%1

A year after it shuttered operations at its 60,000-square-foot farming facility in Braddock, Pa., the vertical farming startup Fifth Season has filed for bankruptcy, the Pittsburgh Post-Gazette reported. Michael Von Lehman, president of Meridian Management Partners, had been trying to find a new buyer for the plant after he was brought on as chief restructuring officer in December. But the vertical farming industry is too fragile for any company to take on such a significant acquisition right now, he said. RDC, the owner and developer that poured $30 million into the autonomous farming facility, had planned to convert the space to food manufacturing in early July if a new operator wasn't found. The building was listed for sale for $12 million in June by the commercial real estate firm CBRE Inc. Fifth Season did not own most of the assets it operated, Mr. Von Lehman said. It leased the Braddock building and most of its equipment. According to a filing with the United States Bankruptcy Court for the Western District of Pennsylvania, the company estimated its asset value ranges between $50,001 and $100,000. Its liabilities are estimated to be between $10,000,001 and $50 million. 1

The Biden administration on Monday proposed new regulations to strengthen competition rules in poultry and livestock markets aimed at protecting farmers and ranchers in dealing with the companies that process their products, Bloomberg News reported. Long-simmering grievances over the domination of meat and poultry markets by a few giant companies have exploded into the broader political debate as rising meat prices played an out-sized role in surging inflation this past year. President Joe Biden and his top economic aides have accused meatpackers and poultry processors of abusing their market dominance while farmers complained they haven’t received a fair share of surging supermarket prices. The proposed regulation prohibits meat processors from using specific deceptive practices in purchasing livestock, including making false or misleading statements or omitting important information to secure contracts for livestock or negotiate purchases. It also prohibits retaliation against farmers who try to join together or report abuses, according to an Agriculture Department summary. “Highly concentrated local markets in livestock and poultry have increasingly left farmers, ranchers, growers and producers vulnerable to a range of practices that unjustly exclude them from economic opportunities and undermine a transparent, competitive, and open market,” Agriculture Secretary Tom Vilsack, who announced the proposed rule, said.

A federal appeals court on Wednesday ruled that bankrupt Florida grocery store owners could discharge debts owed to a produce supplier, resolving a "tug-of-war" between U.S. bankruptcy law and a federal law intended to protect companies delivering perishable foods, Reuters reported. Spring Valley Produce Inc. had appealed a bankruptcy court order allowing Central Market of FL Inc. to discharge a $261,504.15 debt for produce that Central Market never paid for. Spring Valley argued that the Perishable Agricultural Commodities Act (PACA) overrules bankruptcy law's normal discharge of debts, because PACA makes it illegal for a buyer to fail to make prompt payment for produce. PACA automatically creates a "statutory trust" when produce is delivered, and Spring Valley argued that Central Market was a fiduciary of the PACA trust created by its deliveries. Because Central Market was a fiduciary, its owners' debts to Spring Valley were not dischargable under normal bankruptcy rules, Spring Valley argued. The U.S. Court of Appeals for the 11th Circuit disagreed, saying that PACA "imposes some trust-like duties," but it did not qualify for the fiduciary exemption in bankruptcy law. Specifically, PACA does not require a produce buyer to keep trust assets segregated from its other assets or prevent the buyer from using the trust assets for other purposes, the 11th Circuit ruled. The 11th Circuit said that its decision balanced "two statutes with competing interests" without eroding PACA's protections for produce suppliers. Produce suppliers can ask a court to force the disgorgement of payments made in breach of the PACA trust, and they are entitled to the highest priority for repayment in bankruptcy, the 11th Circuit wrote. "Allowing PACA debtors to be freed from personal liability for their debts through bankruptcy discharge promotes the overarching goal of the Bankruptcy Code of providing debtors with a fresh start," the 11th Circuit wrote. "At the same time, PACA still provides significant benefits to unpaid produce sellers."

Congestion on America’s railroads is disrupting operations for farmers and agriculture companies, industry officials said, potentially pushing up food prices, the Wall Street Journal reported. Delayed trains and scarce railcars are impeding crop shipments this spring, causing grain storage facilities to fill up, backing up fertilizer shipments and temporarily shutting down production at ethanol producing plants, company executives said. Railroad operators said they are working to fix the problems but struggling to find enough workers. The railroad slowdown has grain companies looking for other ways to move farm commodities across the country, leading to higher transportation costs that company officials said will ultimately increase food prices for consumers. Food globally is already becoming more expensive, with food makers paying more for fuel, ingredients and labor. “We are seeing a disruption across the industry from top to bottom,” said Todd Becker, chief executive of Green Plains Inc., a major producer of ethanol and animal feed ingredients. “Transportation is a big driver of food prices.”

The current rally of U.S. grain and oilseed prices could help bolster American farm incomes this year, as Russia's invasion of Ukraine roils commodity markets over fears of massive disruption of exports from the Black Sea region, an economist for the Federal Reserve Bank of Chicago said yesterday, Reuters reported. But how big of a financial boost this ultimately will be for farmers remains murky, as production costs are soaring and the levels of pandemic and trade war-related supports the federal government has paid out since 2019 are falling. "While the rally of agricultural prices is helpful, inputs are higher too," Chicago Fed economist David Oppedahl said during a Federal Reserve webinar about U.S. agriculture. U.S. net farm income is forecast to be $113.7 billion this year, a 4.5% drop from 2021, according to data released in February from the U.S. Department of Agriculture. But USDA's forecast is as of Feb. 4, or 20 days before Russia invaded Ukraine. In its wake, Chicago Board of Trade wheat futures prices have jumped 26% and corn futures are about $1.00 per bushel from its record high. Russia and Ukraine combined account for about 29% of global wheat exports and 19% of corn exports. Direct government payments are forecast to reach $11.7 billion in 2022, down from an estimated $27.1 billion in 2021, $46.6 billion in 2020 and $22.4 billion in 2019, according to the most recent USDA data.