Vreba-Hoff faces foreclosure threat 10.13.2010

Written by David Green.

By DAVID GREEN

Vreba-Hoff Dairy is stuck in a position of having too few cattle and at the same time too many.

By not being able to operate at full capacity, Vreba-Hoff dairy owners claim they’re unable to make payments on fines levied by the state’s environmental agency.

But that’s just the problem, says the state. The two dairies northwest of Morenci are unable to adequately handle the manure created by the livestock, and that’s what brought the forced reduction in herd size.

A $580,000 lien against Vreba-Hoff’s two dairies was recently approved in Ingham County Circuit Court, on behalf of the Michigan Department of Natural Resources and Environment (MDNRE). Judge James Giddings is giving the state and the dairy until Oct. 18 to reach a settlement.

The lien covers $180,000 in unpaid penalties assessed against Vreba-Hoff—due to the concentration of pollutants applied to fields in irrigation—and $400,000 in financial assurance.

The MDNRE is seeking a reduction of 600 cows a month until the dairies meet standards set for manure application onto fields.

Vreba-Hoff’s troubles compounded last week with news that a mortgage company is seeking foreclosure on $55 million in loans.

Rabo Agrifinances, based in Delaware, filed a complaint Oct. 5 in federal court in Grand Rapids, alleging Vreba-Hoff has defaulted on loans; allowed property taxes to go unpaid; and failed to plant crops on a significant portion of the mortgaged land. Furthermore, Rabo claims the Michigan dairies are being devalued by the state government action listed above.

Rabo wishes to place the properties in receivership to prevent continued diminishment of value.

In addition to the Vreba-Hoff I and II dairies, the foreclosure affects Waldron Dairy in Hillsdale County; Blue Stream Farms near Convoy, Ohio; Wild Cat Farms near Payne, Ohio; and Williams Dairy Farm near Prospect, Ohio.

Rabo Agrifinance loaned the money to Vreba-Hoff in 2007 and 2008.

A judge will hear an emergency motion Oct. 19 to rule on the receivership request.

Chesterfield Dairy east of Morenci was placed in receivership in September 2009 with a debt of $8.5 million owed to AgStar Financial Services of Minnesota. Vreba-Hoff served as a consultant and developer of the dairy.

Chesterfield closed and was sold at auction. Bridgewater Dairy of Montpelier, Ohio, announced the purchase of the dairy in September and will reopen the facility under the name Oakshade Dairy.

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