MARCH 25-2015--ATLANTA – The November 2014 bankruptcy of the U.S. peanut processor Clint Williams Company, an affiliate of the Texoma Peanut Company, had the potential to devastate the peanut industry in the Southwest; voiding the contracts peanut farmers had with the company.
“Producers in Oklahoma, Texas, Mississippi and Arkansas were being asked to forfeit marketing loans without a ready market for their 2014 crop,” said Bob White, chairman of National Peanut Board and peanut farmer from Quail, Texas. “We all know farming has enough inherent risks without added concern over buyers not being able to honor agreements.”
Faced with the strong possibility of financial hardship, National Peanut Board, Mississippi Peanut Growers Association, Oklahoma Peanut Commission, Texas Peanut Producers Board, Western Peanut Growers Association and Southern Peanut Farmers Federation joined forces to request that USDA-FSA help protect producers by:
- Slowing down the acceleration of the repayment of loans to allow for an orderly marketing process for their 2014 peanut crop;
- Giving growers relief on in-charges and inspection charges;
- Working out an agreement with the shelling companies acquiring Texoma Peanut Company on liability and risk of loss.
As a solution, USDA-FSA recently proposed a Special Storage Agreement (SSA) with companies that are assuming ownership and operation of former Texoma facilities. USDA reduced the loan repayment rate for Segregation I peanuts stored under Texoma Warehouse License by $100 per ton for a specific time period; from March 25, 2015 until midnight June 30, 2015.
“We are appreciative of the tremendous efforts USDA-FSA provided to bring relief to farmers and create a smooth transition as new buyers assume operations,” said Bob Parker, National Peanut Board’s president & CEO. “There was also great collaboration among the various industry organizations who represent the best interests of farmers.”
Now, peanut farmers affected by the transition have two options. He or she may choose to forfeit the peanuts and incur no further liability. Or, the grower may choose to sell the peanuts and repay the loan at a reduced rate. USDA outlined a five-step process for loan repayment:
The reduced loan repayment rate could possibly be limited by USDA-FSA program payment limitations. Producers may incur additional charges (i.e., load-out charges), which may vary by location. After the loan and all charges are repaid, any remaining funds must be remitted to USDA. USDA will retain a portion of the funds to cover possible shortages not covered by the warehouse bond, while the producer will keep the remaining money.
Producer Information Meetings Announced
Producers are encouraged to attend one of the Informational meetings sponsored by USDA-FSA to see how the SSA affects them. The first meeting is Thursday, March 26, 1:30 p.m., at Texas A & M AgriLife Research and Extension Center, 1102 East F.M. 1294, Lubbock, Texas; the second is Friday, March 27, 1:00 p.m., at Caddo-Kiowa Technology Center, Fort Cobb, Okla. Kathy Sayers, USDA-FSA Peanut Program Manager will officiate the meetings and conduct question-and-answer sessions.
- The grower repays the loan at an amount reduced by $100.
- The grower repays the in-handling charge of $30 per ton.
- The grower repays the incoming inspection fee.
- The grower pays any storage charges accrued from the effective date of the SSA.
- The grower pays any charges related to the safekeeping of the peanuts from the effective date of the SSA.