Dishonest grain dealers will find it harder to operate in Missouri. On July 11, 2011 Missouri Governor Jay Nixon signed legislation which will require grain dealers to pony up more money to safeguard against insolvency.
The legislation is in response to the actions of Cathy Gieseker who defrauded approximately 180 farmers out of $27 million. According to the evidence, Cathy Gieseker told farmers that she had contracts with Archer Daniels Midland Co. which would pay 50-100 percent above market price. Cathy did not have such a deal but sold grain at spot prices and occasionally paid inflated returns to some farmers to prove she maintained the contract. The gig was up when she kept putting off payments and was finally turned in to the state Agricultural Department. Cathy Gieseker is now serving a nine-year federal sentence along with a ten-year state sentence.
Missouri was one of the few states that did not previously require a grain dealer to maintain an equal “asset-to-liability” ratio. However, the new legislation requires grain dealers to maintain assets equal to their liabilities along with the following:
– Grain dealers will need to maintain a net worth of 5% of their annual grain purchases (up from $20,000 or 1%);
– Grain elevators will need to maintain a net worth of $.25/bushel based on their storage capacity (up from $.15/bushel); and
– Grain dealers surety bonds are increased to minimum of $50,000 and a maximum of $600,000 (up from $20,000 and $300,000 respectively)
Richard Wahl, president of the Association of Grain Regulatory officials and chief of the Grain Warehouse Bureau for the Iowa Department of Agriculture and Land Stewardship quoted “Overall it’s a move to modernize Missouri’s grain dealer statute, and it should enhance the protections that the (state agriculture) department provides to the farmers through its regulatory program.”
Story and quote taken from Associated Press article authored by David A. Lieb and can be linked to here.