On Nov. 6, the North Dakota Public Service Commission issued a notice that it intends to amend its administrative rules.
Among other things, it is amending its rules related to grain elevators and grain buyers, and the bonds they must post in order to be licensed. Commissioner Julie Fedorchak has shown a genuine interest in landowner issues, and these proposed rules are a small step forward in helping North Dakota farmers who are left holding the bag after the insolvency of a grain elevator or roving grain buyer. You can obtain a copy of the notice and proposed rules by contacting the NDPSC, or feel free to call or email me for a copy. It appears that the PSC has recognized the problem with the grain warehouse and grain buyer insolvency laws, but it needs to go much further in addressing an obvious problem for North Dakota farmers.
As an example, one of the recent grain buyer insolvencies was that of Mitchell Feeds Inc. American Federal Bank managed to take possession of the entire sunflower seed inventory of the insolvent grain buyer, leaving the farmers with nothing but the bond posted with the PSC to cover their claims for unpaid deliveries. This was true, despite the fact the sunflower seeds that went to the bank were likely the very seeds delivered to the insolvent grain buyer by the farmers. Regardless, the farmers' claims amounted to more than $1 million of sunflower seeds for which Mitchell Feeds had not paid. The bond posted by Mitchell Feeds to pay the farmers in the event of its insolvency was $70,000. This amounted to 7 percent of the total claims from the farmers. For the farmers, it is pennies on the dollar, and entirely insufficient.
Unfortunately, the proposed rule changes from the PSC would have made little difference for the farmers affected by the insolvency of Mitchell Feeds. Indeed, the rule changes would offer inconsequential relief for most farmers who have been faced with the insolvency of a grain elevator or grain buyer in the past decade.
On the other hand, it is a good sign the PSC has recognized the need to better protect farmers. In the past, commissioners have said it should be the farmers' responsibility to know who they are selling to. But many of the farmers who sold to Mitchell Feeds, for example, had been doing business with the company for years. The bottom line is that farmers cannot always know if a grain buyer is going to become insolvent, and North Dakota needs to protect its citizens from what are often out-of-state grain buyers operating in the state who eventually become insolvent.
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According to the notice sent out by the PSC, a public hearing will be held at 1 p.m. on Dec. 15, in the Commission Hearing Room on the 12th floor of the State Capitol in Bismarck. Written comments may be submitted to the PSC until the close of business on Dec. 26. Comments can be sent in the form of a brief letter to the PSC, stating concerns -- even if they are just jotted down on the back of a napkin. Public agencies often assume if they do not hear from farmers on issues such as this, the farmers are not concerned. Although deer hunting and late harvests have probably kept many busy, this is an important issue, and the PSC should hear from North Dakota farmers about the proposed rules.
