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Published March 26, 2014, 03:56 PM

ND PSC: Earth Harvest suppliers to get 40 percent

Farmers and other companies who delivered grain to now insolvent Earth Harvest Mills in Harvey, N.D., will receive about $1 million — roughly 22 percent of what they initially said they were owed, and 40 cents on a dollar for valid claims, according to a North Dakota Public Service Commission recommendation.

By: Mikkel Pates, Agweek

FARGO, N.D. — Farmers and other companies who delivered grain to now insolvent Earth Harvest Mills in Harvey, N.D., will receive about $1 million — roughly 22 percent of what they initially said they were owed, and 40 cents on a dollar for valid claims, according to a North Dakota Public Service Commission recommendation.

Earth Harvest Mills was doing business as Dakota Prairie Organic Flour. The PSC declared the company insolvent in April 2013.

Commissioner Randy Christmann says PSC will recommend the $1 million in payments during a hearing in Wells County District Court in Fessenden, N.D., May 14. Farmers and companies had filed $4.5 million in total claims, of which about $2 million were declared invalid.

•Credit sales — Eighteen individuals or companies had filed $4.2 million in claims, of which $2.4 million were deemed valid. After the standard $280,000 cap was imposed on two of the valid claims that exceeded it, a total of $949,000 is expected to be paid from the state’s indemnity fund at its 80 percent level, the maximum that can be paid on a legitimate claim. That’s a 39 percent payout from the valid claims. Eight of the claims were from Canadian firms.

•Cash Sales — Seven cash claims were filed totaling $81,000 so the $50,000 warehouse bond designed to cover the unpaid deliveries will be able to pay 62 percent of the claims.

Commissioner Julie Fedorchak says the case underscores the importance of producers converting scale tickets in a timely manner and scrutinizing people to whom they sell. She also says policymakers might need to “reevaluate and update our protections” for producers.

“We need to somehow or another find some way to see these (insolvencies) coming,” Christmann says. “Now that we’ve gotten through these insolvencies, I certainly have learned a lot, but I want to work with industry groups and ag producers and see what could have been done that would have caught some of these things … in advance or at least earlier. To restore some percent of the losses is not a long-term solution. The losses are getting too big for that, nowadays.”

The indemnity fund was established in the 2003 Legislature at $10 million but was reduced to $6 million in the 2007 Legislature. The fund stopped collecting money in summer 2008 and has grown only on interest income.

Christmann says if the fund pays out for the Earth Harvest case as projected, it will have about $4.7 million remaining. Indemnity fund check-off collections won’t resume unless the fund falls below $3 million. Credit sale contracts would be checked off at the rate of two-tenths of one percent of value.

The credit sale fund has been depleted by several recent insolvencies. Pending payment are Earth Harvest, $950,000; Falkirk (N.D.) Farmers Elevator, $220,000; and Anderson Seed Inc., Mentor, Minn., $650,000. Previous payouts were Grabanski Grain LLC, Grafton, N.D., $327,000 in 2013; Organic Grain and Milling, Langdon, N.D., $129,000 in 2011; and Minnesota Grain at Rhame, N.D., $110,000 in 2009.

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