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Organic and non-GMO farmers facing bankruptcy clawback

The executive director of the Organic Farmers Association (OFA) says more than 90 farmers in Iowa, Minnesota, and other states recently received “clawback” letters surrounding the 2022 bankruptcy of Iowa-based Global Processing, Incorporated.

Kate Mendenhall says the letters are legitimate.

“Farmers have also received the claw back to pay back the money they were paid in 2022 for grain that they delivered, and they don’t get the grain back.”  She says, “That is long gone, but they are asked to pay back the money that they were given to the grain delivered.”

The clawback process in bankruptcy allows a trustee to recover assets or their value from a debtor who made unfair transfers within 90 days before the filing.

Mendenhall says this is the second such case impacting organic growers since 2021, but it can happen to any farmer, organic or conventional.

“Farmers need to, you know, be careful about who you’re selling to,” she says.

She tells Brownfield OFA is advising growers who received the letters to contact an attorney, as well as request an extension with the firm handling the filing.

“There is definitely room for negotiation, so I definitely don’t recommend that any farmer just pay the amount that they were given,” she says, “because farmers shouldn’t be held responsible at all, but because this is part of the bankruptcy proceeding, it’s possible we will have to pay something.”

Mendenhall says the organization is lobbying for farmer protections from bankruptcy clawback in the ongoing farm bill process. 

A link to further resources on the issue can be found HERE.

AUDIO: Kate Mendenhall – Organic Farmers Association