Failing Gregory elevator to be sold to New York company
GREGORY — Gregory Farmers Elevator patron members voted 63-4 in favor of a New York company purchasing the assets of the elevator to keep it in business.
Interstate Commodities Inc., of Troy, N.Y., will buy the elevator for $555,000. Greg Oberting, president of the company, spoke to patrons during a meeting Monday evening at the Gregory Memorial Auditorium.
“We’re in the grain business, have been for 66 years,” Oberting said. “It’s a third generation, family owned business. We have a large presence throughout the United States in shipping and selling grain and grain products.”
Oberting said Interstate Commodities does a lot of business in South Dakota, including the recent purchase of an elevator in White Lake, and was alerted to the Gregory Farmers Elevator potential foreclosure a few months ago. He said his company has worked with about five other elevators in the same situation.
Interstate Commodities immediately plans to add dump capacity, increase the speed to receive grain and double storage capacity. Oberting said the Gregory elevator will also provide strong grain bids.
“We’re really, really excited about this,” Oberting said. “It’s crucial to have you along with us. Thank you very much for trusting us with this and we’re not going to let you down.”
The Gregory Farmers Elevator began having various financial issues about a year and a half ago, including former manager Melissa Vosika allegedly embezzling money from the elevator. However, board members said that is not the only issue that brought trouble.
The state Public Utilities Commission discovered a working capital deficiency last year, said Jim Mehlhaff, director of the PUC grain and warehouse division. Mehlhaff spoke during the meeting, stating that the bottom fell out of the working capital last August.
Patrons of the elevator met on different occasions to attempt to merge with another cooperative or sell to another company. Those efforts fell through.
“It came very close to pulling the plug a few months later,” Mehlhaff said. “Then you made a last ditch effort in raising capital from the patrons.”
In March, the PUC voted to suspend the elevator license.
“Working capital was gone and we saw no hope of recovering that money,” Mehlhaff said.
The elevator has approximately $1 million in debt, said John Jacobsen, attorney for the cooperative.
“Collection of the assets barely pays the creditors,” he said. “This elevator is insolvent. There are more liabilities than assets.”
If the patrons hadn’t voted in favor of Interstate Commodities purchasing the elevator, it would have gone back to the bank, which would have foreclosed on the property.
“It’s a sign of the times,” said Sherman Vomacka, chairman of the cooperative board.
Vomacka said many farmers already go direct by selling directly to marketers rather than going through the elevator. The cooperative began in 1915.
Fellow board member Dave Shoemaker is confident the sale will move Gregory in a better direction. He credits Vomacka and Mehlhaff with getting the deal with Interstate Commodities.
“The patrons have all been paid in full because of Sherman’s hard work and dedication,” Shoemaker said. “The board was ready to give up and let the elevator go back to the bank.”
Shoemaker and Vomacka said Mehlhaff was always available for ideas and help when needed.