Managing Feed-Related Claims
As livestock operations become larger, so does the size of individual customer accounts and their associated feed purchases.
Mycotoxins are fodder for feed-related claims because they are naturally occurring and can be found in trace amounts in many instances. The feed customer or their counsel will assert that the quantity found was very harmful to the animals.
In truth, the mycotoxins, if present, likely had no impact on the customer's operations. It is simply an attractive claim to counsel for the producer in relation to the overall business dispute.
F&G: How can a feed supplier guard against feed-related claims, including mycotoxin-related claims?
Langel: Feed manufacturers and nutritional consultants concerned about the allocation of risks associated with mycotoxins or other feed-related claims can employ a number of standard procedures in their operations that will help clarify the expectations of producers, and at times, serve to protect from unfounded claims made by producers whose production levels fall short of expectations.
Feed manufacturers and consultants should recognize the tendency for producers to zero in on variables outside the realm of their own management or control. Herd health consultants and nutritionists often report that when production challenges arise, an inordinate amount of attention is given to the feed, concentrates or mineral packages. Instead of looking into their own management of water, heat, forage, reproduction or other facets, producers focus on feed. In an effort to stem this tendency, consultants should take time to listen to producers' concerns, and to educate them on the importance of effective management of the other variables affecting their production.
Consultants should endeavor to keep customer expectations in check with the realities of dealing with biological processes. Aggressive sales styles and "puffery" may lead to unrealistic performance expectations, and ultimately, a disappointed client. Take time to explain the pros and cons associated with a particular nutritional strategy, and understand that often producers may place undue weight on examples of performance gains or projected cash flows. Producers must understand that variables exist in any production system, some of which are under the control of the producer and consultant, but a greater number of which are up to environmental factors.
Bylund: It is advisable to consider an evaluation of contracting procedures to provide for the proper disclaimer of warranties and to provide for alternative dispute resolution methods, so that any disputes that arise can be dealt with in an efficient and inexpensive manner. To help avoid serious disputes, it may be beneficial to engage the services of a competent attorney familiar with the industry and these issues to appraise current practices and recommend improvements to increase the level of protection from unfounded or frivolous claims.
Managing your companies' internal claim process is also very important. To that end, develop and follow a complaint resolution protocol that includes steps for gathering pertinent information about the claim or complaint as early as possible in the process. Maintain a solid record-keeping process. It is always more difficult and costly to assemble the information at a later date in the context of defending a claim in litigation. This goes for both feed product records and records related to the producer, his/her animals, management, symptoms, veterinary diagnosis and the like.
Langel: Because many feed performance claims are asserted in collection actions, keeping your accounts receivable in check helps manage these risks. Performance claims raised in defense to collection efforts are some of the oldest tricks in the book. Keeping detailed records of invoices, account balances, orders and finance charges can help avoid the need for litigation and help to support your case if a lawsuit is necessary.
Lastly, know your customer before servicing the account. Request organizational information, (if incorporated or an LLC) and financial information, and consider a master agreement before providing services on credit.
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