At a March 5, 2015 meeting of the Farm Produce Insurance Authority (FPIA), the board approved 122 producer claims for $3,869,381 in farm produce losses resulting from the October 28, 2015 failure of Lapeer Grain Company (Lapeer Grain).
On October 31, 2014, the Michigan Department of Agriculture and Rural Development (MDARD) issued a summary suspension of the grain dealer’s license for Lapeer Grain and their five locations in Lapeer, Imlay City, Jeddo, Palms and Capac for failure to satisfy financial requirements of the Grain Dealers Act, PA 141 of 1939, as amended
Based upon legal notice of failure and letters sent to all known producer creditors, 132 claims were submitted for eligibility review. The Farm Produce Insurance Act, PA 198 of 2003, as amended, requires that a claim from a failure of a licensee be found valid by MDARD, and approved by the FPIA, less all credits and offsets. PA 198 also requires a producer to submit a claim within two years of the transfer of title of the farm produce to the licensee.
The FPIA was established in 2003 to provide for reimbursement to a participating producer for losses suffered when a grain dealer declares insolvency or is otherwise unable to pay its claimants for grain delivered and sold but not paid for. The FPIA is chaired by the Director of the MDARD and consists of a 10 member (eight voting) board representing farmers, industry and banking interests. Covered commodities include corn, soybeans, dry beans, small grains and cereal.
The FPIA has a current balance of $6.3 million. Upon disbursement of claim payments that reduce the balance below $3 million, the premium collection in addition to the administrative assessment may be reinstated at a rate equivalent to $2 per $1,000 of the net value of all commodities sold to licensed grain dealers until the balance reaches a minimum of $5 million.
Prior to the Lapeer Grain failure, the FPIA has paid more than $930,000 in claims to 92 producers and has recovered $600,000 from bankruptcy and probate proceedings.
If you have any questions or would like more information about the FPIA, call (517) 284-5642 or visit www.michigan.gov/graindealers.