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Published May 02, 2013, 03:22 PM

ND PSC begins proceedings against Dakota Prairie

Randy Christmann, the PSC commissioner with the grain warehouse licensing portfolio, acknowledged that the agency on April 26 had petitioned the Wells County Court in Fessenden to be appointed trustee, and to begin the process of distributing the company’s $50,000 bond.

By: Mikkel Pates, Agweek

The North Dakota Public Service Commission has initiated insolvency proceedings against Earth Harvest Mills of Harvey, N.D., which does business as Dakota Prairie Organic Flour Co.

Randy Christmann, the PSC commissioner with the grain warehouse licensing portfolio, acknowledged that the agency on April 26 had petitioned the Wells County Court in Fessenden to be appointed trustee, and to begin the process of distributing the company’s $50,000 bond.

“We’re in business, and we’re going to continue in business” Grayson Hoberg, the company’s chief executive told Agweek on May 2. “It was disappointing what the PSC did in February, what they’re going to do this week. We will continue forward and this is one of the issues we have to deal with.”

“We’re aware of about $2.9 million in credit sale contracts that are out there, and about $85,000 in cash sale contracts, which were never converted or paid,” Christmann told Agweek on May 2.

Christmann says the difficult financial situation at Earth Harvest that has been “going on for some time” and was an active case of concern for the PSC when he started as a commissioner on Jan. 1. Hoberg delivered a report to the PSC on the company’s status earlier this year.

“He was working on solutions and there were no active claims at the time,” Christmann says. There had been at least one claim, but that was withdrawn. In January or February, Christmann says, Hoberg gave PSC officials a list of grain that had not been paid for. The top three on the list were for $578,000, $138,000 and $85,000.

Hoberg told Agweek that the $2.9 million list includes only $500,000 technically past due, and the remainder under longer-term contracts. He says he told the PSC in February he had a plan to be current on the $500,000 by this summer.

On Feb. 27, the PSC executed a cease and desist order, prohibiting the Earth Harvest from buying new grains, although the company can still purchase processed grains from other processors. Subsequently, Hoberg requested to have the order lifted, but the PSC declined, making it clear that if it received any new claims, the PSC would move to declare the company insolvent. Christmann says the current insolvency action was triggered by a $26,000 claim against the company on April 26.

Hoberg says the company has received numerous publicly backed loans and grants. The most recent was a $7.3 million loan, backed by U.S. Department of Agriculture Rural Development guarantees. The company also has received a handful of North Dakota Development Fund marketing grants, which have helped the company enter Asian and European markets.

“If you go in and dump your grain, you’re expecting that grain warehouse is going to send you a check within a couple of weeks, or at the end of the month,” Christmann says. “By law they’re supposed to pay you in 45 days. If you don’t want your money inside of 45 days, you both sign a (credit sale) contract. Inspectors can see it isn’t a bad bill, it’s a contract.”

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