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Last Updated: Nov 3rd, 2008 - 10:06:10 |
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| Keith Olsen |
“Farmers must be vigilant and monitor the situation closely when delivering grain on contract to financially struggling grain buyers,” Nebraska Farm Bureau President Keith Olsen said Friday (Oct. 31). “Farmers delivering grain on contract are oftentimes unsecured creditors. If something happens, they could risk not being paid.”
Elevator closings and recent reports of financially struggling ethanol producers have farmers questioning their rights and obligations under contracts to deliver grain, he said. Often, farmers have entered into contracts with grain buyers to deliver grain at a set price during harvest or a specified delivery period. Specifically, farmers are wondering if they should indeed deliver on the contracts if the buyer appears to be struggling financially.
Paul Peter of Lincoln, legal counsel for Nebraska Farm Bureau, suggests farmers with contracts should monitor the situation closely. Visit with the grain buyer and determine how payments are being handled. If the farmer does not feel comfortable with the payment process, perhaps a suitable arrangement can be made -- such as a wire transfer or letter of credit to assure payment.
Farmers also should seek advice from their attorney, Peter said. Farmers with contracts can seek adequate assurances they will be paid when delivering grain. An attorney can review the contract and help farmers determine their rights and how best to protect their interests.
Finally, farmers need to remember contracts require performance on both sides, Peter said. “If a buyer declares bankruptcy, it does not void the contract. It can, though, change how the contract is fulfilled. Again, it is important farmers visit with their attorney before proceeding,” he said.
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