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H0487...............................................by AGRICULTURAL AFFAIRS
COMMODITY DEALERS - Amends existing law 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.
02/07 House intro - 1st rdg - to printing
02/08 Rpt prt - to Agric Aff
02/15 Rpt out - rec d/p - to 2nd rdg
02/18 2nd rdg - to 3rd rdg
02/20 3rd rdg - PASSED - 63-0-7
AYES -- Anderson, Andrus, Barrett, Bayer, Bell, Bilbao, Block, Bock,
Boe, Bolz, Bowers, Bradford, Chadderdon, Chavez, Chew, Clark,
Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Harwood,
Henbest(Burgoyne), Henderson, Jaquet, Killen, King, Kren, Labrador,
Lake, LeFavour, Loertscher, Luker, Mathews, McGeachin, Mortimer,
Moyle, Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ringo,
Ruchti, Rusche, Sayler, Schaefer, Shepherd(02), Shepherd(08),
Shirley, Shively, Smith(24), Smith(30)(Stanek), Snodgrass, Stevenson,
Thayn, Thomas, Trail, Vander Woude, Wills, Wood(27), Mr. Speaker
NAYS -- None
Absent and excused -- Bedke, Black, Brackett, Marriott, Patrick,
Roberts, Wood(35)
Floor Sponsor - Stevenson
Title apvd - to Senate
02/21 Senate intro - 1st rdg - to Agric Aff
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 487 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- 11 fied: 12 (1) "Agricultural commodity" means any feeds, grain, wheat, barley, oats, 13 corn, rye, oilseeds, dry edible beans, peas, lentils and other leguminous 14 seedsand 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 leasttentwenty-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- 30 tracts. 31 (4) "Department" means the department of agriculture of the state of 32 Idaho. 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 2 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 9 in 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 14 chapter. 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 exceedstwofive hundredand25fiftythousand 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 exceedtwofive 28 hundredand fiftythousand 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 exceedstentwenty- 33 five thousand dollars ($1025,000) and is less thantwofive hundredand34fiftythousand dollars ($2500,000), or 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 37tentwenty-five thousand dollars ($1025,000) but less thantwofive hun- 38 dredand fiftythousand dollars ($2500,000). A class 2 licensee whose pur- 39 chases from producers exceedtwofive hundredand fiftythousand 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- 50 ration; 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 3 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. Assets shall be shown at 10 original cost less depreciation. Upon written request filed with the depart- 11 ment, the director may allow asset valuations in accordance with a competent 12 appraisal. 13 (7) In order to receive and retain a commodity dealer's license the fol- 14 lowing additional conditions must be satisfied: 15 (a) For a class 1 license a commodity dealer shall have and maintain a 16 net worth of at leastfiftytwo hundred thousand dollars ($5200,000).or17maintain a bond in the amount of two thousand dollars ($2,000) for each18one thousand dollars ($1,000) or fraction thereof of net worth deficiency;19however, a person shall not be licensed as a class 1 commodity dealer if20the person has a net worth of less than twenty-five thousand dollars21($25,000). A bond submitted for purposes of this subsection shall be in22addition to any bond otherwise required under the provisions of this chap-23terProvided however, for those commodity dealers licensed prior to July 24 1, 2007, that were at the time of licensing required to maintain a net 25 worth of at least fifty thousand dollars ($50,000), that are continually 26 licensed through December 2010, their net worth requirement shall increase 27 by fifty thousand dollars ($50,000) per license year until the two hundred 28 thousand dollar ($200,000) net worth minimum is reached which shall be no 29 later than December 31, 2010. In the event a commodity dealer licensed 30 prior to July 1, 2007, shall at any time prior to December 31, 2010, cease 31 to be licensed, and shall thereafter again apply for a class 1 license, 32 they shall be required to have and maintain a net worth of at least two 33 hundred thousand dollars ($200,000). A class 1 commodity dealer shall have 34 and maintain grain assets plus liquidity equal to or greater than grain 35 liabilities. Guidelines relating to grain assets, liquidity and grain lia- 36 bilities shall be promulgated by rule. 37 (b) For a class 2 license a commodity dealer shall have and maintain a 38 net worth of at leasttwenty-fivefifty thousand dollars ($250,000) or 39 maintain a bond in the amount of two thousand dollars ($2,000) for each 40 one thousand dollars ($1,000) or fraction thereof of net worth deficiency; 41 however, a person shall not be licensed as a class 2 commodity dealer if 42 the person has a net worth of less thantentwenty-five thousand dollars 43 ($1025,000). A bond submitted for purposes of this subsection shall be in 44 addition to any bond otherwise required under the provisions of this chap- 45 ter. Class 2 commodity dealers licensed before July 1, 2007, that were 46 required at licensing to maintain a net worth of twenty-five thousand dol- 47 lars ($25,000) shall have until the next licensing renewal after July 1, 48 2008, to meet the minimum net worth of fifty thousand dollars ($50,000). 49 (8) The department may require additional information or verification 50 regarding the financial resources of the applicant and the applicant's ability 51 to pay producers for agricultural commodities purchased from them. 52 SECTION 3. That Section 69-514, Idaho Code, be, and the same is hereby 53 amended to read as follows: 4 1 69-514. CREDIT-SALE CONTRACTS. (1) A commodity dealer who purchases agri- 2 cultural commodities by credit-sale contracts shall have in effect a current 3 class 1 commodity dealer license and maintain books, records and other docu- 4 ments as required by the department to establish compliance with the provi- 5 sions of this section. 6 (2) In addition to other information as may be required, a credit-sale 7 contract shall contain or make provision for all of the following: 8 (a) The seller's name and address; 9 (b) The conditions of delivery; 10 (c) The amount and kind of agricultural commodities delivered; 11 (d) The price per unit or basis of value; and 12 (e) The date payment is to be made. 13 (3) Title to all agricultural commodities sold by a contract is in the 14 purchasing dealer as of the time the contract is signed, unless the contract 15 provides otherwise. The contract must be signed by all parties and executed in 16 duplicate. One (1) copy shall be retained by the commodity dealer and one (1) 17 copy shall be delivered to the seller. Upon revocation or termination of a 18 commodity dealer's license, the payment date for all credit-sale contracts 19 shall be advanced to a date not later than thirty (30) days following the 20 effective date of the revocation or termination and the purchase price for all 21 agricultural commodities without a price shall be determined as of the effec- 22 tive date of revocation or termination in accordance with all other provisions 23 of the contract. However, if the business of the commodity dealer is sold to 24 another licensed commodity dealer, credit-sale contracts may be assigned to 25 the purchaser of the business.
STATEMENT OF PURPOSE
RS 17755C1
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 1 and 2 Commodity Dealers;
Section 69-503 (7) (a) adds increased financial responsibility
for those Commodity Dealers licensed as Class I and II
Commodity Dealers; Section 69-514 adds a requirement that
Commodity Dealers must hold a class 1 license in order to
write credit sale contracts.
FISCAL NOTE
No impact to the General Fund.
CONTACT
Name: Representative Dennis Lake
Phone: (208) 332-1137
STATEMENT OF PURPOSE/FISCAL NOTE H 487