Arkansas is providing a $5 million loan to Delta Peanut in an effort to facilitate the purchase of this year’s peanut harvest as the company works toward an acquisition by an outside firm.
Gov. Sarah Huckabee Sanders and Arkansas Secretary of Agriculture Wes Ward announced the loan from the Governor’s Quick Action Closing Fund. The money will be used solely for Delta Peanut’s operational expenses, including staff, utilities and overhead.
“Peanuts are an expanding crop market in Arkansas, and we can’t allow this year’s harvest to rot in the field and kill the entire industry,” said Governor Sanders. “My administration is stepping in to offer this short-term bridge loan and facilitate the purchase of this year’s harvest. Looking forward, this is an industry we believe can stand on its own two feet and add diversity to the agriculture industry in the Delta.”
The announcement follows a September decision by the U.S. Department of Agriculture to pull Delta Peanut’s federal warehouse bond. Delta Peanut subsequently told its nearly 90 growers that it would be unable to dry, process or store their harvest.
Arkansas’ only other federally bonded peanut warehouse is already operating at full capacity, according to the announcement, while transporting the crop to facilities outside the state is not financially feasible for most farmers.
“Governor Sanders took immediate and decisive action to save nearly 80 percent of Arkansas’ peanut crop and help keep several farmers from being forced out of business,” said Secretary of Agriculture Wes Ward. “This bridge loan provides a responsible, short-term solution that will allow our producers to harvest this year’s crop, stay in business, and preserve the future of Arkansas’ peanut industry.”
As part of the arrangement, farmers will be required to agree to a $60-per-ton delivery fee and a bank subordination agreement that gives the state priority lender status for repayment of the operating loan.
The loan agreement with Delta Peanut will last no longer than six months. The loan will be repaid as payments are received from the USDA and through delivery fees.
Meanwhile, Delta Peanut is negotiating with a third party to purchase the company and take over operations after the current harvest season.
The company has also been provided a $2.7 million line of credit that will allow the USDA to reinstate its warehouse license. However, Delta Peanut still needs funding for operational expenses in order to process this year’s harvest.
Feature Photo Credit: iStock/Bing-Jhen Hong
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