Better Late Than Never- Peanut Farmers Finally Getting Money From Peanuts Caught in Clint Williams Company BankruptcyMon, 07 Mar 2016 05:53:28 CST
United States Department of Agriculture (USDA) Farm Service Agency (FSA) Administrator Val Dolcini announced on Friday that USDA has begun making final payments to peanut producers in Texas, Oklahoma, Arkansas and Mississippi, helping to restore nearly 100 percent of the value of their peanuts after the bankruptcy of a peanut sheller and licensed warehouse operator.
"These farmers played by the rules, they honored their contracts, but because of circumstances outside their control, were put in a difficult position, which is why USDA stepped in on their behalf," said Dolcini. "Today's action illustrates how the basic protections of the 100-year-old U.S. Warehouse Act can still provide important safeguards for farmers today."
More than 83,000 tons of peanuts were stored by the warehouse operator, Clint Williams Company, and its affiliates, the Texoma Peanut Company, Clint-Co Peanut Co. and the Clint Williams Co - Western Division, which filed for bankruptcy in November 2014. Farmers had pledged more than 81,700 tons of peanuts as collateral to receive USDA marketing assistance loans. The loans provide interim financing so that producers can store peanuts and meet cash flow needs without having to sell crops during harvest, when market prices are low. Peanut producers potentially lost thousands of dollars when delivery contracts were not honored by the failed company and the peanuts remained in storage.
This was devastating to peanut producers in the four states, according to Mike Kubicek, who was at the time the Executive Director of the Oklahoma Peanut Commission. Kubicek spoke on behalf of peanut producers to USDA Secretary Tom Vilsack and outgoing House Ag Committee Chairman Frank Lucas in January 2015 when the Secretary was in El Reno, Oklahoma for a celebration of the 2014 Farm Law. Click here for our story at the time and the conversation we had with Kubicek about the harm the bankruptcy and the slowness of USDA to act was doing to farmers.
Since the Clint Williams Companies went out of business, peanut acreage has fallen in Oklahoma, with no local shellers left to be an active buyer of peanuts grown in this region. Out of state buyers have favored contracts with producers in the southeast, where acreage has been maintained, while southwestern US acreage has lagged.
Under the United States Warehouse Act, USDA is responsible for protecting all depositors in the licensed storage facilities, including ineligible producers or those who chose not to receive loans. USDA entered into an agreement with the new warehouse owners to provide for additional storage time for an orderly sale of peanuts, plus incentives to encourage sales of peanuts pledged as collateral. The agreement also provided an initial 85 percent payment to producers that sold peanuts with the remaining amount to be paid after any shortages and the bond claim were resolved. With the USDA successfully receiving the entire bond, the final payments are now being made to producers.
The United States Warehouse Act, now in its 100th year, provides agricultural producers with high-quality storage of farm products to allow marketing throughout the year. Warehouse operators who volunteer to participate are licensed by USDA as meeting federal standards for storing commodities, such as grains, cotton and peanuts, and agree to unannounced inspections of sampling, weighing and grading. The United States Warehouse Act fosters national uniformity in the handling and ownership documentation of U.S. farm products, promoting consumer protection and quality control in the domestic and world marketplace. Approximately 47 percent of all commercial commodity warehouse space is licensed under the act.
WebReadyTM Powered by WireReady® NSI
Top Agricultural News