DEVILS LAKE, N.D. -- Hunter Hanson, 21, of Leeds, N.D., is a young man in a hurry.
Over the past three years, he has seemed to be an entrepreneurial wonder, registering seven businesses with the state of North Dakota.
In early November, the North Dakota Public Service Commission started getting complaints on two of his businesses -- Midwest Grain Trading company and NoDak Grain, both based in Devils Lake, which is about 30 miles southeast of Leeds in north-central North Dakota..
As of Nov. 21, Konrad Crockford, director of the PSC compliance division, says calls have come in related to some $5 million to $6 million in “bounced, canceled or stopped checks or people owed for grain they had priced” with Hanson, who told Agweek the totals are far lower.
At age 20, Hanson started a roving grain buying company on March 21, 2017. He became licensed about two months later, after complaints to the PSC, which advised Hanson to get a license.
On Sept. 11, 2018, Hanson formed Nodak Grain, under a “warehouse” license using two older wooden elevators.
In an interview with Agweek on Nov. 21, Hanson said his company had about 100 grain clients and that his business grew “at least 75 percent in one year,” he said.
Also on Nov. 21, the PSC held a special meeting to issue a cease-and-desist order against Hanson’s two grain-buying companies. The PSC plans to initiate an insolvency petition against him in district court either in Burleigh County — in Bismarck — or in Ramsey County, in Devils Lake.
On Nov. 27, the PSC held a strategizing meeting with legislators about potential legislation regarding protections for farmers who deal with roving grain buyers. Nothing was immediately decided.
North Dakota requires roving grain buyers to have a minimum bond of $5,000 bond, but the PSC has a formula that sets bonds higher for various reasons to protect farmers in such large cash deals. The PSC set Hanson’s bond to obtain a roving grain dealer license at $400,000, partly due to his inexperience and lack of assets. Hanson also had to obtain a separate bond totaling $150,000 for NoDak Grain to cover cash grain deals at its two facilities.
A frozen hose
Hanson told Agweek that some of his problems stem from a frozen hose in one of his elevators. The sump pump froze, dumping water into bins at the Rohrville facility, northeast of Devils Lake, he said.
That caused 32 trucks to be rejected from scheduled deliveries, he said.
“We would never have had this issue if that grain would have been delivered,” he said.
A separate issue involving bounced checks was caused by a “misunderstanding in the office,” where he has two employees, Hanson said. Some checks “were not supposed to be issued when they did,” he said.
“We tried to contact everybody on the list that was affected but ... we didn’t call everybody on time,” he said. “They called the state and that’s when the state got involved.”
NoDak Grain doesn’t have the “capital big elevators do, like CHS,” he says. “We pretty much rely on cash flow. If you have one hiccup like we did, it’s very tough to overcome it.”
“Growing pains,” he said.
When Agweek asked Hanson how he learned the grain trade, Hanson referred to his six years of experience in elevators.
“I’m young, but I’ve been around it for six years now,” he told Agweek. “It’s not like I woke up last week and decided to do this.”
When pressed about marketing training, Hanson said:
“I picked that up on my own,” and added, “It’s a fast-moving industry. There’s lots of different variables, lots of things that can happen. You have to be on your toes every day.”
Hunter Brian Hanson was born May 17, 1997, to Keith and Jennie Hanson. Hanson spent his high school years in New Rockford, 40 miles south of Devils Lake, living with his grandmother, Jeanith Johnson.
He graduated high school in 2015. The caption next to his senior picture: “Teacher’s Pet: Plans to go straight into the workforce with a hope to become an entrepreneur in his own Biodiesel Business.”
While in high school, he says he worked “every night” at the Allied Grain elevator at nearby Barlow, N.D.
After high school, Hanson was hired by John “J.R.” Rick, general manager of the Equity Cooperative Elevator Co. in nearby Sheyenne, North Dakota, in early October 2015 as a truck dumper. But Rick said the job gave Hanson “absolutely no training” in grain marketing.
Rick said Hanson talked about big plans, including that he was going to “buy his own elevator and do a biodiesel business.”
Rick didn’t know that on July 1, 2015, Hanson had already registered his Dakota Biodiesel business with the state, using his grandmother’s address in New Rockford.
On March 8, 2016, Hanson established Midwest Hauling and Transport to do “hot hauling, transporting cars, goods, etc.” according to a business filing with the North Dakota Secretary of State.
Rick said Hanson was not always reliable dumping trucks and loading trains with grain.
In one case, Rick said Hanson failed to fully load middle hoppers in two cars, sending a train out without a full load of grain.
In July 2017, Rick heard a rumor that Hanson was looking for a new job. He called him into the office and told him that harvest was coming and if he was leaving, Rick needed to know.
Hanson said he was staying but the next day failed to show up, and never did again. “He just packed up and left,” Rick said.
In November 2016, Hanson was re-hired as a driveway employee at Allied Grain at Barlow, where he worked during high school.
In April 2017, Jeremy Sorenson, Allied Grain’s manager, said he terminated Hanson after he found out Hanson had brought in grain samples from Hanson’s own grain business to be tested on Allied’s equipment.
Also in April 2017, the state PSC censured Hanson for buying grain without a license or bond.
In May 2017, CHS Lake Region Grain at Devils Lake hired Hanson for about six weeks as a laborer in a fertilizer plant.
CHS General Manager Mark Greciar said Hanson told them he wanted leave to go on a vacation cruise with his mother, and never came back. “We were hoping to hire him ... but he never showed up again,” Greciar said.
Amidst his elevator jobs, Hanson approached the city council in Minnewaukan, near Devils Lake, with an idea to build a Dakota BioDiesel plant in the city’s industrial park.
In February 2017, the Minnewaukan City Council voted to allow Hanson to buy up to six acres in the industrial park at $3,000 per acre, or up to $18,000.
“We create BioDiesel out of soybeans, canola, sunflowers, and used cooking oil,” Hanson said in an informational booklet.
He said the biodiesel plant would produce 3.2 million gallons a year and he would add a “gas station-conscience store” (sic). He said he could start building it in the spring of 2017 and that it could take up to three years to “get the funding and materials needed to finish the project.”
He said it might take $2 million in start-up costs, but would net annual profits of $750,000 from the biodiesel, $25,000 from the gas station and $25,000 from the convenience store.
After the city council’s meeting approving the plan, Minnewaukan City Auditor Sherri Thompson sensed a “red flag” when she asked about his financial underpinnings, she told Agweek.
“His financial backer was Midwest Grain Trading,” Thompson recalls him saying. “I said, ‘Who is this?’ He said, ‘That’s me.’” she said.
She told Hanson they’d need more information to “show that this can happen.’”
Hanson didn’t return to the city council until November 2017, when asked to be put on the council agenda. But he was a no-show for the November meeting and again in December 2017.
In his interview with Agweek, Hanson described his biodiesel plans as simply “a thought” and said he’d known for three years he wouldn’t do anything in it.
Hanson turned his attention to finding facilities for his grain-buying business.
Hanson said buying old, wood-construction elevators was no big deal.
In the fall of 2017, he bought the long-closed Tunbridge Farmers Co-op Elevator building about six miles west of Rugby, North Dakota, between Devils Lake and Minot, with access to the BNSF Railroad tracks.
Delmer Fandrich, now 83, managed the Tunbridge site from 1961 to 1998 and still lives in the manager’s house he bought across the street from the elevator.
Fandrich says that in the summer of 2016, Hanson showed up at the Tunbridge facility and asked him if he thought the old elevator was worth $5,000.
“I said, ‘I don’t think it’s worth anything because of how much it’s going to cost to put it back into operation,’” Fandrich recalls telling Hanson.
In November 2017, Hanson showed up and started operating the elevator. Scott Foss of Lone Prairie Grain, in Maddock, North Dakota, said he sold it to Hanson.
In October 2018, neighbors — not including Fandrich -- complained about spilled field peas at the Tunbridge elevator creating spoilage and smell. Pierce County Sheriff Joshua Siegler in Rugby said the complaints have been passed on to the state health department.
Hanson said some 5,000 bushels of field peas had spilled and most had been picked up.
“I don’t see it in my eyes as a huge deal,” Hanson told Agweek.
In May 2018, Hanson went back to his old boss at CHS Devils Lake and asked about buying an old elevator property near Rohrville, North Dakota.
The 156,000-bushel Rohrville site stands on a short line of the Canadian Pacific Railway and hasn’t loaded trains in about 20 years. For the past several years, CHS had operated it from harvest through December and CHS was considering shutting it permanently.
In June, Hanson was scheduled to close the deal, but never showed up for the closing and didn’t call CHS officials.
Then on Aug. 24, he showed up and paid with a $100,000 check.
Hanson licensed the Tunbridge facility as of June 25, 2018, and the Rohrville site effective Sept. 11, 2018. The combined grain dealer’s license required a bond of $150,000.
Hanson’s Midwest Grain Trading advertised prices for grain significantly higher than large train shippers offered. Ads from Hanson’s Midwest Grain Trading aired on radio stations in the Devils Lake region.
Farmers said Hanson offered 17 to 20 cents more per bushel with more favorable terms than large companies with shuttle-loading facilities.
Nodak Grain’s website on Nov. 21 said the company offered credit sale contracts to farmers for corn and spring wheat. Hanson would store the grain for free if it was priced before July 30, 2019.
After that, the company would charge 5 cents a bushel per month.
“Expect two to three weeks (delayed payment) on checks due to high number of settlements,” Hanson’s website says.
Hanson told Agweek he had traded some 2 million bushels and that his companies had “$50 million in business this year,” but quickly corrected that to $23 million.
He said the companies made money doing “volume with small margins.”
The company coordinated the activities of 30 trucks, hired as owner-operators, he said.
Hanson said his role was to do the “buying and selling and look to expand and build customer relations.”
Midwest Grain Trading picks up grain in one area and hauls it to a market in another area, making money on the freight and an arbitrage between the prices, Hanson says. The company effectively takes out the “middlemen,” he said.
Rick, the elevator manager at Minnewaukan, acknowledged being ribbed by farmers about the high prices offered by his former employee.
“They were saying, ‘Jesus, J.R., Hunter’s paying 20 cents per bushel more than you and he’s picking it up off the farm,’” Rick says. “I said, ‘Well, he might be paying 20 cents off the top, but when it comes down to getting paid” it might be smarter to deal with the elevator.
Grain trading has “been a very successful business” in the last two years and could yield him a six-figure income, Hanson said.
He has bought “quite a few” pickup trucks this spring and summer in anticipation of expanding NoDak Grain into the seed business.
After his girlfriend graduated high school in May 2018, she posted photos on social media of a trip they had taken to Paris this summer.
“That’s just a vacation,” Hanson says.
Since July, Hanson purchased two properties in or near Leeds for a total of $95,000, with no mortgages listed on the deeds.
On Oct. 19, he became the named partner in Hanson Motors, a used car dealership in Belcourt, N.D, located on land in belonging to the Turtle Mountain Band of Chippewa. His partners are Stuart Medrud and Ray Parisiene Jr., who ran for tribal council in 2018.
“I’m young and I want to do the best I can in different industries and that’s one of them, I guess,” Hanson said about the variety of his enterprises.
Hanson says he still has hope for his grain-trading business, despite the PSC’s actions.
Hanson says matter-of-factly that the PSC has “got to do their job, and that’s to protect elevators and farmers in a timely manner.”
He describes the cease-and-desist order as a temporary thing, “until everything gets figured out.”