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Agricultural Producer Security / Grain Dealers
A grain dealer is anyone that procures producer grain or markets producer grain as a producer agent. A grain dealer that procures producer grain in Wisconsin must obtain a grain dealer license and comply with
Wis. Stat. ch. 126 and
Wis. Admin. Code ch. ATCP 99, unless the person is operating as an “Exempt Grain Dealer.”
Grain includes the following [refer to Wis. Stat. § 126.01(13)]:
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Corn, soybeans, wheat, oats, barley, canola, rye, buckwheat, grain sorghum (milo), flaxseed, sunflower seed, triticale, and mixed grain as defined in
7 CFR 810.801.
A grain dealer does not include the following [refer to Wis. Stat. § 126.10(9)]:
- A person who merely brokers a contract between a grain producer and a grain dealer without becoming a party to the contract, taking control of grain, or accepting payment on behalf of the grain producer.
- A person who merely buys or sells grain on a board of trade or commodity exchange.
The Wisconsin Agricultural Producer Security Fund (the Fund) is a public trust administered by the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) and is used to secure payments to producers in the case of a default. The Fund will provide partial payment to eligible producers in the event a licensed grain dealer is unable to pay for the procured grain. The fund is used only for the purpose of Wis. Stat. ch. 126.
Licensing
All grain dealer licenses expire August 31 each year. Licenses may not be transferred or assigned to another entity, and fees for a license issued after the license year are not prorated.
Grain dealers are also required to file a financial statement if the license application indicates more than 200,000 bushels of grain procured, or estimated to be procured, from producers and producer agents, or if deferred payment contracts are used. Financial statements must be filed each year along with, or prior to submitting, the license application. The financial statement must be either reviewed or audited by an Independent Certified Public Accountant (CPA), based on the following thresholds:
- If the license application indicates grain procured from producers and producer agents of more than 200,000 bushels but less than or equal to 2,500,000 bushels, either a CPA-reviewed or audited financial statement may be filed.
- If the license application indicates grain procured from producers and producer agents of more than 2,500,000 bushels, an audited financial statement must be filed.
Additional Licensing Requirements
Pay producers within seven (7) days after the date of receipt of grain unless the grain was received under a written deferred payment contract, or a written receipt was issued indicating that the grain was received for storage.
Each year, provide a notice to producers and producer agents regarding the grain dealer's participation in the Agricultural Producer Security Fund. The specific disclosures can be found in Wis. Admin. Code § ATCP 99.14(2).
Maintain fire and extended coverage insurance under Wis. Stat. § 126.12.(1). The policy must cover all grain in custody of the grain dealer, whether owned by the grain dealer or held for others, at full local market value. Refer to Certificate of Insurance.
Maintain complete, accurate, and current records and accounts of all grain procured and all grain sold or marketed for a minimum of six years. These records must be made available to DATCP for inspection and copying upon request.
Fund Assessments and Security
In most cases, grain dealers are required to participate in the Agricultural Producer Security Fund (Fund). For grain dealers that are required to file a financial statement, the grain dealer’s current ratio and debt-to-equity ratio are used to determine Fund assessment rates. The Grain Dealer Assessment Calculator can be used to estimate your assessment amounts.
Under certain circumstances, a grain dealer may reduce its fund contribution and financial statement filing requirements by filing a grain dealer default claim waiver. Refer to Wis. Stat. § 126.70(1)(b).
In some cases, grain dealers may voluntarily, or be required to, file security in addition to participating in the Fund. Security may be in the form of cash, a
surety bond, or a
letter of credit.
Grain dealers that file a reviewed or audited financial statement showing negative equity when first licensed are automatically disqualified from participating in the Fund. A disqualified contractor must file and maintain security with DATCP in lieu of participating in the Fund. The amount of security required to be filed must be at least the sum of the grain dealer's default exposure as determined by statute.
File a Default Claim
If you are a producer that has not been paid for grain, file a default claim (refer to instructions).
For more information about the Agricultural Producer Security program, call our offices at (608) 224-4998 or Chris Oie at (608) 224-4969.