Lapeer Grain bankruptcy causes farm tax to be reinstated

LANSING, MI -- Bankruptcy at the Lapeer Grain Co. has forced the reinstatement of a tax on farm produce, the Michigan Department of Agriculture & Rural Development said.

When the grain company failed to pay farmers in what MDARD said was the largest grain dealer failure in recent history, the Farm Produce Insurance Authority paid $3.5 million to cover farmers' losses, the agency said in a news release. That caused the FPIA's fund balance to dip below required minimums, so the FPIA board last month voted to reinstate a 0.002% assessment on the net proceeds of all farm produce sold in the state.

The reinstated assessment, which begins Oct. 1, is added to an existing, ongoing 0.00015% administrative assessment, the news release said. So, the total assessment on $100,000 of farm produce would be $215, the release said.

The reinstated assessment will continue until FPIA has more than $5 million in the bank, the release said. The assessment was first levied on Jan. 1, 2005 and was suspended on Dec. 31, 2007 after the fund reached the $5 million goal, MDARD spokeswoman Jennifer Holton said.

FPIA was established in 2003 and has paid $4.4 million in claims to more than 200 farmers of corn, soybeans, dry beans, small grains and cereal commodities, the release said.