Arkansas Grain Buyers Law 1
Definitions: Sec. 1. The following definitions apply throughout this subchapter: (1) Arkansas State Plant Board means the regulatory agency operating within the Arkansas Agriculture Department charged with administering this law. (2) Board means Arkansas State Plant Board. (3) "Claimant" means a person that is unable to secure payment within three (3) months following claimant s payment request to a licensee under this chapter for grain that has been delivered to the licensee for sale under a bailment. (4) "Depositor" means any of the following: (a) A person that delivers grain to a licensee under this chapter. (b) A person that: a. owns or is the legal holder of a ticket or receipt issued by a licensee for grain received by the licensee; and b. is the creditor of the issuing licensee for the value of the grain received in return for the ticket or receipt. (5) Buyer-Warehouse means a person that operates both as warehouse licensed under The Arkansas Public Grain Warehouse Law and as grain Buyer. (6) "Designated representative" means the person or persons designated by the director to act in the stead of the director in assisting in the administration of this chapter. (7) "Director" means the director of the Arkansas State Plant Board. (8) "Facility" means a location or one (1) of several locations in Arkansas that are operated by a grain Buyer. (9) "Grain" means corn, wheat, oats, barley, rye, rice, sorghum, soybeans, oil seeds, and other agricultural commodities, for all uses, as approved by the agency. (10) "Grain buyer" means a person who is engaged in the business of buying grain and does not receive a commission payment for arranging a sale between a producer and end user and purchases one thousand (1,000) or more total bushels of all grains. (11) "Grain standards act" means the United States Grain Standards Act, approved August 11, 1916 (39 Stat. 482; 7 U.S.C. 71-87 as amended). (12) Index grains means the grains to be used to review prices received in the potential adjustment of the Indemnity Fund cap. Those are Corn, Soybeans, Rice and Grain Sorghum. (13) "License" means a license issued under this chapter. (14) "Official Grain Standards of the United States" means the standards of quality or condition for grain, fixed and established by the United States Secretary of Agriculture under the grain standards act. (15) "Person" means an individual, partnership, corporation, association, or other form of business enterprise. (16) "Receipt" means a warehouse receipt or scale ticket issued by a warehouse licensed under The Arkansas Public Grain Warehousing Law or the Warehouse Act. (17) "Ticket" means a scale weight ticket, a load slip, or other evidence, other than a receipt, given to a depositor upon initial delivery of grain to a facility. (18) "Warehouse Act" means the United States Warehouse Act, approved August 11, 1916 (39 Stat. 486; 7 U.S.C. 241-273 as amended). 2
(19) "Warehouse" means any building or other protected enclosure in one (1) general location licensed or required to be licensed under this chapter in which grain is or may be: (a) stored for hire; (b) used for grain bank storage; or (c) used to store company owned grain; and the building or other protected enclosure is operated under one (1) ownership and run from a single office. Arkansas Grain Buyer s Law: Section 2. Purpose (a) The Arkansas Grain Buyers Law is established to regulate all persons operating as grain buyers in the state of Arkansas. (b) The Arkansas State Plant Board (Board) is appointed as the administrator of this law. The Board shall have the authority to promulgate rules and regulations in regard to contracting, warehouse receipts, scale tickets, licensing, bonding and insurance requirements, establishment of licensing fees, record keeping, auditing, violations, establishment of a penalty matrix addressing violations, establishment of an voluntary indemnity fund, suspension and/or revocation of licenses, and other documents or actions deemed necessary to enforce this chapter. Section 3. Licenses (a) Persons desiring to operate as grain buyers in the State of Arkansas shall secure a license from the Board before entering into any contract for or making any purchase of grain. a. Persons obtaining a license under this chapter will be required to maintain a minimum net worth of Fifty Thousand ($50,000.00) dollars; and b. A ratio of one to one (1:1) must be maintained on grain sales and purchases; and, c. Post additional bond, letter of credit, cash or other assets acceptable to the Board in the event an audit by the Board reveals a negative financial position. (b) Exceptions to Sec 3(a). Persons operating as grain buyers prior to adoption of this chapter shall be allowed to continue operating but must make application and secure a license within sixty (60) days of the effective date of the chapter. (c) A license year will run from July 1 of the issuance year to June 30 of the following year. (d) Exemptions. Persons who make grain purchases for the purpose of home use of such grain will be exempt from this law. a. Such exemptions will apply only when the total volume of purchases of all grains is less than one thousand (1,000) bushels between July 1 of one year and June 30 of the following year. Section 4. Fees (a) A license fee of One Hundred Dollars ($100.00) shall be established for persons to secure a Grain Buyers License, from the Board, for Buyers purchasing a total of all grains of one hundred thousand (100,000) bushels or less; except, 3
(b) A grain buyers covered under Section 3(b) shall be charged first year license fee of $250.00. (c) For Buyers contracting for a total of between one hundred thousand and one (100,001) bushels and two hundred fifty thousand (250,000) bushels the fee will be Two Hundred ($200.00) Dollars. (d) For each one hundred fifty thousand (150,000) bushel increase, or portions thereof, the license fee will increase by one hundred ($100.00) dollars. (e) The maximum fee to secure a buyers license will be five hundred ($500.00) dollars regardless of the volume of grain handled. a. Buyers that may operate facilities distant from the main facility (satellite facilities), and such facilities operate as a receiving facility but do not participate in contracting negotiations or setting prices, will be required to list those facilities and locations with the Board. b. Satellite facilities will require a listing fee of one hundred ($100.00) dollars and will be listed under the license of the buyer. c. This fee is in addition to the license fee paid by the buyer. Section 5. Penalties (a) Any person who issues a warehouse receipt, scale ticket or contract for grain without a valid grain buyer license or who commits any willful violation of any provision of this subchapter shall be guilty of a Class D felony. (b) Any unintentional or negligent violation of this subchapter shall be subject to a civil penalty of up to $1,000 per violation. Section 6. Disposition of Funds Assessments received thru this subchapter shall be known as the Grain Indemnity Fund. All monies collected in the administration of this subchapter and the regulations adopted pursuant to this subchapter shall be deposited into the State Plant Board Fund of the State Treasury and be used for carrying out the provisions and to administer this subchapter. (a) The Board is authorized to utilize a sum equal to five (5%) percent of the annual funds collected thru the Indemnity Fund; and, (b) The sum total of license fees collected annually, for administrative functions. Section 7. Bond and Insurance. (a) Each applicant for a license under this chapter, shall, as a condition to the granting of a license, file or have on file with the Board a certificate of insurance evidencing an effective policy of insurance issued by an insurance company authorized to do business in Arkansas insuring, in the name of the applicant, all grain that is or may be in the licensee s facilities for its full market value against all losses. (b) In the case of a loss, the licensee shall, upon demand of the depositor and upon being presented with the receipt or other evidence of ownership, make settlement with the depositor. 4
(c) Insurance approved for the issuance of a license, shall not be cancellable until written approval has been received from the Board and after expiration of sixty (60) day time period after the Board has been notified by Certified Mail. (d) Additionally, the Board will establish a bond requirement of up to Five Hundred Thousand ($500,000.00) Dollars. Section 8. Additional Bond and Insurance. (a) Should the Board determine that a previously approved bond, letter of credit, cash deposit or insurance given by an applicant is insufficient for any reason, the Board may require an additional bond, letter of credit, cash deposit or insurance be given by the licensee in the form and upon the terms, conditions and rules required by this chapter. Section 9. Voluntary Indemnity Fund. (a) The Board is authorized to establish an Indemnity Fund to provide payments to producers in the case of a buyer failing to provide payments to depositors due to insolvency, bankruptcy, fraud or other condition out of the control of the depositor. a. Payments to depositors will be equal to one hundred (100%) percent of the maximum allowable award value of the grain sold or in open storage, providing the Board is notified by the depositor within twenty-one (21) days from the selling date of non-payment. b. Payments to depositors will be equal to eighty-five (85%) percent of the maximum allowable award of grain value if notification is provided to the Board on day twenty-two or later after the selling date. c. The maximum amount of award available to individual producers is Seven Hundred Fifty Thousand ($750,000.00) Dollars. (b) The Indemnity Fund will be established by collecting a sum equal to two tenths of one percent (.002%) of the value of the grain sold at the first point of sale. (c) The collection will be made from the proceeds to be paid to the producer. (d) The Buyer will be responsible for collection and submission of the assessment to the Indemnity Fund. The Indemnity Fund will have established a cap of twenty-five million ($25,000,000.00) dollars. a. The buyer is responsible for submitting the funds collected to the Board on a quarterly basis. (e) In the case of a claim being made against the indemnity fund resulting in a lower fund balance, the assessments will re-initialize until the balance cap is achieved and the assessments will pause until the need arises to replenish the fund. (f) Should claims exceed the money available in the indemnity fund, payments will be on a pro-rata basis. Section 10. Participation in Indemnity Fund. (a) Participating grain producers will participate in the assessment process to fund the Indemnity fund at the rate specified in Section 9(b); except 5
a. Non participation will be recorded by producers filling out the appropriate Refund Request form to be provided by the Board and submitting the form to the Board. (b) Those who opt out of participation in the Indemnity Fund, by requesting a refund will not be able to file any claim with the Indemnity Fund should a loss be incurred. (c) Non-Participation (or Participation) is on an All or None basis. It will not be allowable to opt-out of participation on individual crop species while participating in others. (d) Participation in the Indemnity Fund at a later date is possible; however, the person will be responsible for buying back into the fund by paying the assessments due on all grains sold during any time of Non-Participation. a. Claims from participants who buy back into the fund will not be allowable within the first one hundred eighty (180) days after participation begins. (e) Protection offered by the Indemnity Fund will be available to all producers, who have contributed to the Fund. 6