Several Oregon farms have filed crop liens against an out-of-state seed company they claim is past due on more than $1.5 million in payments for radish seed.
Other growers whose contractual payment dates are still upcoming have also filed liens against Cover Crop Solutions, based in Pennsylvania, bringing the total to 35 grain producers liens worth $4.85 million.
“I don’t know of any small business owners in Oregon that can take that kind of hit for an extended period of time. It’s a scary situation,” said Anna Scharf of Scharf Farms, which filed a $250,000 lien against the firm. “When we’re asked to be the banker, it’s hard for farmers.”
David Weaver, CEO of Cover Crop Solutions, said he could not yet discuss the situation but would soon respond to a request for comment from Capital Press.
Jim Gardner of K&J Farms, which filed a $97,000 lien, said his family is relatively new to producing radish seed but it was a major crop for their operation last year.
“I haven’t seen a penny and I need to pay people,” he said.
The uncertainty over payments from Cover Crop Solutions will probably make farmers think twice about growing radish seed, Gardner said. “A farmer can’t grow something for nothing.”
A recent oversupply in the market for radish seed, which is planted as a cover crop, was aggravated by weather in the Midwest last year, said Gary Weaver, president of Weaver Seed of Oregon.
A wet spring in 2014 delayed the planting and harvest of corn and soybeans, which left many farmers in that region with insufficient time to plant cover crops in autumn, he said.
Seed producers in Oregon’s Willamette Valley also overestimated demand for radish seed, Weaver said. “The whole valley planted too many acres.”
However, the oversupply is likely to ease over the next 18 months as seed companies work through their inventories, he said.
Gardner of K&J Farms said that growers file liens because they’re nervous about an eventuality similar to the bankruptcy of Agribiotech, which defaulted on contracts with grass seed farmers in 2000.
“I think it opened a lot of farmers’ eyes about what they need to do to protect themselves,” he said.
In a bankruptcy, liens ensure that farmers are treated as secured creditors who have collateral in the company’s assets, said Tim Bernasek, an Oregon attorney specializing in agriculture.
“Being first in line to get paid enhances your ability to get paid,” Bernasek said.
Under a grain producer’s lien, a company’s entire inventory serves as collateral for the grower — not just the crop he delivered, said John Albert, an Oregon attorney who specializes in agricultural liens.
Farmers therefore don’t have to show the company still has possession of their crop, he said.
“That makes it a pretty powerful tool in the hands of a grower,” Albert said.
However, grain producers liens aren’t effective indefinitely, since they expire after six months.
Before the expiration, growers can enforce the liens to foreclose on a company’s inventory, which is then sold as part of a sheriff’s sale and used to compensate farmers, he said.
Scharf said she doesn’t intend to bash Cover Crop Solutions but is disappointed farmers in the Willamette Valley don’t have the opportunity to plant canola, a related crop that’s restricted in the region.
Canola is a commodity crop that buyers pay for shortly after delivery, unlike contracted seed, she said. “The power is not with the farmers, it’s with the companies.”