Sources: Turner Grain Appears Headed to Bankruptcy, Losses in Millions

by Arkansas Business Staff  on Saturday, Aug. 16, 2014 6:53 pm  

Arkansas soybeans.

Sources in the commodities industry told Arkansas Business late last week that Turner Grain Merchandising Inc. of Brinkley is on the verge of filing for bankruptcy protection. Two sources said the company's losses could be in the millions.

Meanwhile, Arkansas House Speaker Davy Carter, R-Cabot, on Friday sent a letter to state Rep. Matthew Shepherd, R-El Dorado, who is chairman of the House Agriculture, Forestry & Economic Development Committee, seeking help for state farmers who might be left with breached commodities contracts.

"Recently it has come to my attention that some of our Arkansas farmers may have been left holding breached commodities contracts executed by one or more commodities brokers in Arkansas," Carter wrote. "If this holds to be true, literally tens of millions of hard earned dollars that our farm families were expecting will have disappeared into the heavens." 

More: Click here to read Carter's letter (PDF).

Arkansas Business attempted to reach officials at Turner Grain, including President Dale Bartlett and Vice President Jason Coleman, for a story in its Aug. 18 print edition. But they have not returned calls.

Although Carter referred to brokers in his letter to Shepherd, Turner Grain is not a broker whose role is limited to taking a commission for matching sellers with buyers. Turner's business is referred to in the industry as a "principal" or "jobber," actually contracting to buy and taking possession of the farmer's grain and delivering it to the ultimate buyer.

But holding grain can be risky because of swings in commodity prices.

On Saturday, the Arkansas Times talked to one farmer who held a contract with Turner and said he hadn't been paid. Another, a soybean farmer who spoke on condition of anonymity, said he stood to lose $500,000 if Turner can't pay at the agreed upon price. The farmer told the newspaper that he feared the company would have to go into bankruptcy.

"I can pretty much assure you this is a big deal," the farmer said.

One source told Arkansas Business that Turner Grain came out on the losing end when it hedged its bets against volatility in the market. The source said that when Turner tried to make up for losses, the losses only increased.

In his letter, Carter said this isn't the first time farmers have found themselves in such a situation, and that farmers need assurances that contracts made in good faith will be honored.

Carter asked that Shepherd's committee meet to discuss the matter and "identify possible solutions to this problem," include whether Arkansas can require commodities brokers to be bonded or maintain "other adequate insurance under the Commodity Futures Trading Commission Act" or other law.

Update: Bruce Oakley Inc. of North Little Rock says it plans to hand over the money it owes Turner Grain to a judge to decide how to divide it among Turner's creditors.



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