Grain Dealers and Licensing

If you are engaged in the business of receiving, buying, exchanging, selling, or storing farm produce and you do not fall within an exception, you are considered a grain dealer and must obtain a license from the Michigan Department of Agriculture & Rural Development (MDARD).

Who does not need a grain dealer's license?

• A grower or producer who sells farm produce that the grower or producer actually produces.
• A person who buys farm produce, pursuant to a cash sale, as a feeder of the person's own livestock or poultry.
• A person who handled less than 30,000 bushels of farm produce from producers in the prior or current fiscal period, buying farm produce in a cash sale.
• A person who contracts for land or services to produce seed for sowing or propagation.
• A person who purchases farm produce from an entity other than a grower or producer pursuant to a cash sale.

Note: Exceptions are not available if the person is required to offer warehouse receipts or price later agreements or if the person takes title prior to payment for farm produce of a producer or grower. To qualify for an exception, the person must engage solely in the exceptions listed above.

Complete an online application form. 

You may begin operating as a grain dealer once you receive your grain dealer's license, which is processed within 30 days from receipt.

License expiration date depends on the fiscal year end of the company. Licensing periods are normally one year in length.

Applications must be completed and submitted with a financial statement, a copy of current bond, and a copy of insurance information that comply with statutory requirements listed in the license requirements section of the Grain Dealers Act, PA 141 of 1939, as amended. Renewals must be submitted at least 30 days prior to the expiration date.

License applications must be submitted 30 days prior to the date needed or the license expiration date. Each application must be accompanied by a financial statement, which must be prepared in accordance with Generally Accepted Accounting Principles and not less in scope than a review. A Certified Public Accountant must prepare the financial statement, which must include a balance sheet, income statement, and notes and disclosures.

Each temporary facility need be reported only once annually. If temporary facilities are being used at the time of licensing, report location and temporary capacity in Section 8 as well as total of temporary and permanent capacities in Section 9 of the license application and remit appropriate fee.

If temporary facilities are used during the license year and were not reported on the license application, report the location on the Grain Dealer Daily Position Report form and remit additional fee (if required) with the Daily Position Report form. If not previously submitted, include a copy of the lease agreement and bin charts, if any, for the temporary facility.

For a grain dealer who fails to meet any of the allowable net asset requirements under Subsection (3) of Section 3 of the Grain Dealers Act, PA 141 of 1939, as amended, the Department may issue or renew the license if the grain dealer provides the Department with a negotiable bond issued by a surety authorized to conduct business in this state or proof of establishment of a restricted account in a financial institution that conducts business in this state, acceptable to the Department and of which the Department is the sole beneficiary, that is in an amount equal to the amount by which the grain dealer's allowable net assets failed to meet the allowable net asset requirement applicable under Subsection (3). Bond form GD-123 is available here. The bond shall show the address of each original grain dealer's bond (if required) and must accompany the license application.

A grain dealer must have Insurance on all stored farm produce through an authorized insurer against loss by fire, explosion, lightning, or windstorm to the extent of full market value.

Failure to do so is just cause for license revocation. The average market value on the date of loss is the basis for settlement.

A grain dealer shall not be issued a license unless one of the following is met:

• The grain dealer has allowable net assets of $100,000 or more and handled 1,000,000 or fewer bushels of farm produce in the grain dealer's most recent fiscal year.
• The grain dealer has allowable net assets of $100,000 or more and the allowable net assets equal or exceed the product of $0.10 multiplied by the number of bushels of farm produce handled by the grain dealer in the grain dealer's most recently completed fiscal year.

Attach to the application one copy of scale tickets, warehouse receipts, price later agreements, and other forms proposed for use in grain transactions. Retain one copy for your files. If all forms are currently on file with the Department, no submission is necessary.

All licensees are required to submit a Daily Position Report (DPR) for the previous month on or before the 10th business day of each month. Reports must be submitted whether or not there is any farm produce activity during the month (also known as a "zero report"). Failure to submit monthly DPR forms timely may result in fines, suspension, or revocation of the grain dealer's license.

An audit report will be provided following the grain audit, and a follow-up letter may be sent from the Michigan Department of Agriculture and Rural Development. The elevator will be required to show compliance with violations or may be subject to administrative fines, license suspension, and/or license revocation.