Problems with one grain broker and one grain elevator in Missouri have revived efforts to update state regulations.

Industry officials, though, have cautioned the House Agri-Business Committee
that a proposal to increase the bond grain elevators are required to carry might
drive out small operators while failing to address the problems associated with a grain broker under suspicion. The State Department of Agriculture has seized the assets of the  T. J. Gieseker Farms and Trucking, which operates in east-central Missouri. Prosecutors are investigating potential fraud in the case involving grain broker Cathy Gieseker.

The Gieseker case, which involves hundreds of farmers and could total more than
$15 million, has renewed interest in increasing the bond grain elevators are
required to carry. Rep. Steve Hobbs (R-Mexico) sponsors HB 915 which would
increase that bond from the current $300,000 to $1 million or, for small
elevators, from 1% of grain purchases to 2%.

Linking the potential fraud case with increased bonding requirements upsets the industry.

The thing that I have heard a lot is the displeasure, Ill put it, as far as
linking the raising of the bond to the fraud, Steve Taylor, executive director
of the Missouri Agribusiness Association, told the House committee.

Taylor urged the committee to focus on prevention and to review budget cuts made to the state Department of Agriculture, which might have hampered the
departments ability to inspect grain elevators adequately.

A grain elevator operator warned committee members that an increase in the bond
requirement will increase costs, which will be passed on to farmers.

Seth Ricketts operates grain elevators in Salisbury, Shelbina and Cairo. He told
the committee that increased costs wasnt the primary concern of grain elevator
operators.

We believe this could have a tremendous impact on smaller grain merchants,
Ricketts testified before the committee. The primary impact of this legislation
is not the increased cost of the bonding, the ability of a small business to
even obtain a grain bond.

The Department of Agriculture reports there are 400 grain elevators in Missouri.
Twenty-two elevators buy in excess of $50 million worth of grain annually. One
hundred, three elevators operate on the lower end of grain sales with the others
somewhere in the middle.

Rep. Hobbs said after the hearing that he is willing to work with the industry
on compromise language. Industry officials say they would like to see bonding
requirements in the bill lowered from $1 million and 2% to $600,000 and 1  %.

The Missouri Corngrowers Association and the Missouri Soybean Association
testified in favor of the bill. Officials for both also noted that House Speaker
Ron Richard (R-Joplin) has announced he will form an agriculture task force to
consider what the state can do to prevent grain elevator failures. Farmers arent
just reeling from the Gieseker case, but also from the failure of Gallatin Grain
in Daviess County.

A second bill sponsored by Rep. Hobbs, HB 923 , seems to enjoy solid support. It would make it a misdemeanor for grain brokers to sell commodities for which they
do not have a license.

Download/listen Brent Martin reports (1:20 MP3)