Print Friendly HOUSE BILL NO. 425
– Commodity dealers, licenses
HOUSE BILL NO. 425
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H0425...............................................by AGRICULTURAL AFFAIRS
COMMODITY DEALERS - Amends existing law to revise definitions; to revise
license and financial responsibility requirements for commodity dealers;
and to require certain licenses for commodity dealers who purchase
agricultural commodities by credit-sale contracts.
01/25 House intro - 1st rdg - to printing
01/28 Rpt prt - to Agric Aff
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 425
BY AGRICULTURAL AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO COMMODITY DEALERS; AMENDING SECTION 69-502, IDAHO CODE, TO REVISE
3 DEFINITIONS; AMENDING SECTION 69-503, IDAHO CODE, TO REVISE LICENSE AND
4 FINANCIAL RESPONSIBILITY REQUIREMENTS FOR COMMODITY DEALERS; AND AMENDING
5 SECTION 69-514, IDAHO CODE, TO REQUIRE CERTAIN LICENSES FOR COMMODITY
6 DEALERS WHO PURCHASE AGRICULTURAL COMMODITIES BY CREDIT-SALE CONTRACTS.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Section 69-502, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 69-502. DEFINITIONS. As used in this chapter, except as otherwise speci-
12 (1) "Agricultural commodity" means any feeds, grain, wheat, barley, oats,
13 corn, rye, oilseeds, dry edible beans, peas, lentils and other leguminous
14 seeds and feeds (not including minerals or seed crops) or any other commodity
15 as determined by the director.
16 (2) "Commodity dealer" or "dealer" means any person who solicits, con-
17 tracts for, or obtains from an Idaho producer or producers, title, possession,
18 or control of any agricultural commodity through his place of business located
19 in the state of Idaho or through his place of business located outside the
20 state of Idaho for the purpose of sale or resale or who buys, during any cal-
21 endar year, at least ten twenty-five thousand dollars ($ 1025,000) worth of
22 agricultural commodities from an Idaho producer or producers of the commodi-
23 ties. Commodity dealer or dealer shall not mean any person who purchases agri-
24 cultural commodities for his own use as seed or feed within his own operation.
25 (3) "Credit-sale contract" means a contract for the sale of an agricul-
26 tural commodity pursuant to which the sale price is to be paid at a date sub-
27 sequent to the delivery of the agricultural commodity to the buyer and
28 includes, but is not limited to, those contracts commonly referred to as
29 deferred payment contracts, deferred pricing contracts and price-later con-
31 (4) "Department" means the department of agriculture of the state of
33 (5) "Director" means the director of the department of agriculture.
34 (6) "Person" means any individual, firm, association, partnership, corpo-
35 ration, or limited liability company.
36 (7) "Producer" means the owner, tenant or operator of land in this state
37 who has an interest in the proceeds from the sale of agricultural commodities
38 produced on that land. Producer does not include growers who sell their com-
39 modity to a facility in which they have a financial or management interest
40 except members of a cooperative marketing association qualified under chapter
41 26, title 22, Idaho Code.
42 (8) "Public warehouse" or "warehouse" or "warehouseman" means any eleva-
43 tor, mill, warehouse, subterminal commodity warehouse, public warehouse or
1 other structure or facility in which agricultural commodities are received for
2 storage, shipment, processing, reconditioning or handling.
3 (9) "Revocation" means the permanent removal of a commodity dealer
4 license following a hearing on violations of the provisions of this chapter by
5 the hearing officer or director.
6 (10) "Suspension" means the temporary removal of a commodity dealer
7 license by the department pending a hearing for violations of the provisions
8 of this chapter. Correction of the violations prior to a hearing may result in
9 the reinstatement of a license without a hearing.
10 (11) "Termination" means the expiration of a commodity dealer license due
11 to failure to meet minimum licensing requirements, failure to renew a commod-
12 ity dealer license or as requested by the licensee, unless a complaint has
13 been filed against the licensee alleging a violation of any provision of this
15 SECTION 2. That Section 69-503, Idaho Code, be, and the same is hereby
16 amended to read as follows:
17 69-503. LICENSE REQUIREMENTS -- FINANCIAL RESPONSIBILITY. (1) A person
18 shall not engage in the business of a commodity dealer in this state without
19 having obtained a license issued by the department.
20 (2) The type of license required shall be determined as follows:
21 (a) A class 1 license is required if the commodity dealer purchases agri-
22 cultural commodities by credit-sale contract or if the value of the agri-
23 cultural commodities purchased by the commodity dealer from producers dur-
24 ing the previous twelve (12) month period exceeds two five hundred and
25 fifty thousand dollars ($ 2500,000), or if the value of the agricultural
26 commodities expected to be purchased by the commodity dealer from the pro-
27 ducers during the succeeding twelve (12) month period will exceed two five
28 hundred and fifty thousand dollars ($ 2500,000). Any other commodity dealer
29 may elect to be licensed as a class 1 commodity dealer.
30 (b) A class 2 license is required for any commodity dealer if the value
31 of the agricultural commodities purchased by the commodity dealer from
32 producers during the previous twelve (12) month period exceeds ten twenty-
33 five thousand dollars ($ 1025,000) and is less than two five hundred and
34 fifty thousand dollars ($ 2500,000), and if the value of the agricultural
35 commodities expected to be purchased by the commodity dealer from pro-
36 ducers during the succeeding twelve (12) month period will be more than
37 ten twenty-five thousand dollars ($ 1025,000) but less than two five hun-
38 dred and fifty thousand dollars ($ 2500,000). A class 2 licensee whose pur-
39 chases from producers exceed two five hundred and fifty thousand dollars
40 ($ 2500,000) in value during any twelve (12) month period shall immediately
41 apply for a class 1 license. If a class 1 license is denied, the person
42 shall immediately cease doing business as a commodity dealer.
43 (3) An application for a license to engage in business as a commodity
44 dealer shall be filed with the department and shall be on a form prescribed by
45 the department. A separate license is required for each location at which
46 records are maintained for transactions of the commodity dealer.
47 (4) A license application shall include the following:
48 (a) The name of the applicant;
49 (b) The names of the officers and directors if the applicant is a corpo-
51 (c) The names of the partners if the applicant is a partnership;
52 (d) The location of the principal place of business; and
53 (e) Any other reasonable information the department finds necessary to
1 carry out the provisions and purposes of this chapter.
2 (5) A license applicant shall further provide a sufficient and valid bond
3 as specified in section 69-506, Idaho Code.
4 (6) A license applicant shall further provide a complete financial state-
5 ment setting forth the applicant's assets, liabilities and net worth. This
6 financial statement shall be prepared by an independent certified public
7 accountant or a licensed public accountant according to generally accepted
8 accounting principles. The commodity dealer shall have and maintain current
9 assets equal to or greater than current liabilities. If a commodity dealer
10 does not maintain current assets equal to or greater than current liabilities
11 at the end of each business day, the commodity dealer shall immediately con-
12 tact the department and cease doing business as a commodity dealer. Assets
13 shall be shown at original cost less depreciation. Upon written request filed
14 with the department, the director may allow asset valuations in accordance
15 with a competent appraisal.
16 (7) In order to receive and retain a commodity dealer's license the fol-
17 lowing additional conditions must be satisfied:
18 (a) For a class 1 license a commodity dealer shall have and maintain a
19 net worth of at least fifty two hundred thousand dollars ($ 5200,000). or
20 maintain a bond in the amount of two thousand dollars ($2,000) for each
21 one thousand dollars ($1,000) or fraction thereof of net worth deficiency;
22 however, a person shall not be licensed as a class 1 commodity dealer if
23 the person has a net worth of less than twenty-five thousand dollars
24 ($25,000). A bond submitted for purposes of this subsection shall be in
25 addition to any bond otherwise required under the provisions of this chap-
26 ter Provided however, for those commodity dealers licensed prior to July
27 1, 2007, that were at the time of licensing required to maintain a net
28 worth of at least fifty thousand dollars ($50,000), that are continually
29 licensed through December 2010, their net worth requirement shall increase
30 by fifty thousand dollars ($50,000) per license year until the two hundred
31 thousand dollar ($200,000) net worth minimum is reached which shall be no
32 later than December 31, 2010. In the event a commodity dealer licensed
33 prior to July 1, 2007, shall at any time prior to December 31, 2010, cease
34 to be licensed, and shall thereafter again apply for a class 1 license,
35 they shall be required to have and maintain a net worth of at least two
36 hundred thousand dollars ($200,000). A class 1 commodity dealer shall have
37 and maintain grain assets plus liquidity equal to or greater than grain
38 liabilities. Guidelines relating to grain assets, liquidity and grain lia-
39 bilities shall be promulgated by rule. If a commodity dealer does not
40 maintain the minimum net worth at the end of each business day, the com-
41 modity dealer shall immediately contact the department and cease doing
42 business as a commodity dealer.
43 (b) For a class 2 license a commodity dealer shall have and maintain a
44 net worth of at least twenty-five fifty thousand dollars ($ 250,000) or
45 maintain a bond in the amount of two thousand dollars ($2,000) for each
46 one thousand dollars ($1,000) or fraction thereof of net worth deficiency;
47 however, a person shall not be licensed as a class 2 commodity dealer if
48 the person has a net worth of less than ten twenty-five thousand dollars
49 ($ 1025,000). A bond submitted for purposes of this subsection shall be in
50 addition to any bond otherwise required under the provisions of this chap-
51 ter. If a commodity dealer does not maintain the minimum net worth at the
52 end of each business day, the commodity dealer shall immediately contact
53 the department and cease doing business as a commodity dealer.
54 (8) The department may require additional information or verification
55 regarding the financial resources of the applicant and the applicant's ability
1 to pay producers for agricultural commodities purchased from them.
2 SECTION 3. That Section 69-514, Idaho Code, be, and the same is hereby
3 amended to read as follows:
4 69-514. CREDIT-SALE CONTRACTS. (1) A commodity dealer who purchases agri-
5 cultural commodities by credit-sale contracts shall have in effect a current
6 class 1 commodity dealer license and maintain books, records and other docu-
7 ments as required by the department to establish compliance with the provi-
8 sions of this section.
9 (2) In addition to other information as may be required, a credit-sale
10 contract shall contain or make provision for all of the following:
11 (a) The seller's name and address;
12 (b) The conditions of delivery;
13 (c) The amount and kind of agricultural commodities delivered;
14 (d) The price per unit or basis of value; and
15 (e) The date payment is to be made.
16 (3) Title to all agricultural commodities sold by a contract is in the
17 purchasing dealer as of the time the contract is signed, unless the contract
18 provides otherwise. The contract must be signed by all parties and executed in
19 duplicate. One (1) copy shall be retained by the commodity dealer and one (1)
20 copy shall be delivered to the seller. Upon revocation or termination of a
21 commodity dealer's license, the payment date for all credit-sale contracts
22 shall be advanced to a date not later than thirty (30) days following the
23 effective date of the revocation or termination and the purchase price for all
24 agricultural commodities without a price shall be determined as of the effec-
25 tive date of revocation or termination in accordance with all other provisions
26 of the contract. However, if the business of the commodity dealer is sold to
27 another licensed commodity dealer, credit-sale contracts may be assigned to
28 the purchaser of the business.
STATEMENT OF PURPOSE
This legislation amends Section 69-502(2) increasing the minimum
financial requirement to the definition of commodity dealer;
Section 69-503 to increase the minimum financial requirement for
Class I and II commodity dealers; Section 69-503(6) adds clarity
to maintaining current ratios and adds requirement to report to
ISDA if current ratio is not maintained at greater than a 1:1
ratio; Section 69-503(7)(a) adds increased financial
responsibility for those Commodity Dealers licensed as class I &
II Commodity Dealers
No impact to the General Fund.
Name: Lee Stacey
Agency: Agriculture, Dept. of
STATEMENT OF PURPOSE/FISCAL NOTE H 425