As harvest season gets underway, the South Dakota Public Utilities Commission reminds grain producers, grain buyers and grain warehouses to protect their investment by understanding state laws and rules regarding the purchase and storage of grain.
The PUC looks out for the financial welfare of the grain industry through licensing and inspection of grain buyers and grain warehouses. The agency monitors licensed facilities to ensure they are operating within the requirements of state law and administrative rule and that they are meeting their obligations to grain producers.
PUC Chairperson Kristie Fiegen emphasized that producers who choose to delay payment of their delivered grain should fully understand the details of the arrangement. “When a voluntary credit sale is used, grain producers need to be aware that the title of the grain changes from the producer to the buyer. Consequently, that sale is not protected by the grain buyer’s bond or other form of insurance,” Fiegen said. Voluntary credit sales are commonly referred to as deferred payment, delayed price or price later contracts.
The PUC encourages those in the grain industry to be aware of these key points:
- Licensed grain buyers and grain warehouses are subject to bonding requirements.
- Cash sale grain is protected by the grain buyer or grain warehouse’s bond. Grain subject to a price later arrangement is not.
- All contracts between a grain producer and grain buyer or grain warehouse must be signed by both parties.
- South Dakota administrative rules outline requirements for temporary and emergency grain storage, including specifications for storage units.
- South Dakota law requires grain buyers and grain warehouses to notify the PUC if they fall out of compliance with any financial licensing requirement.
- Grain producers who are not being paid in a timely manner or have other concerns should report the problem to the PUC by calling 1-800-332-1782 or sending an email to PUC@state.sd.us.
“Producers should ensure that the grain buyer and grain warehouse facility they are doing business with has been licensed by the PUC,” recommended Commissioner Gary Hanson, PUC vice chairman. The PUC issued 327 licenses in 2018 to state-licensed facilities, federally-licensed facilities, non-storage facilities-based grain buyers, processors, truckers and brokers. A current list of licensed facilities can be accessed on the PUC’s website at www.puc.sd.gov/warehouse.
PUC staff conduct regular on-site inspections of licensed facilities to analyze the financial condition of grain warehouses and grain buyers. Inspectors review items such as daily position reports, settlement sheets and warehouse receipts. Grain storage reports are submitted to the PUC monthly and balance sheets are provided quarterly. Review of these documents helps the PUC ensure facilities have the level of bond coverage required by state statute and are operating within all other requirements of state law.
“The PUC’s inspection process is purposely robust in order to protect grain producers,” commented PUC Commissioner Chris Nelson. “The public utilities commissioners and the staff of the grain warehouse program take our role in protecting grain payments seriously, during harvest season and throughout the year,” he said.
For additional information about the PUC’s role and responsibilities within the grain industry, including links to state statutes and rules, visit the PUC’s website at www.puc.sd.gov/warehouse.
