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March 2, 2001
Ag lien, bankruptcy bill introduced...
Another Texas Farm Bureau legislative priority has been addressed with the filing of SB 779 by State Sen. Robert Duncan of Lubbock and HB 1829 by State Rep. Gary Walker of Plains. With the bill filing deadline of March 9 looming on the horizon, we are thankful for the efforts of these two legislators in getting language introduced to strengthen the protections for farmers in certain bankruptcy situations.
The TFB State Board of Directors designated the Ag Lien / Bankruptcy issue as one of our organization's legislative priorities for this session. The priority statement reads: "Amend Texas law to adequately protect the interests of producers that deliver a commodity to an elevator or processor that declares bankruptcy."
The issue may impact only a small minority of agricultural producers in Texas in any given year, but the ramifications of these circumstances to a grower can be financially severe.
Currently, Texas law provides inadequate protection for agriculture producers when they deliver an agricultural product that they have produced to an elevator or processor that declares bankruptcy after receiving the product. The "Uniform Commercial Code" (UCC) does not address agricultural producers' need for a priority lien status that protects their assets in the event of a bankruptcy.
Current Texas law and the UCC often give priority status to the lending institution of the receiving business, regardless of whether the producer had received payment or not. The UCC does allow a state to preempt the UCC if the state has enabling statutes in law.
TFB wants to provide "priority lien status'' for the commodity producer with such an enabling statute. SB 779 and HB 1829 are companion bills with identical language sought by TFB. SB 779 has been referred to the Senate Committee on Natural Resources, of which Sen. Duncan is vice chairman. HB 1829 has been referred to the House Committee on Agriculture and Livestock. We are hopeful for their outcome.
The recent experiences of several growers in the South Plains area victimized by a company bankruptcy should offer strong evidence as to the need for this legislation. Tens of thousands of dollars were lost by many of these farmers, with no legal recourse to recover the value of their commodity. We'll keep you posted as these two bills move forward. For an update on all TFB legislative efforts, log on to the organization's website at www.txfb.org.
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March 20th is TFB Leader Day in Austin. We hope you will have an opportunity to join us for the one-day meeting as we focus on important legislative issues and travel to the Capitol for legislative visits. Our gathering coincides with National Agriculture Week and National Agriculture Day (March 20) in an effort to heighten awareness of the importance of the Texas agriculture industry. TFB's own "Planet Agriculture" exhibit will occupy the Capitol's ground floor (basement) rotunda from March 20-22 as an added feature.
The TFB Legislative staff in Austin may be reached at 512/472-8288.
