March 3, 2009
Jefferson City, Mo. - For the second time in less than two weeks, Attorney General Chris Koster has taken legal action to protect farmers owed money by an insolvent grain dealership. Koster today obtained an order from a Daviess County judge allowing the Missouri Department of Agriculture to take over operations of the Gallatin Grain Company, owned by Daniel Froman.
Missouri law allows the director of agriculture to go to court to be appointed receiver or trustee of any insolvent grain dealer to protect the assets of farmers and other businesses who have stored grain at the facility. Being appointed trustee allows the Department of Agriculture to freeze the operations of the dealer so that funds and assets can be dispersed to farmers who have suffered losses because of the insolvency.
In his petition, Koster said Gallatin Grain has nearly $700,000 in debts and appears to have no cash, grain or other assets on hand. In the previous case, an Audrain County judge on Feb. 20 granted Koster's request to put an insolvent grain dealership in Martinsburg under the control of the Department of Agriculture.
"We are reminded in both of these cases that a grain dealership is like a bank," Koster said. "Farmers who sell their grain to these companies need to be paid, and my office will do everything it can to make sure that happens. It has become obvious that the bonding requirement under state law is inadequate to cover the potential losses these farmers face."
Missouri law requires licensed grain dealers each year to post a bond with the Department of Agriculture that totals one percent of their total grain purchases for the previous year, not to exceed $300,000. In both the Daviess and Audrain County cases, that bond amount is insufficient to cover the debts owed by the grain dealers.