BioFuels Journal

Cargill Inc., Minneapolis, MN, along with a number of grain elevators in Iowa and Minnesota and 13 insurance companies, have agreed to pay the U.S. Department of Agriculture (USDA) $1.7 million to settle a 1993 case in which the government alleged that grain-drying charges were improperly shifted to federal crop insurance programs, the Minneapolis Star Tribune newspaper reported today.

The settlement follows a five-year government investigation that began when a whistle-blower filed a lawsuit in a Kansas City, MO, federal court in 1994. The case was transferred to Minnesota in 1996.

The case stemmed from a "combined moisture discount program" used by Cargill, the country elevators, and insurance companies to get government payments for the cost of drying corn.

Under government crop insurance policies, farmers in 1993 were not reimbursed for the cost of corn drying, unless the grain elevator was unable to identify the cost of the drying. The government contended that Cargill could identify those costs but did not do so. The investigation focused on the 1993 crop in southern Minnesota and northern Iowa, which was harvested at a high moisture level due to an extremely wet growing season.

"We think the program is a perfectly legal way to buy corn, and farmers were entitled to crop insurance," said Cargill spokeswoman Linda Thrane. "The crops were terrible, and they were wet. They could have plowed it under, and it would have cost the government more money. This was a way to salvage some of the crop."

The government charged that Cargill dried the wet corn, then used a "combined moisture discount" to hide from the USDA the amount it was charging to dry the corn. Cargill contends that it settled to end the investigation.

In addition to the parent company, the investigation focused on local Cargill elevators in Emmetsburg, IA; Royal, IA; Swea City, IA; Alberta, MN; Alpha, MN; Bingham Lake, MN; Elmore, MN; Gluek, MN; Guckeen, MN; Marna, MN; Maynard, MN; Pipestone, MN; and Winnebago, MN.

The government also contended that two Cargill employees falsified documents that allowed Cargill to pay farmers less for their crops than they were owned. USDA also filed a civil lawsuit against insurance agent John Keister of Blue Earth, MN, accusing him of filing inflated insurance claims with the department.

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