Will farmers be getting any cash from the settlement in the multitude of class action suits now being negotiated between corn growers and Syngenta? Syngenta was blamed for the early release of genetically enhanced corn designed to be toxic to corn borers and corn rootworms before it was approved by China. And when the genetics arrived in shiploads of U.S. corn in the fall of 2013, only to be rejected by China, the corn market dropped.
China was not involved back in the 1990s when unapproved genetics from corn known as Starlink were leased onto the market, and class action lawsuits were also filed. In that case, a few pennies per bushel filtered down to farmers; and now, few farmers expect to get anything of significance from Syngenta based on that past experience with Starlink.
But this may be different, believes Donald Swanson, an Omaha attorney familiar with such cases, whose column for the Ag law department at Iowa State University points to some cash going into the pockets of corn growers. He calculates about $100 per 1,000 bushels of corn produced annually by farmers from the 2013-14 crop through the 2017-18 crop.
The attorneys for Syngenta and the farmers who participated in the class action lawsuits have not said anything about a specific amount, and say that has to be announced by the court when the settlement is approved. So how can Swanson estimate how the $1.4 billion settlement is going to be divided among tens of thousands of farmers?
Swanson’s contention is based on the work of two agricultural economists, Bruce Babcock of Iowa State and Colin Carter of the University of California-Davis. Their “cents per bushel” loss estimates are fairly close, putting national cash losses at $3.95 billion to $4.68 billion.
Babcock says the the annual “cents per bushel” loss ranges from 11.5 cents down to 4.8 cents, for an average of 8.18 cents per bushel. Carter says the annual “cents per bushel” loss ranges from 14.84 cents down to 5.44 cents, for an average of 9.74 cents per bushel.
Swanson says those totals are different, but within $700 million of each other. Additionally, the two economists had estimated the financial losses to the Kansas farmers whose successful bellwether lawsuit pointed to $217 million in damages determine by the federal court jury in June. Using the economist s’ estimates and the Kansas City verdict, Swanson says the negotiated settlement of $1.4 billion would be the midpoint of 36.71 percent for Babcock’s total damage estimate and 30.99 percent for Carter’s total damage estimate.
Once a farmer multiplies his or her total bushels from those five crops by the appropriate “cents per bushel” loss number(s), deductions need to be made from there. The first deduction is likely to be a settlement discount, which is from 36.71 percent to 30.99 percent of the professors’ total national damage estimate, and then a farmer’s total bushels multiplied by the appropriate “cents per bushel” loss number(s) must be discounted in the same way.
The second deduction is the attorney fees. As a broad rule of thumb, Swanson says this amount might be viewed as one-third of the total damage amount the farmer is entitled to recover from the settlement fund.
Swanson says once the numbers are approved by the court, then farmers will be notified and will need to present their claims in writing to receive settlement funds; and procedures for doing so will be established.
What is the legitimacy of Swanson’s crystal ball gazing? Chris Ellis, of Bolen, Robinson, and Ellis, one of the members of the attorney executive committee negotiating with Syngenta, was asked for his assessment of Swanson’s approach. Ellis said of Swanson, “I wish I could agree or disagree with his statement. I don’t think anything he writes is out of line, but I also don’t know how accurate it will end up being. I can tell you that the negotiations continue to move forward and I am cautiously optimistic that we will report a very good settlement in the coming weeks/month.”
Since few farmers are really expecting to be compensated for Syngenta’s early release of its genetics, anything that might come in the mail on the order of what Swanson suggests will be like Christmas.
Source: Stu Ellis at Herald&Review.