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Published April 16, 2012, 04:59 PM

PSC looking into Falkirk, ND, elevator

UPDATED TUESDAY, APRIL 17 The North Dakota Public Service Commission was on-site at Falkirk, N.D., on Monday, looking into the books of the Falkirk Farmers Elevator in McLean County, in response to reports that the company had closed its doors late last week.

By: Mikkel Pates, Agweek

The North Dakota Public Service Commission was on-site at Falkirk, N.D., on Monday, looking into the books of the Falkirk Farmers Elevator in McLean County, in response to reports that the company had closed its doors late last week.

Commissioner Tony Clark in Bismarck, N.D., says calls started coming to the agency late last week from producers concerned that the company had shut itself to business, and reported elevator staff was handling grain, perhaps in an effort to inventory it.

Farmers calling the PSC were concerned about getting pre-paid fertilizer and seed deliveries, which are not directly under PSC jurisdiction, Clark says. An elevator must get permission from the PSC if it closes its doors for more than 15 consecutive days.

Falkirk Farmers Elevator is a farmer-owned cooperative with a satellite facility in Hazen, N.D. It has storage capacity for 650,000 bushels at Falkirk and 500,000 bushels at Hazen in Mercer County, for a total of 1.15 million bushels. Clark says the two facilities have separate licenses, but have a collective bond of $380,000.

As of late afternoon on April 16, no one had yet filed a claim for unpaid grain with the PSC, so no insolvency had been triggered, Clark says. When Agweek called the Falkirk elevator, a person answering the phone acknowledged that Ron Hefta, the manager, no longer worked at the company. She took a message for company president Michael Guenthner, who did not immediately return the message.

Brent Petersen, a farmer from Washburn, N.D., who had served on the Falkirk Farmers Elevator board until six years ago, said the company owes him about $80,000 in anhydrous ammonia fertilizer that he’d pre-paid 100 percent back in early March. He said he’d purchased his dry fertilizer from a different source this year.

“We’ve got plenty, I guess, but we’re not the biggest one involved, I guess,” Petersen said.

A phone number for Hefta was disconnected. Petersen said he was told that the company had hired Art Perdue, a recently- retired president of Cenex in Minot, N.D., as an interim manager.

Petersen says he’s heard that elevator officials are meeting today to determine the next step. He says he’s in the middle of wheat seeding so is anxious to learn whether the company can resolve the situation.

It’s typical for elevators to ask for prepayment on fertilizer to lock in the product and the price. “It’s a risk everybody knows about. You’re kind of unsecured, but that’s pretty much the way everybody is doing business.”

Petersen said the cause of the problem is an open question.

According to a listing in the North Dakota Grain Dealers Association directory, the Falkirk site handles small grains, soybeans, dry edible beans, oil sunflowers, oats, flax, canola and corn. It has agronomy services, chemicals, dry and liquid fertilizers, chemical fertilizer application, feed, seed and agronomy.

One source said there had been discussions that the elevator would merge with the CHS-Garrison Farmers Union Elevator in Garrison, N.D., in McLean County, but that that deal was uncertain.

“They supposedly had a good a good audit, a good balance sheet when they were talking about merging with CHS-Garrison," Peterson said. "We’re kind of waiting to see how it’s all going to shake out.”

One source in the region’s grain handling business, who asked not to be named, said he understood the Falkirk elevator membership voted almost unanimously to merge with Garrison. The Bismarck Tribune reported that the merger was to have taken place June 1.

“There are several people with pre-pay anhydrous or pre-pay fertilizer,” said the man, a fertilizer customer who declined to be identified by name.

In a separate matter, Commissioner Clark acknowledged that the PSC on April 9 had been appointed trustee for the Anderson Seed Co. facilities in Durbin and Selz, N.D., locations. The Mentor, Minn.-based company, with facilities in Minnesota and Redfield, S.D., and the associated St. Hilaire Seed, also of Mentor, has sold much of the company to Legumex Walker Inc., a Winnipeg, Manitoba-based company. The NDPSC will publish its final notice to the public to file claims against a $280,000 bond on about April 30. Then farmers will have until about mid-June to file claims against the bond.

Clark said it is not known how much of the grain might be covered by a state indemnity fund established to protect farmers with so-called price-later contracts. The fund is a check-off for price-later transactions and stops accumulating when it reaches $6 million, but the accumulated interest has allowed it to grow to just less than $7 million, Clark says.

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