2008 Legislation
Print Friendly

HOUSE BILL NO. 425<br /> – Commodity dealers, licenses

HOUSE BILL NO. 425

View Bill Status

View Bill Text

View Statement of Purpose / Fiscal Impact



Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Bill Status



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

Bill Text




                                                                       
  ]]]]              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-
 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    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-
 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 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
 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 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-
 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.  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

                                       4

  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 / Fiscal Impact


                      STATEMENT OF PURPOSE

                           RS 17307C1

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



                           FISCAL NOTE

No impact to the General Fund.




CONTACT
Name:	Lee Stacey
Agency:	Agriculture, Dept. of
Phone:	332-8670


STATEMENT OF PURPOSE/FISCAL NOTE	                  H 425