PIERRE, S.D. - As harvest season is underway, the South Dakota Public Utilities Commission encourages grain producers, buyers and warehouses to review state laws and rules regarding the purchase and storage of grain. Understanding these state policies is an essential step for producers and buyers to protect their investment.
The PUC helps preserve the financial security of South Dakota’s grain industry through licensing and inspecting grain buyers and grain warehouses. The agency monitors licensed facilities to ensure they are meeting their obligations to grain producers and operating within the requirements of state laws and administrative rules.
“To protect their interests when making a sale, it’s vital that producers fully understand the details of their contract,” said PUC Chairman Gary Hanson. “Grain buyers offer a variety of purchase contracts and not all are created equal. For instance, when producers agree to a voluntary credit sale or price later contract, these sales are not protected by the grain buyer’s bond or any form of insurance,” Hanson explained.
The PUC recommends those in the grain industry be aware of these key points:
- Licensed grain buyers and grain warehouses are subject to bonding requirements.
- Deals made with unlicensed buyers offer producers and elevators no bond protection at all.
- When selling grain, producers have 30 days to choose between receiving an immediate payment or payment at a later date. At the end of 30 days, grain must be either put to a contract or paid.
- Cash sale grain is protected by a licensed grain buyer or grain warehouse’s bond. Grain subject to a price later, deferred payment or delayed price arrangement is not.
- All contracts between a grain producer and a licensed grain buyer must be signed by both parties.
- When selling grain, title passes from the producer to the buyer once the grain is unloaded. At that point, producers relinquish all control unless the grain is placed into a warehouse facility.
- 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 with any concerns, including those regarding a company’s business practices, compliance with state laws and rules or timely payment to producers, are encouraged to contact the PUC grain warehouse program by calling 1-800-332-1782 or sending an email to PUC@state.sd.us.
“Farmers themselves play an important role protecting the integrity of the grain buying business in South Dakota. Know who you are doing business with, be leery of deals that seem ‘too good to be true,’ and immediately contact the PUC whenever grain payments are not made on time,” recommended PUC Vice Chairman Chris Nelson.
The PUC issued 345 licenses in 2019 to state-licensed facilities, federally-licensed facilities, non-storage facilities-based grain buyers, processors, trucker 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 like daily position reports, settlement sheets and warehouse receipts. To ensure facilities have the level of bond coverage required by state statute, monthly grain storage reports and quarterly balance sheets are also submitted to the PUC for review.
“We at the PUC understand that harvest season is a certainly busy time for everyone in the grain industry,” stated PUC Commissioner Kristie Fiegen. “It’s my hope that this reminder from the PUC helps keep producers, buyers and warehouses informed and educated and that consumer protection remains a key priority among all parties,” she concluded.
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.