PIERRE, S.D. (KELO) — Proceeds from a bond required of a bankrupt grain-buying company haven’t come close to covering losses that producers reported to South Dakota regulators.
The South Dakota Public Utilities Commission approved the distribution of the $50,000 from the bond Friday to two producers who filed $143,627.30 in claims. A third producer chose to seek payment another way.
Pipeline Foods Inc., based in Minneapolis, Minnesota, sought bankruptcy last year. The commission collected the $50,000 from Pipeline’s bond provider.
One of the producers, Tim Trooien of White, told the commission Friday that grain buyers in South Dakota should be required to have a bond “much higher” than $50,000. He described the company’s action as “highway robbery.”
“In this case, there were only three aggrieved parties. There could have been a lot more,” Trooien said. He added, “It could have been a million dollars easy, or a lot more than that.”
Trooien, an organic farmer, said he purchased untreated corn and soybean seeds from Pipeline Foods and returned for refunds 42 unused bags of soybeans and 11 unused bags of corn. “You buy it as seed, you return it as grain,” Trooien said
The commission doesn’t license seed companies. The company bought back the unused soybeans as a grain but took the corn back as seed.
That meant the bond proceed couldn’t cover the corn.
“Bond coverage does not apply to seed. It applies to grain being sold,” said commission chairman Chris Nelson, who also maintains a cattle operation. He recalled his father’s time in the seed business. “So I understand how this all works,” he said.
Commissioner Kristie Fiegen said, “I wish we could give him back all the money we could, but we have to adhere to the law.”
“The soybean was clearly treated as grain,” said Cody Chambliss, who manages the commission’s grain program.