Presho farmer pushes for farmer lien rights
PRESHO -- Dennis Stanley, of Presho, thinks South Dakota farmers should by law have a first lien on delivered grain -- even on credit-sale contracts -- until it's paid for.
"The bank and anybody else should be second," says Stanley, who attended a South Dakota Farmers Union meeting on the topic July 17 in Chamberlain. Stanley was a previous customer of Anderson Seed, the Mentor, Minn.-based company that went insolvent in February 2012. He cut ties with Anderson Seed before it went bust, but says it exposed the need for greater security for farmers.
At the end of the last South Dakota Legislative session, Stanley held a farm shop meeting with a few neighbors and state Sen. Larry Lucas, D-Mission, and Rep. Jim Schaefer, R-Kennebec, to discuss improving farmer protections in insolvencies. He says farmers have a false sense of security with a "bond that is irrelevant" to the amount of money lost.
Stanley would like to see a self-funded indemnity fund like North Dakota has for credit-sale contracts.
"Bonding is false security," he says. "We don't really have anything right now. All we have is financial statements and we have trust. I hate to make it a bankers-versus-farming issue, but that's what it is. When that grain goes to the elevator (in credit-sale contracts), the title transfers to the buyer and the first lien goes to the bank. If there is an insolvency, which means they can't pay all the debts, we're the ones that legally won't get paid. We're guaranteed to be."
Stanley, 44, and his father, Richard, are no-till farmers who raise sorghum, sunflowers, winter and spring wheat and a little corn on an operation that's been in the family since the 1930s. Stanley obtained an accounting degree from the University of Nebraska in 1992, and worked as a certified public accountant in Minnesota and in Pierre, S.D., specializing in farm tax work. He went to full-time farming in 2006.
He says he's a Republican, but is not a public figure, other than serving on the local Farm Service Agency board.
He says he's interested in the case because it's "like seeing my neighbor get robbed, then watching the police and state's attorney bungle the case, and seeing the thief set free through a loophole in the law without paying the neighbor for what he stole. I would fight tooth and nail to close the loophole and to see the neighbor somehow repaid."
Stanley thinks there are better ideas out there. He knows of one elevator operator who suggested a kind of consolidated bond.
"So, say there's 10 grain elevators now that each carry a $100,000 bond. Instead of that, he wanted $1 million bond that covered all 10," Stanley says, adding they'd contribute proportionately to one large pooled bond. Companies with higher risk would pay more, based on volume and risk.
Stanley says it appears the parties in the Anderson Seed case -- Ron Anderson, its U.S. Bank lender and Legumex Walker -- all have benefitted from farmers' unsecured creditor status. He says the Anderson Seed case was a "bankruptcy without a bankruptcy," done in some lawyer's office, "without a judge, without a process."