Largest US dairy processor applies for bankruptcy protection

The US’s largest dairy processor, Dean Foods, has applied for bankruptcy protection as it tries to reorganise its debt and process the sale of the business.

Falling milk consumption and a declining proportion of children in the population are two of the main reasons thought to be behind the company’s difficulties.

Announcing the move, the business said it was in advanced discussions with farmer co-op Dairy Farmers of America regarding a potential sale of almost all of its assets.

See also: US farmers’ six-point plan for better dairy breeding

“If we ultimately reach an agreement on the terms of a sale, the transaction would be subject to regulatory approval and higher or otherwise better offers,” said a statement from Dean Foods.

During this process the business is operating as normal and supplying its customers.

However, it has told its dairy farmer suppliers not to attempt to cash cheques it sent out prior to its 12 November Chapter 11 bankruptcy protection application through the Texas courts.

It expects to be able to honour those cheques but the process may take longer than usual as the court has to give Dean Foods the authority for the banks to honour the cheques.

Dean Foods was formed in 1961 but its origins in milk go back to 1927.

It buys about 10% of the milk produced in the US and has 15,000 employees.

Dean Foods dairy products

© Dean Foods

Among its 50 brands are the longest-established and top-selling US liquid milk DairyPure and leading flavoured milk brand TruMoo.

New funding of US$850m (£659m) has been secured to allow it to continue operations, including payment of employee wages and benefits, as well as paying its suppliers.

Dairy Farmers of America was formed in 1998 when, facing growing processor power, four of the US’ leading milk co-operatives merged.

It has more than 14,000 dairy farmer members and 42 plants nationwide, producing liquid milk, cheese, butter, ice cream, dairy ingredients and other products under national and regional brands.

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