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251.485 Forward pricing (delayed pricing) contracts.
(1)
(2)
(3)
A forward pricing (delayed pricing) contract means an executory contract which
shall be in a form and contain terms the department shall adopt by
administrative regulation pursuant to KRS 251.480. The forward pricing
(delayed pricing) contract shall be executed by the licensed grain
establishment and the producer, or by their authorized representatives, not
later than thirty (30) days after the first delivery of grain is received under the
forward pricing (delayed pricing) contract. The licensed grain establishment
shall maintain a file of executed forward pricing (delayed pricing) contracts that
are available for inspection at any reasonable time by the department. The
licensed grain establishment shall keep records and ledgers which the
department deems necessary to document the licensed grain establishment's
obligations to the producer under a forward pricing (delayed pricing) contract.
The licensee shall provide reports, forms, and other evidence the department
shall adopt by administrative regulation to document the storage and marketing
of grain under the forward pricing (delayed pricing) contract.
Except as otherwise provided in subsection (3) of this section, a licensed grain
establishment which purchases grain under a forward pricing (delayed pricing)
agreement shall at all times maintain the grain in storage, rights in the grain,
proceeds from the sale of grain, or a combination of the grain, rights, and
proceeds equal to eighty percent (80%) of the value of the licensed grain
storage establishment's unpaid obligations for all grain that it has purchased
and for which delivery has been made under a forward pricing (delayed
pricing) contract. The obligation shall be secured or represented by one (1) or
more of the following:
(a) Maintenance of the grain in storage in the licensed grain establishment's
warehouse or storage facilities;
(b) Rights in grain as evidenced by a receipt or ticket for storage of the grain
under a bailment agreement in another warehouse approved by the
department; or
(c) Proceeds from the sale of grain as evidenced or represented by one (1)
or more of the following:
1.
Funds held in a separate account for the benefit of all unpaid
producers of grain delivered under a forward pricing (delayed
pricing) contract with the separate account existing in a state or
federal licensed financial institution or a lending agency of the
federal Farm Credit Administration;
2.
Short-term investments held in time accounts for the benefit of all
unpaid producers of grain delivered under a forward pricing (delayed
pricing) contract with state or federal licensed financial institutions or
a lending agency of the federal Farm Credit Administration; or
3.
Other evidence of unencumbered assets as may be acceptable to
the department, including an irrevocable letter of credit or surety
bond.
The licensed grain establishment handler account required by subsection (2) of
this section shall be deemed grain or the proceeds for grain arising from unpaid
(4)
obligations for all grain purchased and for which delivery has been made under
a forward pricing (delayed pricing) contract. The Commissioner shall have a
priority lien upon the property or assets required to be maintained in the
licensed grain establishment's grain handler account as provided in subsection
(2) of this section. The Commissioner shall, when he questions a licensed grain
establishment's ability to pay producers for grain purchased, or when he
determines that the licensed establishment does not have sufficient net worth
to satisfy indebtedness, after giving notice to the owner or agent of the owner,
prohibit the transfer or disbursement of any grain, property, or assets
maintained in the licensed grain establishment handler account, except for the
satisfaction of unpaid obligations for grain that has been purchased and for
which delivery has been made under a forward pricing (delayed pricing)
contract. Disbursements shall be made under the direction of the
Commissioner to grain producers on a pro rata basis. An action to enforce the
priority lien created by this subsection may be brought in the name of the
Commissioner or the Kentucky Grain Insurance Corporation in the Franklin
Circuit Court.
The licensed warehouse establishment and the producer may at the time a
forward pricing (delayed pricing) contract is executed mutually agree and waive
the payment of compensation from the Kentucky Grain Insurance Fund
authorized by KRS 251.670. The waiver shall be made in writing at the time the
forward pricing (delayed pricing) contract is executed and shall be made in a
manner prescribed by the Commissioner and filed with the department within
ten (10) days thereafter. Upon the waiver, the grain sold pursuant to the
forward pricing (delayed pricing) contract shall be excluded from the coverage
of the Kentucky Grain Insurance Fund and the producer shall be exempted
from the assessment at KRS 251.640(1) for the amount of grain covered by the
contract. The licensed grain establishment shall not be required to maintain
rights in the grain, proceeds from the sale of grain, or a combination of the
grain, rights, and proceeds equal to eighty percent (80%) of the value of the
licensed storage establishment's unpaid obligation relating to the amount of
grain exempted from the payment of compensation from the Kentucky Grain
Insurance Fund.
Effective:July 14, 1992
History: Created 1992 Ky. Acts ch. 76, sec. 1, effective July 14, 1992.
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