Under commission proposal to Legislature, grain buyers face quarterly financial reports
PIERRE -- A panel of state lawmakers Tuesday recommended South Dakota grain buyers file financial reports quarterly so regulators can keep a closer eye on them.
PIERRE - A panel of state lawmakers Tuesday recommended South Dakota grain buyers file financial reports quarterly so regulators can keep a closer eye on them.
But members of the Senate Agriculture and Natural Resources Committee want SB 24 discussed when it reaches the full Senate, possibly as soon as Wednesday afternoon.
"I think we should talk about it," Sen. Jason Frerich, D-Wilmot, said.
Grain buyers currently file two documents. One is the year-end balance sheet. The other is financial information that accompanies the application for a new license or a renewal.
Chris Nelson, a member of the Public Utilities Commission, told the senators a gap of "9 or 10 months" sometimes results. Nelson is one of three elected members of the state Public Utilities Commission, whose responsibilities include regulating grain warehouses.
The commission proposed the changes.
The plan comes after state regulators declared H & I Grain insolvent last year. The company bought grain from farmers around Arlington, Hetland and De Smet.
Nelson said the family-owned business suddenly was short "millions and millions of dollars in a very short time" because of price speculation.
The commission revoked H & I Grain's permit. The criminal side of the case now is in the hands of law enforcement.
The South Dakota Association of Cooperatives supports the change to quarterly reporting, lobbyist Brenda Forman said.
"It's important to know what's going on out in the industry," she said.
Frerichs said the Legislature had approved reforms five years ago after a Redfield seed company went under.
Nelson said the reforms proved their worth when the commission later learned a Gregory elevator faced financial difficulty.
"Because we were involved early, no farmers lost money on their grain," Nelson said.
South Dakota has two types of grain-buyer licenses. The fees are $275 apiece.
Class A buyers can conduct transactions involving credit. There are "about 180 or 190," Nelson said. Class B buyers are limited to cash and have a $10 million limit. There are "about 50," according to Nelson.
Beside the change to quarterly reports, SB 24 would reduce the Class B limit to $5 million.
Nelson said "90 percent" of the grain buyers already prepare quarterly reports.
Nelson nodded in agreement as Frerichs recalled the previous round of changes. Frerichs asked whether the commission had conducted a fact-finding review.
"I can tell you this is a very solid step forward," Nelson said.
Frerichs asked the committee to recommend the bill's passage. A second Democrat, Sen. Troy Heinert, of Mission, seconded it.
"This is one area of concern for me," Frerichs said before the final vote, which was unanimous.
"We know producers were left in a very tough situation," the farmer and cattleman continued. "Certainly we are in a new age right now."