Kernels of Hope

Kernels of Hope

August 23, 2016

Story provided by the Ed Wolf of the Texas Farm Bureau

As the USDA predicts record breaking grain harvests, elevators will most likely fill to the brim.  But if one of those elevators decides to close,  it could spell doom for Texas farmers. A proposed referendum could be their saving grace.

The golden kernels of corn he nurtures to harvest are the life and career of Scott Renfro. They are the future of his farming family. But sometimes life gets difficult. the year 2009 is one he will never forget. It’s the year his perspective changed forever.

"Back in 2009 we had a local elevator go under," said Renfro.  "[It] was an elevator we had been doing business with for 30 years or better. Didn't expect anything. Never had a clue. The next thing we knew doors were getting shut down & locked and our grain was in there."

Grain elevators are vital to farmers, providing space to store harvested grain and help them market their crop. Elevators hold a growers’ livelihood in every bin. If the grain elevator goes bankrupt, a farmer’s very future is at stake.

"Under the bankruptcy laws they said, 'yes it is your grain and you do own it, but it’s tied up in a facility that's in bankruptcy so we couldn't get it," Renfro explained. "All I cared about along with all the other farmers around me was just give me my grain.”

The courts decided instead to sell the grain. And hold the funds until the bankruptcy was settled. The plan was then to distribute the money to the farmers. But by the time it was all said and done, there wasn’t much left to go around.

“After a good year of being in bankruptcy," said Renfro, "the money that was there in that account from the sell of our grain was pretty much gone. And what was left, after all the attorneys that were involved got their part out of it, to get paid we were left with pennies on the dollar."

Renfro only got about 4% of what his grain was worth. Farmers like him struggled to survive. Some went out of business. Some are still trying to recover. Every relationship Renfro had was tested and strained. From his banker…to his equipment dealer…even his wife. He looked to his father-in-law, who’s farmed for 50 years, for advice. But he had never gone through anything like this either. Something had to change.

"It opened my eyes made me realize there needs to be something in place for this not to happen again."

Renfro believes a grain indemnity fund is the answer. And he is not alone. Rodney Schronk, is a farmer near Hillsboro, Texas. But he’s also part owner of Apex Grain. As both a farmer and an elevator owner, he has a unique perspective. Farmers, he says, can protect themselves by cooperating in a state sanctioned grain indemnity fund.

"I think a lot of elevators see this as a threat to them -- that, well, farmers don't trust us as elevators," said Schronk. "I'm a farmer and I'm an elevator owner both.  One of the things I have learned in life is good people make bad decisions and sometimes don't even make bad decisions. Sometimes bad things happen. And you need a way to protect yourself. For me I just see this as a valuable tool to protect us as farmers from bad situations.”

Texas grain farmers will vote on a referendum in early December. If approved the Grain Indemnity Fund would take .2% of the gross sale price of the grain and put it aside. The fund would provide 85% of the value of the grain to the farmer, if an elevator fails. It is a way for farmers to self-insure. Once the fund reaches a certain level, farmers would begin to get their money back. All while still providing a safety net -- an insurance policy, in case of tragedy.

"I hope you realize as a farmer or a landowner your grain is only bonded for a few cents. So if you have a four dollar bushel of grain it’s only bonded for a few pennies. History repeats itself. And it may never happen to you but it could be you tomorrow. You have no way of knowing. So why not pay a fraction of a cent to have the peace of mind to know your protected if something bad did happen."

Nearly all major grain producing states already have grain indemnity funds.  Renfro wishes Texas would get on board. Otherwise, he warns, other farmers’ lives will be disrupted.

"If there was a way I could go back in time," said Renfro, "go back to 2009 when we had no idea what was fixing to happen. It would open up their eyes real quick. That's all it would take."

The Texas Farm Bureau says nearly all major grain producing states already have grain indemnity funds.  Texas voters will make their decision in December.

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