Industry insiders, shocked by a huge grain market fraud case, caution the legislature against an over-reaction.
Executive Director Steve Taylor with the Missouri Agribusiness Association says the criminal case being built against Cathy Gieseker, a grain dealer out of Martinsburg, wasn’t as surprising to his members as you might think.
"When Gieseker was operating and they (his members) were getting out-bid by a dollar or more a bushel, they knew something was up," Taylor says.
Taylor says grain dealers and elevators will compete hard for a nickel difference in the price of a bushel of grain; even harder for a difference of a dime or a quarter.
"So, when you’re getting beat out for business over more than a quarter a bushel, you sit back and think, ‘How is this happening?’"
The most popular recommended response to the Gieseker fraud case is to increase the surety bond grain dealers and elevators are required to have on hand. The bonds are used to compensate farmers who lose money when a grain dealer or grain elevator goes bankrupt. Taylor has two objections. First, he notes none of the bonds being discussed could even come close to compensating farmers in the Gieseker case. Second, he says that increasing bond requirements too much could force some of his members out of business.
Talk at the Capitol has centered on increasing the bond from the current maximum of $300,000 to $600,000 and establishing a minimum $50,000 bond. The bond would be based on about 1% of sales. Federal and state charges filed in the Gieseker case accuse her of defrauding nearly 200 farmers out of at least $27 million, perhaps as much as $50 million.
Taylor says his members, agricultural wholesalers and retailers, have discussed a certification process so farmers know they can trust who they deal with.
"We need to look how we can, as an industry, work harder, work with the department ( Missouri Department of Agriculture ), work with grain producers and make sure, as much as we can, that this never happens again," Taylor says.
Download/listen Brent Martin reports (1:15 MP3)
