German Court Orders Compensation for Wrongly Accused Cucumber Grower

Written by Tyler R. Etter

A court in Hamburg, Germany, has declared that Frunet, a vegetable cooperative based in Spain, should
be compensated for losses sustained following the accusation that the coop’s cucumbers were the likely
source of the 2011 e. coli outbreak.

During the peak of the outbreak, Hamburg officials publicized their suspicions about the cucumbers
being the source of the outbreak. As a result, the coop’s sales dropped, impacting growers in amounts
up to $200 million a week. Investigations revealed that fenugreek sprouts, not cucumbers, were the
source of the deadly outbreak.

The cooperative has asked for €2.3 million in compensation, the rough equivalent of $2.54 million. The
director of the coop noted that although the prospect of reimbursement is important, the restoration of
the coop’s good name was also important. “Pointing the finger at a company can destroy it completely
in seconds...” said Richard Sopenberg, Furnet’s sales manager. He further stated that the coop has
managed to rebuild itself to the production and sales levels from before the outbreak crisis.

It is important to note that the City of Hamburg could still appeal this decision, and even in the lack of an
appeal, the amount must be set in a second litigation phase.  A comparable case in the United States
was decided in the opposite direction. Tomatoes had been named a likely source of salmonella during a
2008 outbreak, but the real source was revealed to be jalapeno and serrano peppers. The case was
decided on the basis that food safety warnings are not “regulatory taking[s]” and that there was no
obligation for the government to compensate the tomato growers.

Dairylea Announces Proposal to Merge with Dairy Farmers of America

The Board of Directors at Dairylea Cooperative, Inc., a dairy cooperative with more than 1,200 members across the Northeast, voted to merge with Dairy Farmers of America (DFA) and its more than 8,000 member farms.  The Board presented the proposal to its members at Dairylea’s Annual Meeting on October 16.  Members will be asked to vote on the approval of the proposal at a special meeting in February 2014.

Dairylea’s Board of Directors spent the last three years examining how to best position its members for the future.  This involved organizing the “2020 Group,” a committee formed in 2010 to solicit member input on how to generate more value beyond the traditional cooperative structure.  According to the DFA press release, one of those options involved looking at creating market opportunities with investments in processing.

Dairylea has been a member cooperative of DFA since 2002.  According to the press release, the proposed merger will be beneficial to both parties.  It will provide Dairylea members access to growing national and international milk markets, ongoing patronage dividends, tax benefits, and other opportunities.  It will also provide DFA members with long-standing customer relationships in the Northeast marketplace, enhanced Farm Services, and expanded access to capital to facilitate strategic growth.

Six seats will be added to DFA’s Board of Directors to represent the expanded membership in the Northeast, and DFA’s Northeast Area Council will continue its local governance in a structure similar to that of Dairylea.

Before the February 2014 vote, a series of informational sessions will be held to provide Dairylea members with more information on the merger and the voting process as well as to allow Dairylea members to ask questions.

The DFA press release can be found here.  Please visit the DFA website and Dairylea website for more information on the cooperatives.

Written by Alyssa Looney – Research Assistant

The Agricultural Law Resource and Reference Center

@PSUAgLawCenter

October 23, 2013