Agriculture officials are watching closely as a major player in the state’s ethanol production network, with scores of grain contracts with southwestern Wisconsin farmers, struggles with bankruptcy.

Court agreements last week in Green Lake County left a receiver in charge of Olsen’s Mill assets, and its president, Paul Olsen, was forced to resign. This came only days after another of Olsen’s concerns, the Renew Energy ethanol plant in Jefferson, filed for bankruptcy, noting $100 million in debts. The grain dealer has elevators or buys grain in Belmont, Viroqua and Jefferson, among other sites.

A European bank, BNP Paribas, filed a civil lawsuit in January claiming Olsen’s Mill is insolvent and cannot pay back more than $55 million it borrowed in August 2007, according to the Oshkosh Northwestern newspaper.

Olsen’s Mill and its farm-to-grainery-to-distiller-to-consumer connections are spread across Wisconsin, and start with grain-buying contracts with farmers. That process now has state auditors on the alert, said Jeremy McPherson, director of the Bureau of Business Trade Practices in the state Department of Agriculture, Trade and Consumer Projection.

"We learned that they were placed in receivership, so we have auditors on sites, making sure farmers get paid. We have not heard from a farmer who didn’t get paid. To our knowledge, they have been paid when due for all of the grain that has been delivered," said McPherson.

"If there are farmers who believe they haven’t been paid, they need to tell us right away," he said.

The department administers a Producer Security Fund, filled by dealer payments, to help pay farmers when dealers won’t or can’t fulfill their contracts. The fund, containing about $9 million, has been used once in eight years, he said.

In the bank’s complaint against Olsen’s Mill, it says the company misrepresented assets, violated terms of a credit agreement and hid $21 million Renew Energy owed the mill for the purchase of corn and other products. Olsen’s Mill also counted 850,000 bushels of grain as inventory, though it had been shipped, the bank charged.

A UW-Madison professor of agricultural and applied economics, Bruce L. Jones, explained that "the economics of ethanol have changed dramatically in the past year and a half. All of the money being made 18 months ago was the result of the big run on corn prices, and now we’ve got a reversal," he said.

"The raw product, corn, is very expensive, and it is competing with cheap oil, so right now it is darn tough to get any kind of return in ethanol," he said.

Olsen’s Mill was involved in a lengthy and bitter legal battle in Belmont last year as it built a large grain storage and drying area across the road from a popular truck stop.

On the Internet

The state’s producer security fund can be tracked down at www.datcp.state.wi.us, or call Eric Hanson at 608-224-4968.

Wisconsin Corn Growers Association: www.wicorn.org.

Olsen’s Mill: www.olsensmillinc.com.