Dealer buffer for grain farmers lacking, 2 say

State has no law, U.S. no way to compensate growers for losses, they assert

There are no protections at the state or federal level for grain farmers in Arkansas who stand to lose millions of dollars in crops they have sold to Turner Grain Merchandising in Brinkley, which has not paid them for their harvests.

That concern is to be discussed Friday at 10 a.m. at a joint meeting of the House and Senate Agriculture, Forestry and Economic Development committees.

Most states have laws granting oversight of grain dealers, such as Turner, said Tim Mehl, chief of the U.S. Department of Agriculture's Warehouse Licensing and Examination Division in Kansas City, Mo.

But state Agriculture Secretary Butch Calhoun said Arkansas does not. And the federal government does not have authority to make right on such losses, Mehl said Tuesday.

"I don't see any good outcome" for Arkansas farmers, Mehl said.

USDA agents searched the headquarters of Agribusiness Properties LLC on Thursday and posted a sign that said Agribusiness Properties' operating license has been temporarily suspended. It and Turner Grain are both owned by Jason Coleman, who has declined to talk about the situation.

Mehl's division does not have regulatory oversight of Turner Grain, but shutting down Agribusiness Properties seriously curtails all of its business, he said.

Agribusiness Properties stores grain bought from farmers.

USDA agents found no grain in storage elevators, which means that Turner had no collateral for bank loans by which it operates, Mehl said.

If Agribusiness Properties does not find a solution within 30 days of when its license was suspended, the license will be revoked, Mehl said.

Andrew Grobmyer, executive vice president of the Arkansas Agricultural Council, a trade group, said the only ray of hope might be if Turner Grain files for bankruptcy protection. Depending on which chapter of bankruptcy it sought, that might mean farmers could see some money.

As of 3:30 p.m. Tuesday, none of the principals in Turner Grain had filed in U.S. Bankruptcy Court in either of the Eastern or Western districts of Arkansas.

Grobmyer said, "It's not just in Arkansas. They did business on an interstate basis. I think they're buying and selling contracts in bordering states, and maybe beyond.

"I don't know a dollar figure, [but] I'd say there's tens of millions tied up in all of this."

"The spread in the market is substantial. When you're talking hundreds of thousands of bushels, it adds up. Corn [for example] probably has the most dramatic decline in prices over the last several months. It's two to three dollars less per bushel than [what] they booked."

Dealers such as Turner Grain are not commodities traders, but they can work with brokers to lock in prices in the futures market.

Grobmyer said he is puzzled about how the Turner Grain problems could've occurred.

Partly in anticipation of falling prices, many Arkansas growers moved away from planting corn this spring, shifting their acreage to cotton and soybeans. The state's farmers planted about 580,000 acres of corn this year, down 34 percent from 2013.

Corn closed Tuesday at $3.62 per bushel for September delivery at the Chicago Board of Trade. Two years ago, corn prices peaked at more than $7 per bushel.

The price of corn has dropped 26.5 percent in the past four months.

In either time frame -- two years or four months -- the drop in price can adversely affect any farmer whose grain has not been protected by hedging his "bet" by locking in a good futures price.

The Wilkison family farms 15,000 acres in Monroe and Lee counties. Don Wilkison has said Turner Grain is a year behind on payments to his family.

The legislative committee is expected to take up the matter Friday in the Multi-Agency Complex building near the state Capitol.

House committee Chairman Matthew Shepherd, R-El Dorado, said that meeting will be informational so that officials can be apprised of the facts surrounding the Turner Grain problem.

As he said earlier this week, he explained that the thrust of the hearing will be assessing how to prevent such problems from recurring.

Information for this article was provided by David Smith and Glen Chase of the Arkansas Democrat-Gazette.

A Section on 08/20/2014

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