Vreba-Hoff to help them locate, build, and equip their new facilities.
But their dreams went sour in 2009 as milk prices crashed to levels of decades ago, sending many of the dairies developed by Vreba-Hoff into bankruptcy protection.
Dairies across the country were affected as milk prices fell and feed and fuel costs rose, while federal price supports were unable to hold milk prices up enough to maintain profitability. Even though analysts believe milk prices have recovered, at the low point, dairy farmers were losing between $50 and $200 per head per month on their farms.
Last year, ownership of three of Vreba-Hoff’s first megadairies, the Vreba-Hoff Dairy I and II near Hudson, Mich., and the nearby Waldron Dairy, were transferred to their main creditor, Rabo AgriFinance Inc. and were consolidated into a single site in Hillsdale County’s Wright Township.
Last month, the federal bankruptcy court in Toledo approved a reorganization plan for Bryan’s Springfield Dairy LLC, which filed bankruptcy in 2010. It will repay some of its secured creditors at as much as 100 percent and other creditors at 15 cents on the dollar. In July, an earlier bankruptcy reorganization case involving Van Ham Dairy Leasing LLC in Continental, Ohio, was finalized under more favorable terms that also allowed that dairy to keep operating.
At least five other former Dutch dairy operations in the area have ceased operations, with their creditors foreclosing on the secured property and their bankruptcy cases dismissed as a result, according to federal bankruptcy court records in Indiana. Two other Indiana dairy bankruptcy cases, involving Union-Go Dairy Leasing and Four-Leaf Clover Dairy, still are being adjudicated, court records indicate.
A spokesman for AgStar Financial, a Minnesota financial institution that was the lead underwriter on several of the start-up loans for the Dutch dairy operations, said that of the 18 original Vreba-Hoff-related properties it financed, three have undergone a reorganization under Chapter 11 and once again are operational, two are still going through a Chapter 11 reorganization, eight are under new ownership, one was acquired by AgStar on Sept. 1, and four others are continuing to operate under their original ownership structure.
Contact Larry P. Vellequette at: email@example.com or 419-724-6091.
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