2015 Kentucky Revised Statutes CHAPTER 251 - GRAIN WAREHOUSES 251.720 License to engage in business of buying grain from producers for resale, milling, or processing -- Grounds for refusal to issue or to revoke license -- Notice and hearing -- Surety bond required -- Invalid license -- Requirements for bulk purchasers of grain.
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251.720 License to engage in business of buying grain from producers for resale,
milling, or processing -- Grounds for refusal to issue or to revoke license -Notice and hearing -- Surety bond required -- Invalid license -- Requirements
for bulk purchasers of grain.
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Any person engaged in the business of buying grain from producers for resale,
milling, or processing shall first procure a license from the department as required
by the board before transacting business. The license shall expire on June 30 and
shall be renewed annually by August 1. The annual license fee shall be based on the
total annual volume handled as follows:
(a) From zero to five thousand nine hundred ninety-nine (5,999) bushels, seventyfive dollars ($75);
(b) Six thousand (6,000) to ninety-nine thousand nine hundred ninety-nine
(99,999) bushels, one hundred fifty dollars ($150);
(c) One hundred thousand (100,000) to one million nine hundred ninety-nine
thousand nine hundred ninety-nine (1,999,999) bushels, three hundred dollars
($300);
(d) Two million (2,000,000) to five million nine hundred ninety-nine thousand
nine hundred ninety-nine (5,999,999) bushels, four hundred fifty dollars
($450);
(e) Six million (6,000,000) to nine million nine hundred ninety-nine thousand
nine hundred ninety-nine (9,999,999) bushels, six hundred dollars ($600); or
(f) Ten million (10,000,000) bushels and up, seven hundred fifty dollars ($750).
The fee for each license shall be used for carrying out the provisions of this chapter.
Every person licensed as a grain dealer shall file with the department a surety bond
signed by the dealer as principal and by a responsible company authorized to
execute surety bonds within the Commonwealth of Kentucky. A grain dealer may
file with the department, in lieu of a surety bond, a certificate of deposit payable to
the Commissioner, as trustee, or an irrevocable letter of credit on forms provided by
the Commissioner. The principal amount of the certificate or letter of credit shall be
the same as that required for a surety bond under this section, and the interest, if
any, shall be made payable to the purchaser. The bond shall be a principal amount,
to the nearest one thousand dollars ($1,000), equal to ten percent (10%) of the
aggregate dollar amount paid by the dealer to producers for grain purchased from
them during the dealer's last completed fiscal year, or in the case of a dealer who
has been engaged in business as a grain dealer for less than one (1) year or who has
not previously been engaged as a grain dealer, ten percent (10%) of the estimated
aggregate dollar amount to be paid by the dealer to producers for grain purchased
from them during the next fiscal year. The bond shall not be less than twenty-five
thousand dollars ($25,000) nor more than one million dollars ($1,000,000), except
as otherwise authorized by this section.
The Commissioner shall, when he questions a grain dealer's ability to pay producers
for grain purchased, or when he determines that the grain dealer does not have a
sufficient net worth to meet his financial obligations, require a grain dealer to post
an additional bond in a dollar amount equal to the insufficiency or shall require an
additional certificate of deposit or an irrevocable letter of credit equal to the
insufficiency, as deemed appropriate by the Commissioner. Failure to post the
additional bond or certificate of deposit or an irrevocable letter of credit constitutes
grounds for suspension or revocation of a license issued under this section.
(5) The bond or additional bond shall be made payable to the Commonwealth of
Kentucky, with the Commissioner as trustee, and shall be conditioned on the grain
dealer's faithful performance of his duties as a grain dealer and his compliance with
this section. It shall be for the use and benefit of any producer from whom the grain
dealer may purchase grain and who is not paid by the grain dealer, and shall not be
canceled, except upon at least sixty (60) days' notice in writing to the department. In
no event shall the total aggregate liability of a surety exceed the face amount of its
bond.
(6) An incidental grain dealer whose total purchases of grain from producers during any
fiscal year do not exceed an aggregate dollar amount of two hundred fifty thousand
dollars ($250,000) may satisfy the bonding requirements of this section by filing
with the department a bond, certificate of deposit, or an irrevocable letter of credit
at the rate of one thousand dollars ($1,000) for each ten thousand dollars ($10,000)
or fraction of ten thousand dollars ($10,000) with a minimum bond, certificate of
deposit, or an irrevocable letter of credit of five thousand dollars ($5,000), and a
current financial statement.
(7) Failure of a grain dealer to file a bond, certificate of deposit, or an irrevocable letter
of credit and to keep the bond, certificate of deposit, or an irrevocable letter of
credit in force or to maintain assets adequate to assure payment to producers for
grain purchased from them shall be grounds for the suspension or revocation of a
license issued under this section.
(8) When the Commissioner has determined that a grain dealer has defaulted payment
to producers for grain which he has purchased from them, the Commissioner shall
determine, through appropriate legal procedures, the producers and the amount of
defaulted payment, and, as trustee of the bond, shall immediately after the
determination call for the dealer's surety bond or bonds to be paid to him for
distribution to those producers who should receive the benefits. Should the
defaulted amount owed producers be less than the principal amount of the bond or
bonds, then the surety shall be obligated to pay only the amount of the default.
(9) Any grain dealer who is also in the business of storing grain and is a warehouseman
as defined in KRS 251.610 may be exempted from the licensing fee and bonding
requirements of KRS 251.451 as long as his storage capacity and storage
obligations are considered in formulating his grain dealer bond requirement.
(10) The department may refuse to issue a license to any applicant or revoke the existing
license of one who furnishes false or misleading information or conceals a material
fact on the application or other supporting documents, has been convicted of fraud
or deceptive practice, is currently adjudicated incompetent by a court of competent
jurisdiction, fails to maintain an asset to liability ratio of one to one (1:1) or fails to
post additional surety to cover the deficiency, or for other good cause shown. Any
individual denied a license for these reasons shall be given written notice within
thirty (30) days of receipt of application. Any applicant who is denied a license or
has had his license revoked and feels he has been aggrieved may request a hearing
by writing to the Commissioner of Agriculture. Upon request, a hearing shall be
conducted in accordance with KRS Chapter 13B.
(11) All applications for a grain dealer license shall be accompanied by a current
financial statement, or an irrevocable letter of credit from a financial institution.
(12) (a) A grain dealer license shall become invalid upon the cessation of operations,
change of partners in a partnership, change of corporate structure of a
corporation, sale, or failure to remit license fees or fines. Licensed grain
dealers shall immediately notify the department as to any changes and shall
surrender the invalid license to the department. In the case of a successor, the
successor shall apply for a new license.
(b) If there is a cessation of operations or sale, the department, when deemed
appropriate, may cause an audit and examination to be made. In this case, all
records required in this chapter shall be available to the department until the
department is satisfied that all obligations have been met.
(13) In addition to the other provisions required by this section, any person who is
engaged in the business of buying grain from producers and who purchases or takes
title to grain valued at more than one million dollars ($1,000,000) within a calendar
month shall:
(a) Notify the department, in writing, by submitting a detailed position report
outlining the:
1.
Type of grain;
2.
Quantity of each grain, in bushels;
3.
Disposition of the grain, whether paid, forward price contracted, or
other; and
4.
Aggregate value of the grain purchased within the calendar month.
The report shall be submitted to the department within ten (10) days following
the close of the calendar month. Failure to submit the report may result in the
revocation of the person's license;
(b) Upon request of the department, submit a balance sheet on a form provided by
the department, current through the end of the calendar month. Additional
surety shall be required, on a dollar-for-dollar basis, if the total value of
purchases of grain exceeds the combined value of the licensee's net worth and
existing surety. If the licensee has an asset-to-liability ratio falling below one
to one (1:1) or has outstanding payables to producers, other than legitimate
forward price contracted grain, over thirty (30) days due and exceeding one
million dollars ($1,000,000), the licensee's license shall be suspended until the
deficit is corrected; and
(c) Be placed on an accelerated audit schedule as determined by the department.
If, in the determination of the department, the licensee cannot meet a
minimum asset-to-liability ratio of one-half to one (0.5:1), the department
shall revoke the license. The department shall also place liens on licensee
assets up to the amount of indebtedness to producers. If the department
determines the licensee is insolvent, the Commissioner shall have the power
to seize assets up to the value of the indebtedness to producers.
Effective: June 8, 2011
History: Amended 2011 Ky. Acts ch. 21, sec. 2, effective June 8, 2011. -- Amended
2009 Ky. Acts ch. 61, sec. 7, effective June 25, 2009; and ch. 68, sec. 3, effective
June 25, 2009. -- Amended 2005 Ky. Acts ch. 125, sec. 8, effective June 20, 2005. -Amended 1996 Ky. Acts ch. 318, sec. 178, effective July 15, 1996. -- Amended 1990
Ky. Acts ch. 396, sec. 8, effective July 13, 1990. -- Amended 1988 Ky. Acts ch. 321,
sec. 2, effective July 15, 1988. -- Amended 1986 Ky. Acts ch. 81, sec. 5, effective
July 15, 1986. -- Created 1984 Ky. Acts ch. 389, sec. 13, effective July 13, 1984.
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