Fifty southern Alberta farmers could lose up to $3 million worth of alfalfa seed sales after an American forage seed company declared bankruptcy last week.
Nevada-based AgriBioTech Ltd. voluntarily filed for bankruptcy last week. The company holds contracts with farmers in Alberta and the United States. More than 4,000 acres are involved.
“There’s about $3 million worth of alfalfa seed in southern Alberta and a lot of it is not going to be paid for,” said Jim Burton, a private seed contractor in Brooks.
He acted as an agent for ABT since it bought the Ontario-based seed company Oseco Inc. last year. When ABT took over the Ontario company, it also assumed the grower
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contracts.
Besides cash losses, ownership of the patented seed is in dispute. Farmers want to know who owns the seed if the company is unable to pay them.
The farmers argue that until they are paid, they own the seed. The company says the farmers are obligated by contract and the plant breeders rights law to turn the seed over.
Raymond Virostek acted as an agent for ABT. He owns Bantry Seed Cleaning Ltd. at Tilley and was contracted to clean the seed. Some of it is stored at his plant.
“My chances of capturing my money this year is pretty slim,” he said.
He had no dealings with ABT until it bought out his former client Oseco Inc. but said he worked with Oseco for more than 20 years with no problems.
Growers are paid by the clean pound and ABT was offering about $1.20 per clean lb., said Virostek.
Some people received a 40 cent per lb. advance. Some never saw any money and if ABT is unable to pay them, they want their seed released from Virostek’s plant.
“I’m right in the middle of all this, These are my friends. For our area it is worth a lot of money. If you didn’t have cows, alfalfa seed was the only thing paying,” he said.
Doug Bell, a lawyer acting on behalf of some farmers, is unsure how much they can hope to recover as unsecured creditors.
Colleen Acres, of the Canadian Seed Growers Association, is not sure either. The association certified the Alberta fields as pedigreed seed.
“We’re very sympathetic to these growers but our hands are tied.”
Last spring the growers told the association to issue the pedigreed seed certificate to ABT since it held the contract for seeded acres.
“We can’t go back on that agreement now or we’re liable to be sued by the creditors,” she said.
At present, the company holds the certificate but many of the farmers are holding onto the seed until they are paid. One has no value without the other, she said: “The seed without the certificate is just common seed.”
She hopes for a quick resolution because the seeds’ germination ability and value could deteriorate over time.
Some seed companies are concerned there could be a flood of common seed on the market this spring, driving down the price of pedigreed and common seed.
In the last several years ABT went into high gear, acquiring 34 companies in the U.S. and in Canada.
The company website said ABT faced many challenges with slow cash flow, an oversupply of seed and a downturn in prices.
The amalgamation of 34 companies also proved more costly than expected.
The Idaho Alfalfa Seed Growers Association has retained an attorney to handle claims, which some individuals estimated range from a few thousand dollars to more than $250,000.
