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Grain buyer’s bankruptcy could take steep toll on Delta farmers

» Defaults on contracts and non-payment on grain already delivered are main worries

The chapter 12 bankruptcy of a principal of Arkansas’ Turner Grain Co. and accompanying grain contract defaults could cost farmers in the Mississippi Delta “paper” losses of up to $70 million, according to a Greenville lawyer for several grain producers.

Separate from the paper losses is the prospect of some farmers going unpaid for grain already sold to Turner Grain.  Attorney Scott Phillips, who represents Leland farmer Harper Ross and five other Mississippi farmers who sold to Turner, said his clients have not been paid for grain deliveries totaling about $1.7 million.

The paper losses would come through Turner Grain’s inability to honor contracts made at the start of the planting season, leaving corn and soy bean growers to sell at today’s much lower price. Corn contracts averaged around $5.10 a bushel in late April. By Tuesday’s close, they had fallen to around $3.43. Likewise, soy bean contracts averaged around $12.07 a bushel in late April and early May but by Tuesday they stood at around $9.79.

“We’ve been hearing of $60 million to $70 million in loses,” most of which are based on grain getting lower prices than they contracted for with Turner Grain, Phillips said.

Not only are Ross and the other clients “not getting the price they bargained for, they may not get anything,” Phillips said.

Phillips said he can show that Turner received payment for the nearly $2 million worth of grain before Turner co-owner Dale Bartlett of Marvell, Ark., filed for bankruptcy protection Sept. 12.   The chapter filing in the U.S. Bankruptcy Court for Easter Arkansas is designed for individuals involved in agriculture and buys Bartlett time in his personal defense against lawsuits arising from Turner Grain’s failure to pay farmers in Arkansas, Louisiana and Mississippi, the Arkansas Democrat-Gazette reported Monday. The newspaper reported agricultural officials believe that the full scope of the grain dealer’s multi-state defaults could reach several tens of millions of dollars.

Bartlett lists assets valued at from $1 million to $10 million, according to the filing.

The Mississippi Department of Agriculture reports that Turner Grain is not currently licensed as a grain buyer in the state, though it had a license as recently as 2012.

Ross said in an interview with the Democrat-Gazette that Turner Grain picked up about 335,000 bushels of grain valued at around $1.7 million.

He said he became concerned when Turner Grain’s trucks quit showing up to load additional grain.

Phillips said the grain sold by Ross and the other Delta farmers went directly to Tyson Foods. Tyson paid Omaha, Neb.,  grain distributor Gavilon, Phillips said, who based his claim on statements made by Gavilon.
Gavilon has said it paid Turner Grain in full, according to Phillips.

“We’re trying to figure out if anyone is hiding any money that arose out of our crops,” Phillips said of his clients. “We’re trying to see if any other middle men are holding funds that are directly traceable to our funds.”

Added Phillips: “We’re in sort of a holding pattern right now but we’re not going to hold much longer.”

State bond requirements for grain brokers in Mississippi apply only to the square-footage of warehouse space purchased grain takes up, according to Steve Nail, president of the Greenville Grain Coop, a federally licensed grain storage operation.  The federal bond requirement is much the same as the one the state has, he noted.

Nail said the coop, made up by and governed by individual farmers, pays on delivery. It sells the grain by the barge load to exporters, he said.

The paper loses could take a large toll on Delta farmers, say Mississippi State University agriculture specialist John Michael Riley and AgFax.com editor Owen Taylor of Brandon.

“My suspicion is that this season could do in some growers,” Riley said, and lamented that some of the contracts farmers made with Turner were verbal.

Many Delta farmers were feeling good about contract prices they booked with Turner in the spring, said Taylor, who publishes a daily online news letter detailing crop prices across Mississippi and the rest of the South. “Now they are no better off” than farmers who wagered on high corn and soy bean prices by fall and declined to make earlier contracts with buyers, he said.

Prices for corn and soybeans dropped steeply on June 30 and have been bouncing along ever since, Taylor said.

Riley attributed the unexpectedly low prices to favorable growing conditions, higher yields and planting of increased acreage.

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