SD legislators get report on ND grain elevator failuresTen insolvencies seen by grain marketers from 2000 to 2009.
By: Bob Mercer, Republic Capitol Bureau
PIERRE — South Dakota legislators received a report Monday showing 10 insolvencies by North Dakota grain marketers from 2000 through 2009.
The data was assembled by the South Dakota Public Utilities Commission. The PUC regulates grain warehouses within South Dakota.
Two commissioners up for election this year are under political fire over the estimated $2.6 million of losses suffered by producers from the financial failure of Anderson Seed Co. at Redfield.
Democratic opponents and other critics have pushed for PUC Chairman Chris Nelson and Commissioner Kristie Fiegen, who are Republicans, to look at a different system for protecting producers.
South Dakota relies on a bonding system that was established by the Legislature.
Among the proposals offered is a North Dakota-style system, in which producers are assessed a per-bushel fee.
The money builds in an indemnity fund that can be tapped in case of insolvency.
The new report regarding North Dakota’s experiences was presented Monday to the Legislature’s Government Operations and Audit Committee.
Nelson in June had told the same committee that in the past 11 years, South Dakota had three insolvencies while North Dakota had 12. Both of Nelson’s numbers included Anderson Seed.
The report Monday didn’t reflect Anderson or two other insolvencies pending in North Dakota at this time. South Dakota’s two non-Anderson failures took place in 2000 and 2001.
Two of the instances in the 2000-2009 span had sufficient bonds on file to cover the losses without needing to tap into North Dakota’s indemnity fund. A third was settled directly with the surety company.
The unpaid claims for five of the others totaled slightly more than $3 million, according to James Mehlhaff, the director for the South Dakota warehouse division. He compiled the report from North Dakota data.
The 10th incident involved a combination of payments. Cash claims were paid 100 percent while credit claims were paid at 32 percent after attorney fees were covered.
The report was in response to questions posed in June to Nelson by Rep. Paul Dennert, D-Aberdeen.
Dennert was the only member of the legislative committee to comment about the report Monday.
“We had one go under for about the same amount as they had for the last 10 years,” he said.
Former state Rep. Nick Nemec, a Democrat, is challenging Nelson, while Democrat Matt McGovern and Libertarian Russell Clarke are competing with Fiegen.