Thousands of corn growers from across the Midwest could potentially have their contracts with ethanol producer VeraSun rejected, including the chairman of the National Corn Growers Association (NCGA).
NCGA chairman Ron Litterer of Iowa and others have filed a formal objection with the U.S. Bankruptcy Court in Delaware regarding the proposed disposition of corn contracts by VeraSun Energy Corporation, which filed Chapter 11 at the end of October.
VeraSun announced recently that they are continuing to work with suppliers while pursuing long-term financing.
“Unfortunately, the Company will need to reject some corn contracts for delivery through Dec. 31, 2008 at our Janesville and Welcome, Minn., facilities due to the delayed startups. Other contracts may need to be rejected or renegotiated as we continue to work through them on an individual basis.”
The objection filed by the corn growers indicates specific concerns with VeraSun’s proposed procedures under bankruptcy, which may allow VeraSun to wait until 10 days before contracted delivery date to notify growers of their rejection of the contract. This would essentially leave corn suppliers in a state of limbo while VeraSun is free to determine the market price for corn before deciding whether to accept deliveries under a contract or summarily reject the contract. Litterer believes this would be fundamentally unfair to corn growers and other corn suppliers.