By KEVIN WALKER
Michigan Correspondent

WAUSEON, Ohio — Soon, the Vreba Hoff dairy company might go out of business. Apparently, its fall might be as hard as its rise was illustrious: It no longer owns or runs its three Michigan dairies and apparently doesn’t own any others outright.

One of Vreba Hoff’s lenders, Rabo Agrifinance, has recently taken ownership of Vreba Hoff’s dairies in Michigan through an organization it set up called Southern Michigan Dairies. Todd Gurley, a spokesman for Rabo Agrifinance, would only confirm that the lender had taken possession of some of the company’s properties.

“We’re at the point of developing what we have,” Gurley said. “We still have issues to settle and we’re evaluating what assets we have. We took over some of the assets, that’s been reported.”

Gurley wouldn’t speculate on how much longer its lawsuit against Vreba Hoff would last and he said he doesn’t know if Vreba Hoff will continue to exist as a company. In addition to owing Rabo Agrifinance money, Vreba Hoff is reportedly owed a lot of money by another company that is now bankrupt.

Cecilia Conway, a spokeswoman for Vreba Hoff, said the company has some differences with Rabo Agrifinance that still have to be worked out. Nicole Zacharda, an enforcement specialist with the Michigan Department of Natural Resources and Environment (DNRE), said Vreba Hoff doesn’t own or run any of the three dairies.

“Vreba Hoff is not in control of any of those dairies anymore,” Zacharda said. “They are all owned by Southern Michigan Dairies.”

Conway confirmed this. She also said the cows from two of the dairies were moved to the Vreba Hoff 2 location in Hillsdale County and that Vreba Hoff’s two other farms, Vreba Hoff 1 and Waldron Dairy, are now idle. Vreba Hoff 1 and Vreba Hoff 2 are both in Hudson, Mich., but Vreba Hoff 1 is in Lenawee County.

One mortgage that was assigned to Rabo Agrifinance in Hillsdale County last November, was originally assigned to the Waldron Dairy in 2007 for $55 million, according to the Hillsdale County register of deeds office. But Conway said the $55 million figure reflects the value of all three properties combined.

Vreba Hoff appears to be the victim of several factors, including low milk prices, high grain prices, the lack of available credit after the financial crisis hit in 2008, the rising cost of land in Michigan, as well its own problems with Michigan’s Department of Environmental Quality (DEQ), which at the moment is part of the DNRE.

“I think it was more economic,” Conway said. “We were working through our issues with the DEQ.”

Vreba Hoff has been sued by the state of Michigan twice for environmental breaches and now owes the state $580,000 in fines; what’s more, the company is reportedly having to spend more time and money than it used to managing its waste in order not to incur more fines. But that’s only one of its problems.
An illuminating report by David Alvis of the British Oxford Farming Conference in 2008 makes it appear that the “writing was on the wall” for Vreba Hoff even back then.

Alvis, the recipient of a grant from the Conference, traveled to the United States three times in 2008 and spent five weeks in Indiana, Ohio, Michigan and Wisconsin during one of his visits. He wrote in his report that Vreba Hoff was able to take advantage of the high value of its assets in the Netherlands, as well as the low cost of land in the Midwest to greatly expand its enterprise.
The Vander Hoff family, which moved to Michigan from the Netherlands in the 1960s, bankrolled Vreba Hoff along with their Dutch cousins, the van Bakel family. There are other owners, too. The Vander Hoff family built up its dairy operation until by 1998 they had 3,500 milking cows.

“Steven Vander Hoff and Willy van Bakel saw an opportunity to capitalize on their collective expertise and in 1998 set up Vreba Hoff Dairy Development, LLC, to provide a one-stop-shop service for Dutch and German dairy farmers wishing to relocate to the U.S.,” Alvis wrote.

“Dutch farmland in the late 1990s was selling for typically five to 10 times what land could be acquired for in parts of the Midwest and with quota worth as much as the land itself, emigrating Dutch farmers could, after allowing for the cost of building a state-of-the-art facility, increase the size of their operation by five to 10 times virtually overnight with the added opportunity of being able to grow further without the restriction of quotas and punitive environmental laws.”

Alvis wrote that in 1998 the company suddenly doubled its number of milking cows, to 7,500. Also, over a period of 10 years, between 1998 and 2008, Vreba Hoff helped about 50 families from the Netherlands, Germany and Canada relocate to Indiana, Michigan and Ohio to farm. Vreba Hoff would provide various services to these client farms. Typically the size of the farm would be just under 700 cows in order to avoid regulation as a large farm.

“Vreba Hoff had enjoyed 10 years of virtually unbroken success ...” Alvis wrote. “However, risk management and environmental compliance did not seem as high up the agenda as they had been on other businesses I visited.”

According to the Michigan DNRE, between 2001-09 the department documented 49 separate discharges of Vreba Hoff waste to surface waters in the state.
The DEQ sued Vreba Hoff in 2003 and negotiated a settlement with the company the following year. But the problems popped back up again. In December 2009, the department sued Vreba Hoff a second time, making similar allegations.

“We have an injunction that they can’t irrigate effluent in violation of their NPDES (National Pollutant Discharge Elimination System) permit,” Zacharda said. She added the injunction applies to whoever owns and runs the dairies.
Zacharda refused to speculate on why the Vreba Hoff operations were not more cooperative with the state. “I don’t know why they didn’t provide more oversight,” she said.

Conway sees the matter differently. “What the press hears from the state and what the reality is are two different things,” she said. “Vreba Hoff has not had a discharge in over three years. Some of it was a public relations issue.”
Conway said she’s glad that some of the employees that worked at the Vreba Hoff farms are still working there. She said that the company is working on getting financing to start a new venture.

“All the refinancing has to work together,” she said. “Right now, milking cows is a tough business because of high corn prices and low milk prices. There are very aggressive financial lenders who want to get out of the dairy business.
“There has not been a formal decision made as to what the next steps are. It will probably still be in dairy. Everything that transpired is disappointing, but we are looking towards the future.”

Of Vreba Hoff’s client farms in Michigan, all seven are still in business, Conway said. Only five of its client farms in Ohio have gone out of business; that’s out of 26 altogether. Of the 13 farms it helped start in Indiana, 10 are still in business.