Nebraska Grain and Feed Association
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COMMENTARY: RECENT PSC RULE ON MINIMUM STORAGE POLICY “SOLVES” PROBLEM WHERE NONE EXISTED BEFORE

NGF, NCC OPPOSED ELIMINATION OF MINIMUM STORAGE CHARGE, PSC REDUCES MINIMUM STORAGE PERIOD TO 120 DAYS

As previously reported, the Nebraska Public Service Commission (PSC) ruled on June 15, 2010 to maintain the long held regulation which allows state licensed grain warehouses to implement a minimum storage charge, however the PSC also voted to reduced the maximum storage period from 180 to120 days. 

The Nebraska Grain and Feed Association (NGF) and the Nebraska Cooperative Council (NCC) joined together in strongly opposing any attempt by the Commission to eliminate the minimum storage provision.  The organizations also urged the PSC to hold the maximum storage period to 180 days or until representatives of the grain industry had a chance to engage their members and PSC staff on what the appropriate maximum storage period should be.  Instead, the Commissioners voted to reduce the maximum storage period to 120 days, thus solving a problem where none existed before.

NGF testified in opposition to the elimination of the minimum grain storage charge due to rising costs associated with new and existing state and federal government regulatory compliance, insurance, labor, repairs and other expenses.  The Association also maintained that the minimum storage policy should be viewed as a tool that assists producers and elevators alike to make prudent marketing decisions.

Depending upon its implementation, an elevator’s minimum storage policy and the number of days it runs is a decision best left to the elevator manager and the producer who chooses to store his grain at their facility.  After all, producers aren't forced to store his grain at that facility, and they are entitled a certain number of days of free storage before he decides to pull his grain out or comply with the elevators minimum storage policy.

So, where was the “problem” in the first place?  Association staff received no complaints either from producers or other elevators over predatory minimum storage policies that extended beyond an unreasonable period of time.  PSC grain division staff stated at the hearing that they had received no prior complaints from producers regarding the minimum storage policy. 

However, in remarks made prior to the hearing, a commission staff member stated that he felt that the minimum storage policy was just wrong and that it basically amounted to “an elevator construction slush fund.”  The same staff member stated that if elevators needed the revenue from their minimum storage policy, they should instead get it from commission approved storage and handling charges. 

Unfortunately, this situation appears to be one where the state agency in charge of overseeing state licensed grain elevators removes themselves from the proper role of regulator and referee to one that advocates for policy changes or regulations they deem appropriate or moral, based upon their own inclination.  It's challenging for a trade Associations like NGF to advocate for its members best interests during real times of crisis brought on by economic uncertainy or in the resistance of truly needless laws and regulations brought by those who have little understanding of the industry.  It's another thing to attempt to convince the very agency created to regulate the industry and maintain a level playing field from enacting regulations and rules that they deem appropriate based upon their own and narrow opinion.

The Association noted at the hearing that most surrounding states including federal regulators do not govern minimum storage provisions including the number of days that depositors can be charged for storage.  NGF also noted that any drastic change in the current minimum storage policy including significantly reducing the maximum number of days could cause a number of state licensed elevators to apply for federal licenses.  Some of these same state licensed warehouses who thought their voice counted and once felt that they could depend upon local control for a common sense approach to regulation could now feel compelled to make a different choice.

 

calendar of events

August 4, 2017

NeGFA Summer Meeting & Golf Outing

York Country Club

York, NE

 

 

 

 

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Nebraska Grain and Feed Association
4600 Valley Road, Suite 416
Lincoln, NE 68510-4844
Phone: 402-476-6174
Fax: 402-476-3401