August 30, 2014

Pierce elevator closure may cost dozens of farmers several million dollars

Losses from the financial collapse of the Pierce grain elevator are still being tallied but estimates find some 200 farmers lost nearly $10-million dollars.

Nicole Mulcahy, legal counsel for the Nebraska Public Service Commission, says there will be some payback to farmers affected by the bankruptcy, including two bonds worth around $880,000.

“Valid owners, storers or depositors of grain will get some recovery, a higher level of recovery, if they can prove they’re a valid owner of grain in the warehouse,” Mucahy says. “They will get some of the proceeds from the sale of the grain and there’s also a bond on the warehouse side to help cover that.”

There’s more money from sale of the grain at the elevator which the commission took control of after the closure. Mulcahy says not everyone will be getting the majority of their investment back. Dozens of farmers may lose a large portion of a combined $4-million.

“The folks that did some direct shipping, their grain never went to the elevator but was sold to a third party that never got their money, they’re going to have a lesser recovery,” she says. “There’s only a $300,000 bond to cover those types of transactions. They’re looking at under 10-cents on the dollar for those.”

The Public Service Commission hopes to get nearly five-million dollars from selling the grain the elevator held when it closed, but that’s a far cry from the estimated nine-point-seven million in losses.

Mulcahy says the Nebraska legislature may have to look at starting some type of indemnity fund in order to protect farmers who sell their grain. She says that would be up to lawmakers.

“There’s been discussions about that and it’s never gotten any traction,” Mulcahy says. “I think there might be some discussions again taking place with the legislature in 2015 about the possibility at least.”

The Pierce elevator closed earlier this year when its credit was cancelled by the Citizen’s State Bank of Laurel.

By Jerry Oster, WNAX, Yankton