Posted August 21, 2014
On Monday, a group of farmers sued Turner Grain Merchandising Inc. for fraud, according to an Arkansas Business article by Mark Friedman available here. Arkansas Matters also published an article available here.
The farmers said they possessed commodity contracts to sell grain to Turner, and Turner has not paid them for their products or the received checks did not clear.
However, Turner has already sold the grain to a third party.
Based on farmer reports, Turner Grain was a middleman. Turner reached out to large buyers such as Tyson who would then set a price and a quantity of grain they were willing to purchase, which is process known as booking. Farmers use this process to eliminate risks by securing a price, according to Arkansas Matters.
It is speculated that Turner Grain may have extended its operations with some farmers by actually purchasing the grain and waiting for a buyer to connect with, which increases the price risk.
Farmers are worried whether or not their contracts are valid.
“Whenever you get this far in the year and somebody tells you your contracts aren’t any good, it’s scary,” Justin Higgins of Marianna said. “If I hadn’t booked my crops early, I would have to be selling it a dollar short today from what I had booked it at. A dollar might not sound like much, but you start multiplying that by thousands of bushels, and it can turn into $100,000. I don’t know anyone who $100,000 wouldn’t be a lot of money.”
If contracts are not valid or there is not anyone to buy it at the previously agreed price, farmers could be facing those devastating losses.
The farmers are also seeking an unspecified amount of damages for several counts including breach of contract, conversion, and negligence, according to Arkansas Business.