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Michigan reinstating produce collection of $2 per $1,000

 
By KEVIN WALKER
Michigan Correspondent

LANSING, Mich. — Michigan’s Farm Produce Insurance Authority (FPIA) has announced it will reinstate an assessment on farm produce sold, effective Oct. 1. The reason was the failure of Lapeer Grain Co. last year, which resulted in 108 claims being parceled out to farmers who did not get paid for delivered grain.
The payouts totaled $3.5 million. According to the announcement last week, that was the largest grain dealer failure in recent history in Michigan.
The FPIA reimburses a participating producer for losses suffered when a grain dealer declares bankruptcy or is otherwise unable to pay its claimants for grain delivered and sold, but not paid for. Since it was established in 2003, the authority has paid $4.4 million in claims to more than 200 producers and recovered $600,000 from bankruptcy and probate proceedings. The FPIA covers corn, soybeans, dry beans, small grains and cereal commodities.
Because of Lapeer’s bankruptcy, the FPIA fund balance dropped below the $3 million required, thus necessitating reinstatement of the assessment. On June 23 the FPIA approved assessment of 2/10 of 1 percent, or 0.002 percent, from the net proceeds of all farm produce sold.
The reinstated assessment will be in addition to the existing administrative premium assessment of 15/1,000 of 1 percent, or 0.00015 percent, for a total of 0.00215 percent.
“If you have $1,000 of grain, you’d get assessed $2.15,” explained Jeff Haarer, producer security manager at the Michigan Department of Agriculture and Rural Development. The $2 is what’s being reinstated, while the 15 cents is the ongoing administrative fee.
The reinstated fee will continue until the fund reaches its cap of $5 million. The preceding assessment was originally begun on Jan. 1, 2005, and suspended on Dec. 31, 2007. Haarer is hoping the assessment won’t last long.
“Last time we did the assessment we collected $2 million a year using the same formula,” Haarer said. “Prices are even a little higher than they were then.”
Meanwhile, another grain dealer, Hicks Farm Services of St. Johns, has also declared bankruptcy and surrendered its grain dealer license. Haarer is crossing his fingers there won’t be many claims related to this bankruptcy, but he doesn’t know for sure.
“To date I’ve received just one small claim and we’re looking at that right now,” he said.
According to a court document dated Apr. 27, Hicks has about $11.2 million in secured and unsecured debt; however, the company has a number of different businesses.
As for the final fate of Lapeer Grain, it is still in business, but with different owners and configured somewhat differently. According to a published report, earlier this year two Lapeer County farmers, brothers Terry and Ken Jostock, bought the Lapeer facility, but it’s not clear what other sites they bought, if any.
The brothers told ABC-TV affiliate WJRT Online March 12 they felt the area should have a grain dealer. According to the article, the brothers leased out the Imlay City facility to Helena Chemical, so it could run the fertilizer side of the business. They said Oxford Feed would run the feed part of the business.
As of the date of the article no one had been found to run the grain dealer portion of the concern. A telephone call to the company for an update last week went unreturned as of press time.
Lapeer’s Capac facility was purchased by Armada Grain. According to Haarer, Lapeer never owned, but only leased, the Jeddo and Palms facilities; Cooperative Elevator has taken over those leases. On its webpage, Lapeer Grain now lists locations in Lapeer, Imlay City and Deckerville.
7/29/2015