Anderson Seed's unpaid clients file claims

• Anderson Seed

The Anderson Seed sunflower processing plant in Redfield was in operation for a year before the company closed with $2.6 million owed to South Dakota clients. (Agweek photo)

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• ANDERSON SEED CO. CLAIMS

The deadline has passed and 28 people and businesses have filed claims with the South Dakota Public Utilities Commission over non-payment of deliveries to the Anderson Seed Co.

The Redfield elevator, which processed edible sunflower seeds, closed this year without paying an estimated 39 South Dakota customers a total of $2.6 million.

It had posted a required $100,000 bond, which has been seized by the PUC. The commission primarily regulates utilities in the state, but in addition is in charge of warehouses and grain elevators.

The South Dakota PUC had deter- mined, after an audit, that 39 people and businesses in South Dakota had been denied payment for their products.

The $100,000 bond will be divided on a percentage basis among the claimants, according to the PUC. There is an additional amount of slightly more than $100 in interest that will also be distributed once a split is announced.

“That’s the process that our staff will go through,” PUC Chairman Chris Nelson said.

The PUC contacted everyone who had done business with Anderson Seed and asked them to file a claim if they felt they were owed money, Nelson said.

“We wanted to make sure nobody was missed and everybody got a chance to file a claim if they believed it was valid,” he said.

Anderson Seed had another 47 unpaid grain claims in North Dakota worth $2.8 million, according to the North Dakota Public Service Commission. The firm posted a $280,000 bond in North Dakota.

It is unclear how much is owed to people and businesses in Minnesota. Anderson Seed posted a $125,000 bond in that state.

Nelson said the losses will be hard for some people and businesses to take.

“Undoubtedly, it’s certainly devastating to their financial situation,” he said.

Jeff Brown, of Scranton, N.D., said he lost about $26,000 when the final load of seeds he brought to the Redfield plant were not paid for.

Brown said Anderson Seed had been slow to pay for four previous loads, promising payment in 30 days but instead making payment in about 60 days. The final load he brought in was never paid for, he said.

Brown said he called twice to check on it and was told “the check is in the mail” both times.

“They lied to me twice,” he said.

He had contracted to deliver his sunflowers to the elevator at a price of 36 cents per pound.

When the Redfield plant closed, he had to search for another buyer. When he found one, he was offered 24 cents per pound.

That was an additional $100,000 loss.

Brown, 55, said he will be able to absorb the loss. But he said younger farmers who took bigger hits than he did may have trouble remaining afloat.

Of the 28 claims filed in South Dakota, 27 ask for compensation. One man who filed, Milo Dyk, of Strasburg, N.D., said he is not owed money, but his son is owed more than $26,000.

“I still cannot understand why the PUC allowed Anderson to haul the sunflowers out of Redfield when (it) had not paid for them,” Dyk wrote on his claim form. “This would make a big difference when settlement is made.”

The claims are all in the thousands of dollars. The largest is from Dakota Mill & Grain Inc., of Rapid City, which is seeking $672,275.76. The smallest claim arrived by mail Thursday, but it had been postmarked by the Tuesday deadline. Gary Horner, of Herreid, claims he is owed $15,508.58.

Nelson was unsure why 12 people and businesses who were considered to have absorbed a loss had not filed claims.

He said Anderson was allowed to sell the sunflower seeds and oil, since once the product changed hands, it belonged to the elevator, not the producer.

“That’s the way state law is set up,” Nelson said. “Once you sell it, it changes possession at the time of sale.”

People have a legal right to demand payment within 48 hours, he said, but many wait, some for tax reasons, others because they wish to collect once for a series of deliveries.

Anderson sold the seeds to Legumex Walker, a Canadian grain company.

The Anderson Seed land and buildings don’t appear to be another way to collect money for the people who were cheated.

“The important thing to realize is there is a mortgage on that probably for more than it is worth,” Nelson said.

“If there are additional dollars, that is possible.”

He said there is one bright side to the whole mess.

When Anderson Seed failed to pay for its deliveries, the PUC wasn’t called for four and a half months, Nelson said.

When another elevator in the state did not issue payments this year, the PUC was called within a week, he said. Two inspectors were dispatched there and the problem was quickly resolved.

“What it tells me is farmers are paying more attention,” Nelson said.

The PUC will hold a hearing in November or December to disclose the proposed settlement. Once that is done, a proposal will be brought to the Fifth Circuit Court in Redfield, where Judge Tony Portra will rule on it.

When that is completed, checks will be cut, Nelson said.

Anderson Seed’s headquarters and another processing plant were in Minnesota, and it had two smaller elevators in North Dakota in addition to the Redfield plant.

Ronald L. Anderson of Mentor, Minn., was chief executive officer of the Anderson Seed Co. as well as a sister company, St. Hilaire Seed Co., which is a dry bean processors.

His daughter, Stephanie, was general manager of Anderson Seed Co. Inc.

In February, St. Hilaire Seed and “the assets of Anderson Seed” were sold to Legumex Walker Inc., of Winnipeg, Manitoba, for $19 million.

The Redfield elevator and processing plant was built in 2010 and formally opened for business in 2011.

When it held its grand opening on Feb. 13, 2011, Gov. Dennis Daugaard, who had taken office a month earlier, was at the ribbon-cutting ceremony.

Anderson Seed was to receive a state Revolving Economic Development and Initiative Fund loan, according to Tony Venhuizen, Daugaard’s director of policy and communications.

“That commitment was made during the prior administration in the summer of 2010,” Venhuizen said in an email to The Daily Republic.

“The REDI loan offer was withdrawn by the Board of Economic Development in September 2011.”

Now, the plant stands silent. There are environmental concerns about the site; it was a landfill before the plant was erected and the South Dakota Department of Environment and Natural Resources has inspected it.

While the DENR determined it was contaminated, it also ruled there was nothing that posed a risk to human life or the area, so no action was required.