LONOKE -- A grain broker paid nearly $5.5 million for rice linked to a group of Lonoke County farmers in the final weeks of Turner Grain Merchandising Inc., a Brinkley grain dealer that went bankrupt in 2014, according to testimony Thursday in Lonoke County Circuit Court.
Those numbers were part of a spreadsheet developed by Dottie Morrison, a bookkeeper and office manager for KBX Inc., one of several defendants in a civil lawsuit filed by Lonoke County farmers less than two weeks after Turner Grain closed its doors about Aug. 12, 2o14.
The company filed for federal bankruptcy protection about two months later, listing some $14 million in assets and $47 million in debts. The debts primarily were to farmers who never got paid for their rice, all of which was either shipped out by barge for export or delivered to mills for domestic processing and use.
Morrison said the numbers in her spreadsheet came from grain contracts, ledgers for checking accounts and wire transfers, and other documents tied to barge shipments of rice.
Morrison said KBX paid Turner Grain $5,488,101 for all rice that belonged to the Lonoke County plaintiffs, with nearly all of those payments being made in July and August of 2014. Another $9.3 million was paid by KBX to Turner during that time for rice that came from other farmers, she said.
Attorneys for the five Lonoke County farm entities contend that Turner Grain was an agent of KBX, and that it is KBX that owed farmers for their rice. KBX was based near Benton at the time but is now in Little Rock.
A forensic accountant last week put the Lonoke County farmers' losses at $5,491,888 -- for some 832,700 bushels of rice.
Morrison said KBX has never contracted directly with farmers for their grain and, instead, has always gone through middlemen such as Turner and other merchandisers.
The trial began Feb. 3. It is scheduled to continue through Feb. 28. A 12-member jury is hearing the case.
Turner Grain was closed in August 2014 by federal regulators after they found no grain in bins certified as being full.
Turner Grain Merchandising isn't a defendant in the Lonoke County case because of its bankruptcy filing. It operated under several entities, most of which were never registered with the secretary of state's corporations division.
Turner Grain had a business plan of offering prices to farmers that were higher than those offered by other merchandisers, primarily to gain market share, according to lawyers' opening statements some 10 days ago and testimony since then.
Gail Cramer, a retired agriculture economics professor at the University of Arkansas, Fayetteville who now lives in Baton Rouge had testified Wednesday for the plaintiffs that he researched rice prices during the weeks just before Turner Grain's collapse.
Turner's per-bushel prices were markedly higher than others, he said.
Cramer said Riceland Foods Inc. and Producers Rice Mill Inc., two farmer-owned cooperatives in the state, had a per-bushel average of $7.16 during that time. The U.S. Department of Agriculture reported per-bushel prices ranging from $6.34 to $7.02 in its market surveys during that time.
But the price offered by Turner to the Lonoke County farmers, he said, ranged from $7.04 per bushel to $7.29 per bushel.
The per-bushel difference between what Turner offered the Lonoke County farmers and what KBX paid Turner ranged from 33 cents to 99 cents, according to Cramer's testimony.
Citing a 34-cent difference in one particular contract, Cramer said, "That's huge in the rice industry. ... When you add up 10 or 20 cents to thousands of bushels, that's a large amount of money. The question becomes, why did that happen?"
Circuit Judge Sandy Huckabee has given attorneys for the plaintiffs through today to present their case. The defense is scheduled to open its defense on Tuesday. The court is closed Monday for the federal holiday commemorating the birthday of President George Washington and the state commemoration of Arkansas civil-rights leader Daisy Gatson Bates.
Business on 02/14/2020
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