| 3 min read | by Lonnie Huhman, email@example.com |
A place that local farmers have looked to for many years and a longtime familiar site along Dexter-Chelsea Road, the Chelsea Grain Company on Dec. 18, 2019, voluntarily surrendered its grain dealer license.
According to Jeff Haarer, a Manager with the Michigan Department of Agriculture & Rural Development Agriculture Development Division, Producer Security Program, Chelsea Grain LLC is going through a liquidation process and has voluntarily relinquished its grain dealer license under PA 141 of 1939.
Haarer, on behalf of MDARD, has sent notification letters out to producer creditors of Chelsea Grain announcing the Notice of Liquidation of Farm Produce.
His letter opens by stating, “Based on a review of the books and records of Chelsea Grain, LLC. in Chelsea MI, your name has been listed as a holder of a scale ticket, warehouse receipt, grain bank, price later agreement, or spot sale for farm produce that has not been paid in full.”
Haarer said MDARD administers the Grain Dealers Act, which licenses grain dealers and the Farm Produce Insurance which provides indemnification for eligible producers.
Nathan Dawson, President of Chelsea Grain, LLC, said the state “requires that if you have a grain dealer’s license that you have 1 to 1 current liabilities vs. assets. The Grain Company has assets to cover customer liabilities. They are in the form of hard assets (land, equipment) not cash. I elected to close the business instead of finding investors or push more cash into the company.”
Haarer’s letter said, “Based on conversations with Nathan Dawson, President of Chelsea Grain, LLC, Nathan has decided to begin liquidation of the assets (including grain) at the facility with the intent of satisfying all grain obligations. The goal is to have all grain settled and liquidated from the facility by January 31, 2020. To ensure equitable payment to all producers impacted, Chelsea Grain, LLC will not be paying more than 75 percent for all priced but not paid for grain. Further payments will be prorated based upon revenue received.”
Haarer said, “MDARD will supervise the liquidation of grain assets for Chelsea Grain, LLC in accordance with Section 26 of the Grain Dealers Act, PA 141 of 1939, as amended. Chelsea Grain, LLC is not currently licensed as a grain dealer under the Grain Dealers Act (GDA) due to the voluntary surrendering of their license and as such Chelsea Grain, LLC is not allowed to receive farm produce.”
When asked, what your customers should know, Dawson said, “There is no reason to think that they will not be paid. The company is currently liquidating all grain inventory. After the grain assets are liquidated, the property of the company will be sold to cover debits. If there is still a balance due after every asset is liquidated. The farmers have paid into an insurance fund that pays 90 percent of the remaining balance. Currently Chelsea Grain has assets that exceed liabilities.”
Haarer said in the letter, “MDARD is now in the process of verifying the grain dealers’ records with your records and netting any obligations that you may have with Chelsea Grain, LLC. To complete the liquidation process so Chelsea Grain, LLC. can make final payments, please complete the attached MDARD Statement of Loss form and submit it to our office by January 10, 2020. If there is not enough farm produce and assets to cover your losses, MDARD will prorate the proceeds in accordance with the GDA. Any outstanding balance owed to you after liquidation may be eligible for recovery under the Farm Produce Insurance Act, PA 141 of 1939 (separate claim process).”
Haarer said the process is to first verify all potential producers that have grain in facility and outstanding obligations.
“The intent of operator is to pay producers fully from liquidation of grain from faculty and other assets,” Haarer said.
Dawson started with Chelsea Grain in 2001, became its manager in 2005, and then bought 10 percent of it in 2008 and the remainder in 2012, which turned out to be a drought year and big loss. Dawson said that challenge took years to recover from and then in 2016 they were back on their feet, and grossed $15 million and made a small profit.
However, in 2017, the road coming out of Chelsea was closed due to the gas pipeline work, which led to the farmers, especially from the Stockbridge area coming down M-52, having to make a tough decision about traveling to Chelsea Grain.
Dawson said the pipeline is still not complete.
The Sun Times News reported in early December that 2019 was a tough year for agriculture in Washtenaw County and as a result of extreme weather fluctuations such as spring flooding and summer drought causing poor harvests, the United States Department of Agriculture (USDA) declared the county as a Primary Natural Disaster Area.
STN reported the move allowed some producers to be eligible for USDA Farm Service Agency (FSA) emergency loans.
According to a United States Department of Agriculture 2017 census, Washtenaw County has 1,245 farms for a total of 178,995 acres devoted to agriculture, or 38.7 percent of the county’s 462,080 total acres. Farming in the county contributes $91,167,000 to the economy. Any hit to farmers has a big ripple effect.
The Sun Times News reached out to Dawson to get his view of the Grain Company going forward.
STN: What should the community know?
Dawson: Things are changing. I have been accepted into the community and I want the best for it. I hoped to extend the conventional use of this plant for more years than I was able. To me that is failure. I am more unhappy than my former customers in that regard.
He said, “This is an economic hub. I know we don’t look like much, but we keep 4-6 good jobs and $10-15 million in the local economy. When small, utilitarian plants like this are gone, they never come back.”
“This has been my community for going on 20 years,” Dawson said. “I am willing to do as much as I can to make this a useful sight. I have thought that this is a past, present and future sight for Western Washtenaw agriculture. I would like to spend the next 20 exploring and helping that potential.”
STN: What are the plans going forward?
Dawson: We have many plans going forward. From farmer owned to an outside grain company buying and running the facility. These things normally take months not weeks. Time is an issue. For all the right reasons, the state will move forward with the best plan to get the farmers paid.”
STN: How do you describe Chelsea Grain?
Dawson: The coffee is always on. Come talk. We will not judge you.
STN: Is there anything that we haven’t asked about that you would like to say?
Dawson: Politics today is left or right wing. Agriculture is organic or conventional. We all need to be closer to the middle. This area is ripe for meeting the newest customers’ needs. I hope my friends and customers can see that.