The state attorney general’s office issued a warning late this week about”credit sale contracts” for grain farmers and buyers. Holders of thosecontracts will wait in line if there’s a bankruptcy, and be paid withwhatever’s left after secured creditors get paid. Farm division assistantattorney general Steve Reno explains while sellers can defer their incomefrom grain sales till the following year, they’re a risky tool. He says inthe wake of the bankruptcy at a Creston co-op, farmers should ask questionsbefore any sale is arranged. Ask what the elevator’s books look like, and ifthey’re not strong, don’t take a credit-sale contract or you’ll risk whathappened at Crestland Co-op. Reno says the caution about credit-salecontracts is nothing news. He says every year the attorney general’s officeputs out an advisory, and it happens this year the Crestland cooperativejust failed and holders of this kind of contract are left with little.Iowa’s grain indemnity fund doesn’t cover credit-sale contracts, while itcovers 90-percent of the value of grain sold using cash-sale contracts, orgrain that’s stored at a state-licensed warehouse.
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