Board sorting out grain-license law

Applications for new grain dealer licenses are starting to flow into the state Plant Board as the agency continues its effort to finalize the record-keeping rules it needs to track grain sales during an audit.

Board Director Darryl Little said Friday that the department has received 10 applications through Thursday and had another half-dozen or so inquiries from businesses and individuals trying to find out whether they fall under the licensing law.

On May 13, the Plant Board approved an emergency rule to begin licensing grain dealers under Act 601 of 2015, the Arkansas Grain Dealers Act. The Arkansas Legislature approved the act this year to establish a licensing, bonding and auditing framework after last year's failure of Turner Grain Merchandising of Brinkley, which cost farmers who did business with the dealer tens of millions of dollars.

The new law requires people and companies who buy and sell grain in Arkansas to obtain a license if they don't already hold either a federal or state grain warehouse license.

Little said he hasn't been surprised by any of the current applicants or by the inquiries from those trying to decide whether the law applies to them.

"We're going by what the law requires -- if you're buying from the farmer and [are] not going to store the grain, just buying and selling to an end-user, then you're a dealer," he said.

The new law requires both in-state and out-of-state businesses that buy or sell Arkansas-produced grain to obtain a state license and provide bonding. They must also provide information about their financial condition and credit worthiness. If a problem is reported, the Plant Board can subject the licensee to an audit and a dealer's license can also be suspended, pending a hearing. The law also established a hotline for farmers to call if they aren't paid in a timely fashion for any grain sold to a state-licensed dealer.

Plant Board staff are now trying to rework a section of the rules needed to implement a section of the law dealing with record keeping. The board adopted the emergency rule so dealers could be issued licenses when the law took effect on May 25.

Little said farmers, dealers and other industry groups "were all pretty much on the same page" regarding record keeping.

"We just had to word it properly," he said. "We had to add some definition to clarify points. I'm hoping to have it wrapped up by the time of the board meeting next Thursday."

The Plant Board will hold its regular quarterly meeting beginning at 1:30 p.m. Thursday at its offices at 1 Natural Resource Drive in Little Rock. A planned public hearing on making the emergency rule permanent was dropped from the agenda, Little said, to give the board and others more time to review the record-keeping section.

He said the chairman of the board's grain dealer subcommittee and others will need time to review and comment on the draft. Final action could come at a special board meeting to be called later this year or put off until the full board's next quarterly meeting in September.

The leader of one industry group monitoring the ongoing talks about record keeping said discussions held on record-keeping requirements over the past several weeks have gone really well.

"Once we get into the wheat harvest and into the fall, we're going to see this deal in action and whether it works," said Andrew Grobmyer, executive vice president of the Agricultural Council of Arkansas.

While the record-keeping part has yet to be completely resolved, he said its generated a lot of interaction among board staff, dealers, farmers and organizations that represent Arkansas agriculture.

Grobmyer said talks have focused on the kinds of records that need to be kept, what information they need to contain and ensuring that everyone uses the same language in defining a record.

"Record keeping is a key component of the law and will be something that will be an added layer of security for the farmer that's going to be marketing their grain through these types of businesses," he said. He said it's equally important for licensees to be able to understand the rules so they can readily comply with them.

Turner Grain Merchandising, which did business as Turner Grain Inc., filed for bankruptcy in October, listing liabilities of $24.8 million and assets of $13.8 million. Last month, a federal bankruptcy judge approved converting the bankruptcy to a Chapter 7 liquidation.

Attorneys and others following the case are still waiting for details about what caused Turner Grain's failure. According to the bankruptcy filing, as late as 2014, the company had gross revenue of $235.3 million.

Creditors filed several lawsuits against Turner Grain and its principals, President Jason Coleman and Vice President Dale Bartlett and various businesses with ties to Turner Grain in state and federal court seeking to recover payment for grain delivered to the company. None of those suits have been resolved.

Business on 06/06/2015

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