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The Grain Dealers Act gives regulatory responsibility to the Michigan Department of Agriculture and Rural Development (MDARD) and provides for:
- the storage, warehousing, buying, and selling of farm produce within the State of Michigan
- the licensing, regulation, and bonding of grain dealers
- warehouse receipts and price later agreements and their priority
- the creation of security interests
- the establishment of an inspection service and personnel for licensed grain dealers
- penalties for the violation of this act
A person shall not act or offer to act as a grain dealer without annually securing a license from MDARD.
A. NAME OF PERMIT OR APPROVAL:
Grain Dealers License
B. STATUTORY AUTHORITY:
Grain Dealers Act
C. APPLICABLE REGULATION:
None
D. SUMMARY OF PERMIT/APPROVAL PROCESS:
1. Applicability (activities that require the permit)
Grain Dealers are required to obtain a license before conducting business in the State of Michigan. If you are engaged in the business of receiving, buying, exchanging, processing, selling or storing farm produce and you do not fall within an exception, you are considered to be a grain dealer and you must obtain a license from the Michigan Department of Agriculture and Rural Development. The exceptions are related to a person soley engaged in one of the following: selling own farm produce, buying farm produce for own livestock on cash basis, handling less than 30,000 bushels from producers during a fiscal period, contracting for land or services to produce seed for sowing or propagation and purchasing farm produce from a person other than the grower or the producer of the farm produce. If you issue warehouse receipts or price later agreements you are considered to be a grain dealer.
2. Pre-Application Requirements
No license can be issued unless the dealer, which handles less than 500,000 bushels during their fiscal year, reports at least $50,000 in allowable net assets. For dealers that handle more than 500,000 bushels, the calculation is 10 cents of allowable net assets for every bushel handle up to a maximum of $1,000,000 in allowable net assets.
3. Application Submission Requirements
Each application must be a accompanied by a finanacial statement of at least a review in nature completed by an independent certified public accountant within 6 months of the fiscal year end, a copy of the most current bond and/or insurance. If the financial statement is of a parent corporation, the application shall include a declaration of liability (DOL) by which the parent corporation assumes all financial obligations incurred by the licensee during the term of the license.
If the financial statement discloses the grain dealer during the preceding fiscal year had a current asset to current liability ration of less than 1 to 1, the licensee shall include with the application a plan and timetable to increase the current ratio to 1 to 1 or more.
A grain dealer who is a bailee of farm produce or who issues warehouse receipts and open storage produce shall be required to submit a sufficient bond on a form provided by the director. Grain merchandisers and truckers are required to submit a $100,000 bond that secures their faithful performance of his or her obligations in any farm produce transaction.
Attach to the application one copy of the scale ticket, warehouse receipt, price later agreement or other forms proposed to be used in grain transactions. Retain one copy for your files. If all current forms are currently on file with the Department, no submission is necessary.
For grain dealer license application instructions,bond, DOL and licensing forms go to:
Grain Dealer Forms
4. Procedures and Time-Frame for Obtaining Permit or Approval
License applications must be submitted 30 days before license expiration date. A license is issued for a term of 1 year. The department shall issue or deny a license within 30 days after receipt of a completed application, license fee and financial statement. If an application is withdrawn before a license is renewal is approved, the department shall retain $50 for processing and return the remainder of the licesne fee to the grain dealer.
5. Operational Requirements
During the first 10 days of each month, all licensees are required to submit a Daily Position Report (DPR) for the previous month. Licensees may use the Department approved Daily Position Reporting forms available from the Fairs, Exhibitions, and Racing Division of the Michigan Department of Agriculture and Rural Development. Reports must be submitted whether or not there is any farm produce activity during the month. Failure to submit monthly DPR forms on a timely basis may result in a fine, suspension, or revocation of the grain dealer's license.
Each temporary facility need only be reported once annually. If temporary facilities are being used at time of licensing, report location and temporary capacity and total of temporary and permanent capacities of the license application and remit the appropriate fee. If temporary facilities are used during the license year, and were not reported on the license application, report the location on the daily position reporting (DPR) form and remit additional fee with the DPR (if required). If not previously submitted, include a copy of the lease agreement and bin charts, if any, for the temporary facility.
For daily position reporting forms go to: Grain Dealer Forms
6. Fees
- Grain dealer facility - for each receiving point that has a total bushel capacity of:
- 100,000 or less $500.00
- More than 100,000 and 200,000 or less $625.00
- More than 200,000 and 300,000 or less $750.00
- More than 300,000 and 400,000 or less $875.00
- More than 400,000 $1000.00
- Grain merchandiser $1000.00
- Farm produce trucker (1 vehicle) $500.00
- Each additional vehicle $200.00
Every three years, the department may adjust the fee schedule by an amount, not to exceed 5%, to reflect the cumulative annual percentage change in the Detroitconsumer price index over the three year period.
7. Appeal Process
After a hearing conducted in accordance with the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, the department may revoke or refuse to issue or renew a license, or require a fidelity bond in an amount and on terms determined by the department, if any of the following occurred within the 5 years preceding the date of the license application:
(a) The applicant, a manager employed by the applicant, or any other individual with management responsibilities for the farm produce handling business of the applicant was a principal in a grain dealer receivership or insolvency proceeding that resulted in losses to creditors or depositors.
(b) The applicant, a manager employed by the applicant, or any other individual with management responsibilities for the farm produce handling business of the applicant pled guilty or was convicted of any felony involving fraud, conversion, or embezzlement.
(c) The applicant's license, under the United States Warehouse Act 39 Stat. 486, 7 U.S.C. 241 to 273, was revoked or canceled due to a violation of that act.
8. Public Input Opportunities
The success of the grain dealers act is based upon open communcation between producers, grain dealers, associations and the department. Please contact the department through the contact and web information listed below.
E. Contact Information:
Contact Us
Creation/Revision Date: June 4, 2012
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