The state Plant Board is expected to approve rules regulating grain dealers in Arkansas today, giving the agency a paper trail to track crops from the farmer to the buyer.
"We have had extensive discussions with the industry and they don't have any problems with it," Terry Walker, the board's assistant director, said Thursday.
The rules are required by a new state law intended to protect producers by licensing grain dealers. The law was passed in response to last year's failure of Turner Grain Merchandising Inc. of Brinkley.
Turner Grain's bankruptcy cost farmers and others tens of millions of dollars in losses. It also generated civil lawsuits against Turner Grain and affiliated companies from growers who delivered grain for which they never received payment.
Jeff Pitchford, director of public policy for state affairs for the Arkansas Farm Bureau, said the board and its staff had done a good job of building a consensus in support of the proposed rules.
"There's been a lot of input from all of the constituents, and I expect them to pass," Pitchford said. "This is new. We're regulating people who've never been regulated. It's a good start, and now we'll see how it works."
Jim Meade of Delta Grain Marketing LLC in Jonesboro agreed.
"We're definitely satisfied with the rules," he said. "They'll help everybody."
Addison Adams of England Marketing Services Inc. in England also said the rules were a good start.
"I'm sure when we get into this, they'll work with us to tweak some things so it's easier for us and for them," Adams said.
The Plant Board will consider the rules at 1:30 p.m. today at its offices in Little Rock following a public hearing. If approved by the board, the rules also must be reviewed by the governor's office and the Legislature before taking effect.
In addition to requiring that dealers be licensed, Act 601 of 2015 requires businesses or people who buy or sell grain to show they have the financial capacity to carry out the transactions unless they are already licensed through the federal Warehouse Act or the Arkansas Public Grain Warehouse Law. Act 601 also established a bonding requirement and a public database so producers can check to see who is licensed to do business in the state.
Before passage of the Arkansas law, farmers had no one to turn to if they weren't paid for grain in a timely fashion. Now, if a problem occurs, they can call a hotline to report it to the Plant Board, which can audit dealers to determine their financial health and impose a range of penalties if problems are found. Possible penalties include warning letters, the suspension or revocation of licenses, or referral to a prosecuting attorney, depending on the severity of the offense.
The board adopted an emergency rule this spring that set up the licensing procedure and bonding requirements but held off adopting a section dealing with required record-keeping to allow board staff members, farmers, dealers and others to define what records need to be kept.
Eleven dealers have been licensed under the emergency rule, including four from outside Arkansas. Walker said nine applications were pending as of Thursday. Another 42 dealers are licensed under the state warehouse law, Walker said.
The U.S. Department of Agriculture lists 115 dealers who hold licenses in Arkansas under the federal warehouse law, some with multiple locations.
Under the final rules the Plant Board will consider, dealers must retain transaction records for five fiscal years and produce them at the board's request. Sellers and buyers are required to complete purchase contracts that clearly define all the conditions and requirements for the transfer of title for the grain covered in a transaction. Details include the date, a statement saying the seller is relinquishing title, the slow-pay hotline number, and where applicable, the date when payment should be made.
Other tracking documents include scale tickets from a facility with scales certified by the state and destination contracts that list the grain lots being used to fulfill the contract as well as who moved the grain and how much was moved in each load.
Dealers are required to keep records about the grain being transferred, such as scale tickets, purchase contract numbers, delivery details and any other documents used in the purchase.
Dealers are required to give sellers numbered delivery tickets, which include information about scale tickets or a load summary showing the receipt of the grain covered by the delivery ticket. The tickets include the name and address of the dealer, the date the grain was delivered and the number of the contract to which the grain delivery should be applied.
Once the grain purchase is made, it must be confirmed by a settlement document that lists the original purchase contract number and a copy of a delivery sheet or load summary.
Business on 09/04/2015