The Iowa Corn Growers Association (ICGA) and National Corn Growers Association (NCGA) have hired legal counsel and filed a formal objection to VeraSun Energy Corporation's bankruptcy proceedings. The ICGA issued a press release November 25 announcing the decision.
A group of more than 100 corn growers is challenging bankruptcy provisions that threaten corn sales contracts for October, November, and December. Representatives of the ICGA board of directors and the Iowa Corn Promotion Board met in Des Moines last night and informally discussed the possibility of hiring a lawyer as a voice for farmers affected by the bankrupt ethanol manufacturer. VeraSun has five ethanol plants in Iowa, and uses about 8% to 9% of Iowa's corn crop. The firm operates a total of 16 plants in 8 states.
Ron Litterer, a farmer from Greene, Iowa who is a past ICGA president and is the current NCGA chairman, says the group hopes to serve as a voice for corn growers and advocate for farmers' interests with the U.S. Bankruptcy Court in Delaware. "It is doubtful that we can influence the courts to require VeraSun to pay the contracted price for our corn," he says. "However, we do hope to influence other issues of concern to growers."
Proposed bankruptcy procedure unfair
One concern raised by the group is a proposed bankruptcy procedure that could allow VeraSun to wait until 10 days before a contracted delivery date to notify growers that the contract will be rejected.
"That would let VeraSun determine the market price before deciding whether to accept delivery under a contract, but it would leave growers up in the air until the last minute," explains Gary Edwards, the current ICGA president and a farmer from Anamosa in eastern Iowa. "Growers could lose out on their contracted price. At the same time, leaving the grower in limbo could mean losing the chance to sell corn someplace else at a decent price."
Current ICGA directors and staff are monitoring the VeraSun situation, meeting with key Iowa officials, and taking steps to keep ICGA members informed of the latest developments.
Litterer, who farms near Greene in northeast Iowa, has an outstanding contract to deliver corn to VeraSun. He and fellow group members filed the objection on behalf of all affected corn growers who have similar situations and are concerned with VeraSun's proposed procedures to reject outstanding contracts. Potentially thousands of corn growers from Indiana, Iowa, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and other states could be affected.