By HOLLY GASKILL
Following a petition from Kratzer Family Farms of LaFontaine, the Huntington Superior Court has issued an order moving the failure date for Salamonie Mills Inc., a Huntington County grain elevator, nearly one-and-a-half years earlier.
This order allows thousands of unpaid bushels to be eligible for payment through the Indiana Grain Indemnity Fund, which protects farms in case of a grain elevator collapse.
Salamonie Mills had properties in Huntington, Markle, and three in Warren before its failure. Its sister company, Agland Grain of Bluffton, also defaulted.
The Indiana Grain Buyers and Warehouse License Agency originally identified March 20, 2020, as the failure date for Salamonie Mills. The petitioners asked the court to reconsider this date, saying the collapse had “became evident to farmers on March 3, 2020” when the IGBWLA suspended Salamonie Mills’ license. The petition continues, “In the months following, local farmers learned that Salamonie Mills had, in fact, been in a perilous financial condition for years,” and alleged the IGBWLA was also well aware of this.
The petition called selecting March 20, 2020, as the failure date a “significant error”, saying if the IGBLWA had identified the earlier financial failures of Salamonie Mills, the claim period would include thousands more unpaid bushels. Also listed as petitioners were Phil Pasko Farms, DK Farms, Pinkerton Farms, Caley Farmers and Caley Bros Farms, and Seldom Rest Farms of Huntington.
In his order on April 29, 2024, Special Judge Chad Kukelhan identified Dec. 31, 2018, as the failure date. He stated that at that time, SMI’s net worth was negative over $6.6 million and the business showed a net loss of over $1.5 million. Additionally, SMI accountants had indicated financial uncertainty to the IGBWLA, and the company was not compliant with its loans.
“The (IGBWLA) audited SMI but did not consider all debts, making the audit incomplete,” Kukelhan wrote in the order. “On September 24, 2018, the (IGBWLA) concluded SMI did not have the required amount of grain on hand but allowed it to continue operating.”
These financial woes continued in 2019, as there were insufficient funds for several checks to farmers. SMI’s net worth continued its decline, reaching negative over $10.2 million, and showed a net loss of $3.4 million. By January 2020, SMI defaulted on two loans.
When the IGBWLA notified SMI of a potential license suspension in February 2020, the company’s value was negative $11,768,264.
Kukelhan stated that the IGBWLA had failed to determine the soundness of SMI while the company continued to hold a license. By IGWLA’s standards, grain elevators must maintain a positive net worth — which SMI failed to do since late 2018. Because of this, Kukelhan advised that later dates regarding the license revocation and shortage hearing were inappropriate for determining the failure date.
Kukelhan continued: “Using December 31, 2018 as the failure date advances the legislative intent to protect farmers when a licensed grain buyer fails. Selecting the last possible date (SMI’s second suspension on March 20, 2020), as the Agency did here, thwarts the purpose of the Indiana Grain Indemnity Program.”
This earlier date allows the petitioners to claim undelivered grain up to 15 months before the new failure date and through March 3, 2020, the final date the IGBWLA allowed grain to be delivered.
holly@news-banner.com
