Auditors are monitoring Michigan grain situation

As the financial difficulty of VeraSun Energy Corporation continues, the Michigan Department of Agriculture’s Producer Security auditors are closely monitoring the situation with the VeraSun Woodbury ethanol plant in Ionia County. Our auditors are in direct communication with affected farmers and grain elevator operators assessing the potential economic impact for Michigan.

On Oct. 31, 2008, VeraSun, the parent company of the ethanol plant in Woodbury and 24 of its subsidiaries and affiliates, filed voluntary petitions for relief under Chapter 11 of the Federal Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. VeraSun is attempting to pay for all farm produce delivered after Oct. 11, 2008.

Michigan producers holding forward contracts with VeraSun should contact legal counsel, as the Grain Dealers Act, PA 198 of 2003, as amended, and the Farm Produce Insurance Act, PA 198 of 2003, as amended, has no jurisdiction over contracts when the farm produce has not been delivered. The Farm Produce Insurance Fund was not designed to be used to reimburse Michigan producers for their forward contracts.

The Farm Produce Insurance Authority (FPIA) was established in 2003 to provide for reimbursement to a participating producer for losses suffered when a grain dealer declares insolvency or is otherwise unable to pay its claimants for grain delivered but not paid for.

Niles Star