WHAT DO YOU KNOW ABOUT YOUR PROCESSOR?

Ag Rx: Prescriptions for Your Ag Business Health

California is a litigious state. In this state we sue over the heights of curbs. We sue over farm odors. We sue over the wording on paycheck stubs.

When the lawsuit is primarily against an insolvent (or insured) party, we cast about and name others somehow connected to the chain of events. We sue anybody and everybody we can.

This brings me to an issue involving food safety.

Of late, we have seen several instances where processors of fruits, vegetables and nuts have issued recalls of processed goods. In some instances the defective product has caused serious harm and even death. This has resulted in lawsuits against processors (and consultants, etc.).

Could the day come when plaintiff attorneys sue everyone in the food chain with the processors? Even growers?

This is to be expected. But what about the producers who sold farm products to the processor? Are they completely in the clear and exempt from any litigation exposure? Are they potential targets as defendants? How long will it be before some processor processes and sells defective product yet is insolvent and can’t respond to damages claims or, more likely, lacks adequate insurance coverage?

Can you really doubt that the day is not far off when plaintiff’s counsel also sues all of those in the food chain with the processor? Including growers?

Whether the plaintiffs prevail is not the issue. What is at issue is the significant cost and expense to the producer of defending the lawsuit.

So the question becomes – what do you know about the strength of the processors you sell your farm products to? Are they well heeled? Is there a significant net worth? Are they operating on a shoe string? Do they cut corners? Do they have regular inspections?

All too often we find that producers do not know much about the strength of the processors they sell their farm products to. Maybe they should? Could be an expensive lesson to learn.

Riley Walter is an attorney and shareholder at Walter Wilhelm Bauer law firm.  He is a specialist in business reorganization and fellow of the American College of Bankruptcy. He can be reached at 559.490.0949 or at rileywalter@W2BLaw.com.