Nebraska Grain and Feed Association
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NE Grain & Feed

PSC DECLINES TO PURSUE LEGISLATION INCREASING GRAIN DEALER REQUIREMENTS

NGF OPPOSED PROPOSED CHANGES

In December, 2011 the Nebraska Public Service Commission (PSC) staff proposed legislative changes to the Nebraska grain laws that would have required all grain elevators to possess a dealer’s license in addition to a warehouse license, even if those elevators do not participate in direct ship programs.  The Nebraska Grain and Feed Association (NGF) vigorously opposed any additional grain dealer requirements.

The PSC proposal would increase the grain dealer security requirement from its current 7%, to 9% of annual purchases as well as increase the maximum grain dealers bond from the current $300,000 to $500,000.  The proposal would have affected state as well as federally licensed grain elevators.  The proposal would also no longer require a grain dealer’s license for resellers of grain who purchase the grain from a state or federally licensed commercial warehouse for sale to third-party customers such as livestock or poultry operations.  Commission staff said the proposal was an agency initiated attempt to provide more security to farmers, even as they admitted no agricultural organization requested any such changes.

Representatives from NGF including Pat Ptacek, David Prinz and Tim Gubbels met with the PSC December 19, 2012.  John Fecht, director of the warehouse division said the idea of requiring all grain elevators to obtain a grain dealers license was intended to more adequately cover producers at the point of sale.  He also said from all indications and through their dealer audits, the current grain dealer laws were working well.  However with high grain prices he said his intention was to require a first purchaser law to cover any gaps, real or perceived, that might exist.  Fecht said that companies writing bonds in Nebraska would have no problem with expanding the dealer law and issuing the higher dealer bonds proposed under the draft legislation, especially for larger companies with multiple locations. 

The Association strongly objected that the proposed changes suggesting that the commission was pursuing a solution to a problem that does not exist.  Pat Ptacek, NGF Executive Vice President said the proposal would add unneeded requirements and additional costs especially to those private or independent elevators that only may have one or two locations and who want to continue the ability to choose between warehousing or engaging in grain dealer activities.  In addition, expanding the security requirements by 9% of grain purchases and the requirement for a mandatory grain dealer’s license would fall especially hard on independent elevators.  The Association also objected to eliminating a third-party dealer's license for resale, eliminating any recourse from elevators who sold to the third-party to recover losses.

Association representatives stressed that producers must take the responsibility and know the laws governing grain transactions and who they choose to do business with.  Ptacek also pointed out that current law requires that licensed grain dealers may be subject to an audit unless they pledge additional security requested by the commission.  Association representatives suggested that if the commission was genuinely concerned regarding the adequate security for warehousing or grain dealer activities, the $500,000 maximum bond required for a company with 30 locations was wholly inadequate.  It was also pointed out that producers were given the opportunity to support the establishment of a grain indemnification fund several years ago and declined.

Representatives of the PSC said they appreciated and would consider our comments before deciding whether legislation would be introduced.  As of the last day of bill introduction, January 19, 2012, no legislation had been proposed.

 

 

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August 4, 2017

NeGFA Summer Meeting & Golf Outing

York Country Club

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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