by René Lastreto II¹

I. Nature of the Lien

The Producer’s Lien is a California statutory lien. The lien is upon “any farm product” and upon all processed or manufactured forms of such farm product securing the producer’s labor, care and expense in growing and harvesting the product.² “Farm products” are essentially all agricultural products of the soil and includes honey and beeswax, oil seeds, poultry, poultry product, livestock product and livestock for immediate slaughter.³ Timber, timber products, milk, milk products and aquacultural products are excluded.⁴

The lien is in favor of every producer of farm products that sells the product grown by the producer
to any processor under either an express or implied contract.⁵ A “producer” is a person engaged in the business of growing or producing farm products.⁶ An Illinois Bankruptcy Court construing California law, In re S.N.A. Nut Co. 197 B.R. 642, 652(B.CT.N.D. Illinois, 1996) has held that a California processor could assert a Producer’s Lien as to products it may grow. In SNA Nut Co., supra the Debtor attempted to defeat the California Producer’s Lien by arguing that since the party asserting the lien (in that case Tulare Nut Company) was also a processor, it was precluded from asserting the lien. The Court denied summary judgment on that issue finding an issue of fact as to the extent of product delivered by Tulare Nut Company to the Debtor that was actually grown byTulare Nut Company. Id.

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by René Lastreto II¹

I. Introduction

The Dairy Cattle Supply Lien law in California provides for a statutory lien know as a “Dairy Cattle Supply Lien” in favor of those who provide feed or material (a defined term) to aid in the raising or maintaining dairy cattle.² The Dairy Cattle Supply Lien was added to the Food and Agricultural Code in 1987. Other than very minor amendments to conform with certain provisions the Commercial Code, the law remains as originally drafted. While there are no reported cases construing the law, certain issues have arisen in various bankruptcy cases dealing with enforcement of the lien law. Generally, two of the primary financing constituencies in a dairy bankruptcy case are a traditional lender and grain suppliers. In addition to the substantial defaults facing the traditional lender, grain suppliers often have large balances owed at the time of the petition is filed. Most grain suppliers are sophisticated enough to have filed Dairy Cattle Supply Liens with the Secretary of State.

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