ISDA: About IGBWLA

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Governor Mitch Daniels

About IGBWLA

Grain Buyers and Warehouse Licensing Agency steps into the new Millenium

The mission of the Indiana Grain Buyers and Warehouse Licensing Agency (IGBWLA) is to reduce risk to grain producers. The agency has oversight of nearly 400 licensees. This includes over 500 facilities with a 450-million bushel storage capacity. Over tha past year, the agency's field auditors inspected over 840 moisture meters and conducted 380 state and 100 compliance audits, as well as 100 soybean checkoff audits.

The agency investigated and verified producer claims to the Indiana Grain Indemnity Corporation from one grain elevator failure in 2007, the first since September 2003. As a result, auditing procedures were completely reviewed with additional information being requested, along with documentation to backup this information. The Agency adopted a new computer software program to bring auditing procedures more in line with present marketing practices. As a result, the Agency data base system was updated to capture this new information.

AGENCY HISTORY

Indiana's grain dealer and warehouse licensing laws were established in 1972, with the creation of a bipartisan study committee. The goal: to look at methods of preventing loss to Indiana farmers from fraud and bankruptcy of grain buyers and warehousemen.

Laws regulating grain dealers and warehouses became effective on January 1, 1975, when the Indiana Commodity Warehouse Licensing Agency (ICWLA) was created to administer these statutes.

In 1982, the dealer law was repealed, effectively deregulating grain buying in Indiana, but maintaining the licensing and oversight of stored grain. In 1991, the statute was updated to include deferred pricing.

In 1992 the agency entered into an audit agreement with the Indiana Soybean Development Council, Inc. to conduct audits on the Soybean Promotion and Research Checkoff (SPARC). In July of 1996, ICWLA entered into a similar agreement with the Indiana Grain Indemnity Corporation (IGIC) to perform compliance audits.

A new law was passed regulating grain banks, grain buying, and warehousing activities in 1997. The agency name was changed to Indiana Grain Buyers and Warehouse Licensing Agency (IGBWLA).

The authority of the IGBWLA is supported by statute, IC 26-3-7, and is under the administrative office of the Lieutenant Governor of Indiana, who appoints the director.

OPERATIONS

Licensing
The IGBWLA provides four license types: grain bank, warehouse, grain buyer, and buyer/warehouse. Licenses, as well as bin charts and diagrams, are to be posted in a conspicuous place at each facility.

Auditing
IGBWLA staff license and monitor the grain banks, grain buyers and warehouses for compliance to state statutes. Field auditors perform random, unannounced audits which may include audits for IGIC and SPARC.

Moisture Meter Testing
The IGBWLA has been designated by the Indiana State Department of Agriculture to inspect and test moisture testing equipment each year. This is done to ensure that both the producer and the elevator have an equitable system to determine moisture levels in grain.

Hearings
When an apparent violation of Indiana statute occurs, the IGBWLA holds administrative hearings to confirm if a licensee has failed to meet its obligations under this chapter. If it is determined that the statutory bond held by a licensee is to be distributed, a claims hearing is scheduled.

LICENSING TYPES

Grain Bank license - A company that stores only grain bank grain, purchases less than 50,000 bushels of grain per year and has storage capacity of not more than 50,000 bushels of grain.

Warehouse license - A company that only stores grain and purchases less than 50,000 bushels of grain per year.

Grain Buyer license - A company that purchases at least 50,000 bushels of grain per year from producers, (which is not for the sole purpose of feeding the company's own livestock or poultry); offers deferred pricing, delayed payments, or contracts linked to the commodity futures or commodity options market in connection with grain purchases. Includes firms licensed under the U.S. Warehouse Act.

Buyer/Warehouse license - A company that operates both as a warehouse and as a grain buyer.

REQUIREMENTS

Applications and Fees - All grain buyers and warehousemen listed under the license requirements must complete the application and fee process. The initial fee is pro-rated, depending on the month of fiscal year end. License renewal forms are to be filed yearly within 90 days of the fiscal year end.

Bonding - Bonding requirements are determined by the type of license being issued.

Annually Reviewed Financial Statement - Licensees are required to provide a "review-level" financial statement to the IGBWLA within 90 days of the fiscal year end.

Net Worth - Net Worth is subject to the type of license.

Stocks Insured - Grain stocks are required to be insured for full market value.

Equipment & Record Keeping - Truck scales are required to be inspected annually. Scale tickets and adequate record keeping are required.

Grain Buyers & Warehouse Licensing & Bonding Law Highlights

A permanent license is issued.
Yearly licensing renewal fee is required.
Licensee shall maintain the required amount of bonding as prescribed in the statute - IC 26-3-7.
Licensees shall maintain a current asset to current liability ratio of 1:1 - IC 26-3-7-16(a).
Licensee shall maintain a minimum positive net worth as calculated by the license - IC 26-3-7-16.
Licensee shall have on file a certificate of insurance insuring all grain that is or may be in the licensee's facilities for it's full value - IC 26-3-7-12(a).
Producers have an automatic lien on their grain when it is delivered to a facility; it expires when the producer is paid. There is an order of priority - IC 26-3-7-16.8.
Random inspections and audits are conducted.
Public notices may be published in the case of suspensions or failure to comply.
Law, rules and forms for IC 26-3-7 available on the web: www.IN.gov/isda
WHAT YOU SHOULD KNOW AS A GRAIN PRODUCER
- If the elevator is offering storage, grain bank, warehouse receipts, deferred pricing (D.P.), price later contracts or is buying grain, do they have a current license posted?
- Are storage and service rates disclosed to you?
- Does the facility use grain contracts?
- Does the facility give numbered scale tickets? Are they marked correctly (storage, D.P., price later, sold)?
- Are the SPARC checkoff & Indemnity Fund premium (if in effect) deducted and itemized on the settlements?
- Is the facility well maintained?
- Does the facility have regular business hours?
Tips . . .
- Always read, then sign, the contracts and keep a copy for your records.
- Always keep your scale tickets and settlement sheets. They are valid proofs of claim.
- Keep settlement sheets that show Indemnity Fund deductions. This is proof of participation in the fund.
- Look for the LICENSE and BIN CHARTS posted at the facility.
For detailed clarification or copy of the appropriate state statue contact:

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