» Arkansas to consider legislation after Turner Grain bankruptcy leaves farmers unpaid
Unlike Arkansas, Mississippi’s laws provide a measure of protection to farmers who sell their crops through brokers who become financially unstable.
Registration and bond requirements apply to both grain brokers and warehouse owners, according to the Mississippi Department of Agriculture and Commerce.
Thirty-five states require licensing and bonding for grain dealers, according to the Arkansas Democrat-Gazette, which noted in an article the Arkansas Legislature took up a grain dealer licensing bill in 1991 but failed to pass it. Arkansas is expected to try again in January
Momentum for the legislation increased with last week’s Chapter 11 bankruptcy of Turner Grain Merchandising. The company’s bankruptcy protection filing put in doubt payments to dozens of farmers, including some from Mississippi and Louisiana, who made deliveries to Turner Grain.
Arkansas Secretary of Agriculture Butch Calhoun is preparing the new registration legislation. “You could be out here and be a grain dealer and all you needed was a telephone, a computer and a pickup,” Calhoun told Arkansas Business, a Little Rock business newspaper, last week.
“And you’re out here buying millions of dollars worth of grain and reselling them. And nobody’s checking your books and nobody’s doing anything,” he added.
Calhoun’s comments followed Turner Grain’s Chapter 11 filing in which the Brinkley broker listed $24.8 million in debts and $13.8 million in assets. Claims filed against Turner likely will include one of nearly $2 million from Leland farmer Harper Ross and five other Delta growers.
Greenville lawyer Scott Phillips said the Delta farmers never received payment for $1.7 million in grain sales transacted through Turner Grain.
Phillips said the grain delivered to Turner Grain by Ross and his other clients went directly to Tyson Foods via grain distributor Gavilon of Omaha, Nebraska.
Gavilon has claimed it paid Turner Grain in full, according to Phillips. “We don’t know that to be true,” he said in a recent interview.
Turner is facing at least seven lawsuits over allegations of breach of contract, according to Arkansas Business.
Had the Delta farmers used one of the 25 grain dealers licensed in Mississippi, they could make claims on bonds the dealers must have, according to Julie McLemore, director of regulatory services for the state’s Department of Agriculture.
“The laws are designed to protect the producer from a failure of a grain dealer or warehouse” owner, she said.
Turner is one of 15 Arkansas grain dealers name din suits totaling $15.7 million. Eleven of the 15 companies share the same Brinkley address as Turner Grain, according to the Democrat-Gazette suits filed in Arkansas.
The Little Rock newspaper reported Oct. 5 that the nature of the relationships among the businesses is unclear, but three of the four people who have been sued in the complaints have roles in more than one of the companies.
In Mississippi, anyone who is buying grain for resale or milling must have a license from the Department of Agriculture,” McLemore added.
The licenses which are issued annually require a state financial review as well as a letter of credit, bond or certificate of deposit ranging from $25,000 to $100,000, she said.
“The department requires you to submit financial records so we can set the bond,” McLemore noted, and explained the bond amount is based on a percentage of what the dealer paid producers the previous year.
“We generally tell farmers when dealing with grain dealers to ask if they have a license,” she said.
McLemore said cases of brokers going bust are in Mississippi. “I have not had actually had one that has failed,” said McLemore, who has been in her present post since 2012 and with the Ag Department several years ahead of that.
“I know there was one in the early 2000s,” she said.
Warehouse owners must buy an annual bond that ranges from $15,000 to $1 million. The bond amount is based on number of bushels and the capacity of the warehouse. Mississippi issued 15 warehouses licenses this year.
Federally licensed warehouses have similar bonding requirements. Warehouses with federal licenses do not need state licenses, according to McLemore.
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