Farmers in Arkansas and some neighboring states stand to lose $20 million -- possibly as much as $50 million -- in the payment defaults of Turner Grain Merchandising in Brinkley, according to statements made by agricultural officials during a legislative committee hearing Friday.
RELATED ARTICLE
http://www.arkansas…">Bumper corn, bean crops forecast
The problem might have been prevented if a bill in the early 1990s had become state law, a state agriculture official told the joint meeting of the House and Senate Agriculture, Forestry and Economic Development committees at the Multi-Agency Complex on the Capitol grounds.
"I've never seen anything like this in my history, but you wouldn't believe the phone calls and contacts from people whose lives are going to be ruined by this," said Butch Calhoun, the state's agriculture secretary.
The bill would have authorized state oversight of grain dealers.
State Plant Board Director Darryl Little said the reason the bill failed was "primarily the cost" of enforcing the proposed law.
Mike Churchwell, supervisor of the Plant Board's grain warehouse division, said after the hearing that the bill died in committee because of fears of too much government and not enough money.
The bill had the backing of the Farm Bureau and other agricultural players, but the grain dealers opposed it.
"People were having [similar] trouble in other states, and we were trying to get ahead of the game before something bad happened. With what we have today, it would've been well worth it," Churchwell said.
He said that from what he had heard, losses could reach $20 million. Calhoun said the figure might reach $50 million if reports he had received confirm that Turner Grain had traded in neighboring states.
Grain crops will account for about $3.7 billion of the state's $20 billion agriculture output this year, according to calculations based on figures from the state Agriculture Department.
House Speaker Davy Carter, R-Cabot, House committee Chairman Matthew Shepherd, R-El Dorado, and Senate committee Vice Chairman Bruce Maloch, D-Magnolia, set the tone of the meeting by saying it was not in the lawmakers' purview to take steps to help those who have not been paid for their grain.
"Honestly, there's not going to be much we can do," Carter said at the hearing, which drew about 100 attendees other than state officials.
Hiring a good lawyer was their best advice. Acknowledging that their hands were tied for now, lawmakers vowed to work on proposals in advance of the 2015 legislative session, which begins in January.
Several farmers said after the two-hour, 15-minute session that they had retained lawyers, who had advised them not to talk to the news media.
Eight farmers in eastern Arkansas filed suit in Lee County Circuit Court on Monday seeking an injunction preventing Turner Grain from continuing to buy and sell grain, seeking payment or return of grain and possibly liens on their grain.
Arkansas Business reported Friday that Lee County Circuit Judge Richard Proctor had issued an order to Turner Grain not to sell any grain that belongs to the farmers who have sued the company.
Agents for the U.S. Department of Agriculture on Aug. 14 shut down one of Turner Grain's sister companies, Agribusiness Properties LLC in Brinkley, effectively curtailing Turner Grain.
"Let's do something now. Are we just going to accept a kick in the rear?" asked Rep. Walls McCrary, D-Lonoke.
The committees then passed a resolution asking the federal Farm Service Agency to give farmers an open-ended extension on loans owed to the Commodity Credit Corp. The Farm Service Agency has already said it would give them 15 more days. The resolution also requested assistance from the state's congressional delegation.
U.S. Rep. Rick Crawford of eastern Arkansas' 1st Congressional District, a Republican, said in an email:
"Earlier this week, I read reports about what appears to be mis-management at Turner Grain, and I am deeply concerned what the impact of this failure will mean to agricultural producers across Arkansas and the First District.
"I have directed my staff to assist Secretary Calhoun and State Legislators as they determine the extent of this loss and what kind of relief may be necessary for producers. ... Legislators at every level should do all they can to fully understand what transpired and what can be done in the future to protect producers and our state from future losses of this kind."
Little, the Plant Board director, said that in researching laws in other states that have oversight of grain dealers that there are common threads, including licensing dealers after they present a financial statement, requiring them to post a bond, making sure that commodities in hand match those sold, meeting net-worth requirements and submitting to audits.
But in the future, bonds would not be "the thing to cover big losses," Little said.
Churchwell said that there is usually a 30-day deadline on payment for grain. Some farmers have said that payments are a year behind.
Harvey Howington, treasurer of the Arkansas Rice Growers Association, outlined steps that he said could prevent the recurrence of the Turner Grain default.
Among the provisions would be:
• Complete payment to the farmer within 10 days of fulfilling the contract.
• Shift so-called checkoff funds, used to promote crops, levied on grain producers to the Agriculture Department.
• Create an indemnity fund funded by checkoff money.
Sen. Jason Rapert, R-Bigelow, said that there might be some relief found in the 1902 U.S. Grain Standards Act, which he said covers grains transactions.
Another federal law might also yield some options, Rapert said.
However, Harrison Pittman, director of the National Agricultural Law Center in Fayetteville, said that he didn't think either of those statutes would apply to the situation at hand.
A section on 08/23/2014