State Agriculture Officials: Money at Stake in Turner Grain Could Reach $50M

by Lee Hogan and Lance Turner  on Friday, Aug. 22, 2014 4:05 pm  

The Arkansas Legislature's joint committee on agriculture, forestry and economic development meeting Friday to talk about issues related to financial problems at Turner Grain Merchandising Inc. of Brinkley. (Photo by Lee Hogan)

"If we're unable to get in there and keep an eye on what's going on, this is going to happen again," Churchwell told the committee. "Like [Carter] said, we cannot keep them from having bad business practices, but we can cut them short. We can catch them where it's not to the point where we are now."

The agriculture officials, which also included Darryl Little, director of the State Plant Board, provided the legislators with a list of grain merchandising laws in other states. Some of those laws require merchandisers to:

  • Submit financial statements to acquire licenses each year
  • Pay fees
  • Have scale tickets for grain
  • Have legal contracts for grain
  • Post bond
  • Keep their trading assets to trading liabilities ratio at 1:1
  • Meet director’s net worth requirements
  • Undergo regular audits

In his statements to the committee, Calhoun said he didn't yet know how many farmers might have been affected by problems at Turner Grain. He said the only advice he could give to people affected was to hire an attorney.

"We've got farmers who can't get paid for their grain, we've got farmers that have delivered their grain — some of it has been shipped down the Mississippi River, some of it they don't know where it's at, some of it is with end users with contracts that their checks have bounced," he said "We've also got farmers dealing with the Commodity Credit Corp. where they had written checks to pay that out of a loan."

(Related: A judge orders Turner Grain not to sell assets, and one farmer claims Turner owes him $700,000.)

When asked by the committee if possible criminal activity was being considered, Calhoun said all things are being looked at.

"I think it looks like the federal government is going to get involved," he said. "I think the U.S. Attorney for the Eastern District of Arkansas will be. At some point, someone has gotten some money for this grain, if everything we are hearing is true."

Harrison Pittman, director of the National Agricultural Law Center, said he wants his agency to be a resource during this process.

"This is like an intersection, but more of a dysfunctional collision between federal and state laws," he told the committee. "We've heard some questions raised about what federal laws apply, and that's going to continue to come up with some things that none of us have talked about. We're looking at the prospect of the bankruptcy proceedings and what impact that could have, the potential for federal investigation involvement and even the timing as other proceedings move forward."

Pittman was asked about statutes brought to the attention of the committee by Sen. Jason Rapert, which included the U.S. Grain Standards Act of 1902, Series 3 and 31 Licensing and the Farm Produce Insurance Authority in Michigan.

Pittman said, while he hasn't dealt with the act in a period of time, he believes the U.S. Grain Standards Act of 1902 deals more with grading and quality, rather than financial issues. On the Michigan Produce Insurance Authority, Pittman said there is a lot dealing with perishable commodities.

The Arkansas Rice Growers Association also submitted a list of proposals to help mitigate losses when grain companies fail, which includes requiring that all grain buyers should be licensed and bonded with oversight of the state Department of Agriculture.



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