Grain Dealers Regulatory Compilation

Grain Dealer Regulations - Bonds

What are bonds?

Bonds are a type of financial document used to ensure availability of funds in case of a business failure. Most state grain regulations require a specific type of bond called a surety bond. Surety bonds are an agreement between three parties. In the case of grain purchases, the three parties include: the grain purchaser or dealer, the obligee (usually the State), and the guarantor (the company providing the bond). Most likely, states will have a trustee to oversee the implementation and/or default of the bond.

Which states require bonds?

Of the thirty-four states which have created legislation aimed at regulating grain dealers, thirty-one states have bond requirements for grain dealers: Alabama, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Tennessee, Virginia, Washington, West Virginia, and Wisconsin.

What are the types of provisions in bonding statutes?

Each state that includes a bonding statute for grain dealers generally has the following provisions included:

• General Requirements—The general requirements provision usually includes language on whether dealers seeking a license are required to file a bond with the state. Minimum and maximum amounts for the surety bonds are set in this section, along with to whom the bond is deliverable.
• Exceptions—Some states offer exceptions to filing a bond, usually some form of financial substitution offering similar results to what a bind accomplishes.
• Default—If a dealer fails to make the agreed upon payment to a producer, the dealer will be in default. The surety/guarantor is required to pay the amount of the bond to the state, overseen by the trustee. If the bond is too small to cover all amounts owed, the money may be distributed pro rata, depending on the state.

What is Typical of Each Provision?

• General Requirements
  • Minimum/Maximum amounts: Typical minimum amounts for surety bonds range from $5,000 to $25,000. Typical maximum amounts for surety bonds range from $100,0000 to $1,000,000. Some states require surety bond amounts to be a percentage of the value of their farm products.
  • Delivery: Most states require the surety bond to be delivered to the Department of Agriculture or the Commissioner of Agriculture. 
  • Cancellation: If the grain dealer intends to cancel a bond from a specific surety company, most states require the dealer or surety to notify the department of an intent to cancel. A dealer would need to deliver another bond to the department within a certain amount of time, typically 30 to 90 days, from the notice of cancellation. Otherwise, a dealer’s license may be revoked if another bond is not filed. Notice does not relieve the surety company of liability of financial responsibility during the notice period.

• Exceptions
  • Financial Substitutions: Some exceptions for surety bonds include case bonds, government securities, irrevocable letters of credit, payments in cash, or financial evidence of net assets equal to or greater than the bond amount requirements. 
  • Non-Financial Substitutions: Alabama is the only state that will waive their surety bond requirement with proof that the dealer is licensed under the U.S. Department of Agriculture Warehouse Act.

• Default
  • Complaint: When a dealer fails to pay for grain, the injured party can demand payment on the bond by filing a complaint with the commissioner. The complaint should include a claim for injury by fraud, deceit, or in some states, negligence.  
  • Time: Any complaint or claim on the bond must be filed within a certain amount of time following the alleged transaction or breach of contract. Most states allow 180 days to file a claim. A minority of states give the claimant 160 days to file. 
  • Payment: The commissioner will notify the surety company if payment on the bond is required. If the surety company refuses to pay or does not respond, the commissioner can file a Complaint with the district court. 

State-by-State Statutory Language for Each Provision

Alabama | Arkansas | California | Colorado | Delaware | Florida | Georgia | Idaho | Indiana | Iowa | Kentucky | Louisiana | Maine | Maryland | Michigan | Minnesota | Mississippi | Missouri | Montana |  Nebraska | New York | North Carolina | North Dakota | Oregon | South Carolina | South Dakota | Tennessee | Virginia | Washington | West Virginia | Wisconsin

Alabama

General Requirements

“Surety bond; requirements; waiver of bond requirements. 

Every person licensed as a grain dealer shall have filed with the department a surety bond for each separate location signed by the dealer as principal and by a responsible company authorized to execute surety bonds within the State of Alabama. Such bond shall be in the principal amount to the nearest $1,000.00 equal to ten percent of the aggregate dollar amount paid by the dealer to producers for grain purchased from them during the 12 month period ending no more than 30 days prior to the time the dealer files to be licensed under this article. Persons who have been in the business of a grain dealer for less than one year are required to only meet minimum bond requirements their first year. Provided, that in any case the amount of the bond shall not be less than $25,000.00 or more than $100,000.00 for each separate location.”

Ala. Code § 2-31-4 (2024)

“Bond payable to state with commissioner as trustee; beneficiary of bond; cancellation; trust fund agreement in lieu of bond requirements.

Such bond shall be made payable to the State of Alabama as obligee, with the commissioner as trustee, and shall be conditioned on the grain dealer and his compliance with this article, and shall be for the use and benefit of the producer from whom the grain dealer may purchase grain and who is not paid by such grain dealer, and shall not be cancelled during the period for which the license is issued, except upon at least 60 days notice in writing to the commissioner. In no such event shall the total aggregate liability of surety exceed the face amount of its bond.”

Ala. Code § 2-31-5 (2024)

Exemptions

“Provided further, these bond requirements will be waived upon proof to the commissioner that such person is licensed under the United States Department of Agriculture Warehouse Act.”

Ala. Code § 2-31-4 (2024)

“In lieu of the above bond requirements a grain dealer may file and maintain a bond equivalent in the form of a trust fund agreement based upon cash, or fully negotiable bonds of the United States government or of the State of Alabama. All other provisions of the above bond requirements shall be applicable to trust fund agreements.”

Ala. Code § 2-31-5 (2024)

Default

“Action by commissioner upon default.

When the commissioner has determined that a grain dealer has defaulted in payment for grain which he has purchased, the commissioner shall determine through appropriate procedures the producers and the amount of defaulted payment and as trustee of the bond shall immediately after such determination to those who should receive the benefits. Should the defaulted amount be less than the principal amount of the bond or bonds then the surety shall be obligated to pay only the amount of the default.”

Ala. Code § 2-31-8 (2024)

Arkansas

General Requirements

“The State Plant Board may require a surety bond, financial reserve, or other evidence of creditworthiness for dealers.”

Ark. Code Ann. § 2-24-106 (2024)

Exemptions

“(a) The State Plant Board shall:

(1) Administer this chapter; and

(2) Create a publicly accessible database of:

(A) Dealers licensed under this chapter;

(B) Persons licensed under the United States Warehouse Act, 7 U.S.C. § 241 et seq.; and

(C) Persons licensed under the Arkansas Public Grain Warehouse Law, § 2-17-201 et seq. 

(b) And end user is exempt from the requirements of this chapter.”

Ark. Code Ann. § 2-24-103 (2024)

Default 

“(a) It is a violation of this chapter to:

(1) Operate as a dealer without a license issued under this chapter;

(2) Knowingly violate this chapter; or

(3) Knowingly refuse to allow inspection of a dealer’s premises, books, accounts, or other records during an audit by the State Plant Board under this chapter.

(b) A person that commits a violation under subsection (a) of this section is guilty of a Class D felony. 

(c) A person that negligently violates this chapter upon conviction is guilty of a Class A misdemeanor. 

(d)

(1) A person who violates this chapter or a rule promulgated under this chapter upon conviction is guilty of a violation and shall be punished by a fine of not more than one hundred dollars ($100).

(2)

(A) In addition to or in lieu of any other lawful disciplinary action, the board may assess a civil penalty of not more than one thousand dollars ($1,000) for each violation of a statute, rule, or order enforceable by the board under this chapter.

(B)

(i) The board shall establish by rule a schedule designating the minimum and maximum civil penalty that may be assessed under this subsection for violation of each statute, rule, or order over which it has regulatory control under this chapter.

(ii) The board may promulgate any other rules necessary to carry out the intent of this subsection.

(C) If a civil penalty lawfully assessed under subdivision (d)(2)(A) of this section is not paid, the civil penalty is recoverable in the name of the state by the Attorney General in Pulaski County Circuit Court or in the circuit court of the county in which the violation occurred.

(D) A civil penalty paid or recovered under this subsection shall be deposited into the State Treasury to be credited to the Miscellaneous Agencies Fund Account.”

Ark. Code Ann. § 2-24-108 (2024)

California

General Requirements

“(a) Licensees or applicants for a license shall be required to furnish and maintain a surety bond in a form and amount satisfactory to the director, if within the preceding four years the director determines that they have done any of the following:

(1) Engaged in conduct which demonstrates a lack of financial responsibility including, but not limited to, delinquent accounts payable, judgments of liability, insolvency, or bankruptcy.

(2) Failed to assure future financial responsibility unless a surety bond is posted.

(3) Otherwise violated this chapter which resulted in license revocation.

(b) The bond shall not be less than ten thousand dollars ($10,000) or 20 percent of the annual dollar volume of business based on farm product value returned to the grower, whichever is greater, as assurance that the licensee’s or applicant’s business will be conducted in accordance with this chapter and that the licensee or applicant will pay all amounts due farm products creditors.

(c) The director, based on changes in the nature and volume of business conducted by the licensee, may require an increase or authorize a reduction in the amount of the bond, but in no case shall the bond be reduced below ten thousand dollars ($10,000). A licensee who is notified by the director to provide a bond in an increased amount shall do so within a reasonable time as specified by the director. If the licensee fails to do so, the director may, after notice and opportunity for hearing, suspend or revoke the license of any licensee.”

Cal. Agric. § 56189.5 (2024)

“(a) Except pursuant to an exemption granted by the department, no person licensed under this chapter shall employ any person as an agent, or who previously was an agent, who meets any of the following criteria:

(1) Whose license has been revoked or is currently suspended. 

(2) Who has committed any one flagrant or repeated violations of this chapter or Chapter 6 (commencing with Section 55401). 

(3) Who failed to pay a producer’s claims for which the person, or, where the person controlled the decision to pay, the person’s employer, was liable, and which arose out of the conduct of a business licensed or required to be licensed under this chapter or Chapter 6 (commencing with Section 55401). 

(4) Who has been convicted of a crime that includes as one of its elements the financial victimization of another person. 

(b) The department may approve employment of any person covered by subdivision (a) if the licensee furnishes and maintains a surety bond in form and amount satisfactory to the department, but that shall not be less than ten thousand dollars ($10,000), as assurance that the licensee’s business will be conducted in accordance with this chapter and that the licensee will pay all amounts due farm products creditors. The department may approve employment without a surety bond after the expiration of four years from the effective date of the applicable disciplinary order. The department, based on changes in the nature and volume of business conducted by the licensee, may require an increase or authorize a reduction in the amount of the bond, but in no case shall the bond be reduced below ten thousand dollars ($10,000). A licensee who is notified by the department to provide a bond in an increased amount shall do so within a reasonable time to be specified by the department. If the licensee fails to do so, the approval of employment shall automatically terminate. The department may suspend or revoke the license of any licensee who, after the date given in the notice, continues to employ any person in violation of this section.”

Cal. Agric. § 56133.5(a)-(b) (2024)

Exemptions

“(d) The department may grant an exemption on presentation of substantial, clear, and convincing evidence to support a reasonable belief as to any of the following: 

(1) There has been a mistake of fact or identity. 

(2) The present role of the person provides no opportunity for a repeat of the prior behavior. 

(3) The person has been rehabilitated.

All submissions shall be authenticated and verified under penalty of injury. Unless the licensee or person can prove one of these three elements by substantial, clear, and convincing evidence, the department shall deny the request for exemption.”

Cal. Agric. § 56133.5(d) (2024)

Default

“It is a violation of this chapter if the applicant, or licensee, has failed or refused to render a true account of sales, or to make a settlement on the sales, or to pay for any farm product which is received, within the time and in the manner which are required by this chapter.”

Cal. Agric. § 56603 (2024)

“The director may bring an action to enjoin the violation or the threatened violation of any provision of this chapter or of any order which is made pursuant to this chapter in the superior court in the county in which such violation occurs or is about to occur.

There may be enjoined in one proceeding any number of defendants that are alleged to be violating the same provisions or orders, although their properties, interests, residences, or places of business may be in several counties and the violations separate and distinct. Any proceeding which is brought pursuant to this section shall be governed in all other respects by the provisions of Chapter 3 (commencing with Section 525), Title 7, Part 2 of the Code of Civil Procedure.”

Cal. Agric. § 56651 (2024)

“(a) Any person that violates any provision of this chapter is liable civilly in the sum of not less than five hundred dollars ($500) or more than one thousand dollars ($1,000) for each and every violation. This sum shall be recovered in an action by the secretary in any court of competent jurisdiction. All sums which are recovered pursuant to this section shall be deposited in the State Treasury to the credit of the Department of Food and Agriculture Fund.

(b) For a violation of the offense described in subdivision (a), the department may recover investigative costs, excluding attorneys’ fees and administrative overhead, for those charges where there has been a conviction in a court of law, or a court-supervised settlement has been reached. Nothing in this section allows the department to recover investigative costs for an administrative licensing action or any action that has not been filed in a court of law.

(c) Any person or entity responsible for investigative costs under this section shall be allowed to audit the department’s investigative costs. The audit must be performed by a third-party certified public accountant and paid for by the person or entity requesting the audit. The department shall promulgate regulations to implement this subdivision by June 1, 2002.”

Cal. Agric. § 56652 (2024)

Colorado

General Requirements

“(1)

(a) Before the commissioner may issue a license to a dealer, the applicant shall file with the commissioner in the sum of not less than two thousand dollars nor more than one million dollars, at the discretion of the commissioner:

(I) A bond executed by the applicant as principal and by a surety company qualified and authorized to do business in this state as a surety; or

(II) An irrevocable letter of credit meeting the requirements of section 11-35-101.5.

(b) The bond or irrevocable letter of credit must be conditioned upon compliance with this part 3 and section 35-36-104 and upon the faithful and honest handling of farm products in accordance with this part 3 and shall cover any fees due the department by the dealer and all costs and reasonable attorney fees incident to any suit upon the bond or irrevocable letter of credit. The bond or irrevocable letter of credit must be to the department in favor of every producer, dealer, small-volume dealer, or owner and, in the instance of a bond, must remain in full force and effect until canceled by the surety upon thirty days’ prior written notice to the commissioner.

…

Colo. Rev. Stat. § 35-36-304(1)(a)-(b), (2) (2025)

Exemptions

“(1)

…

(e) The commissioner shall not require a bond or irrevocable letter of credit from a dealer who pays for farm products in cash or with a bank-certified check, a bank cashier’s check, an irrevocable electronic funds transfer, or a money order at the time the dealer obtains from the owner of the farm products possession or control of the farm products, or of an applicant for a license or a licensee operating under a bond required by the United States to secure the performance of the applicant’s or licensee’s obligations; except that the bond must include all obligations pertaining to Colorado farm products, and the dealer shall furnish documentary evidence to the commissioner that the bond required by the United States is in full force and effect.”

Colo. Rev. Stat. § 35-36-304(1)(e) (2025)

Default

“(1) 

…

(c)

(d) When an action is commenced on the bond or irrevocable letter of credit, the commissioner may require the licensee to file a new bond or irrevocable letter of credit, and failure of the licensee to file the new bond or irrevocable letter of credit within ten days after the commencement of the action constitutes grounds for the suspension or revocation of the licensee’s license.”

Colo. Rev. Stat. § 35-36-304(1)(c)-(d) (2025)

“Whenever, upon sufficient evidence satisfactory to the commissioner, the commissioner determines a person has engaged in or is about to engage in an act or practice constituting a violation of this part 3 or of any rule or order promulgated under this article 36, the commissioner may apply to a court of competent jurisdiction to temporarily or permanently restrain or enjoin the act or practice in question and to enforce compliance with this part 3 or any rule or order pursuant to this article 36. In the action, the commissioner need not plead or prove irreparable injury or the inadequacy of a remedy at law. Under no circumstances shall the court require the commissioner to post a bond.”

Colo. Rev. Stat. § 35-36-312 (2025)

Repeal of Article 36

“This article 36 is repealed, effective September 1, 2025. Before the repeal, the licensing functions of the commissioner are scheduled for review in accordance with section 24-34-104.” 

Colo. Rev. Stat. § 35-36-109 (2025)

Delaware

General Requirements

“All applications shall be accompanied by a license fee of $25 and a good and sufficient bond in the minimum sum of $25,000. In any event, the bond shall be equal to or greater than the maximum amount of gross business done in this State the previous calendar year, but in no event shall the amount of bond required exceed $50,000. After a hearing on any complaint against a licensee, a maximum bond of $100,000 may be required at the discretion of the Secretary. In lieu of the bond, applicants may deposit with the Secretary, United States government securities, irrevocable letters of credit, or appropriate certificate of deposit, satisfactory to the Secretary, to which every producer and/or auction market with whom the licensee does business has recourse on a claim filed in writing with the Department of Agriculture. In lieu of bond Delaware brokers may submit evidence satisfactory to the Secretary that they have net assets in the State with value equal to or exceeding the bonding requirements of this section.”

Del. Code Ann. tit. 3 § 2504 (2024)

“The bond referred to in this chapter shall be executed by the applicant and by a surety company authorized and qualified to do business in this State as surety in favor of the Secretary in the Secretary’s official capacity for the benefit of all producers with whom the applicant shall transact business, for the period that the license is in force. Such bond shall be upon a form prescribed or approved by the Department and shall be conditioned to secure the faithful accounting for payment to producers, agents or representatives, of all agricultural products purchased, handled or sold by the dealer. Any producer claiming to be injured by the nonpayment, fraud, deceit or negligence of any dealer may bring action therefor upon the bond against the principal or the surety, or both, by the filing of a verified complaint. Such verified complaint shall be upon a form prescribed or approved by the Secretary.”

Del. Code Ann. tit. 3 § 2505 (2024)

Exemptions

“All applications shall be accompanied by a license fee of $25 and a good and sufficient bond in the minimum sum of $25,000. In any event, the bond shall be equal to or greater than the maximum amount of gross business done in this State the previous calendar year, but in no event shall the amount of bond required exceed $50,000. After a hearing on any complaint against a licensee, a maximum bond of $100,000 may be required at the discretion of the Secretary. In lieu of the bond, applicants may deposit with the Secretary, United States government securities, irrevocable letters of credit, or appropriate certificate of deposit, satisfactory to the Secretary, to which every producer and/or auction market with whom the licensee does business has recourse on a claim filed in writing with the Department of Agriculture. In lieu of bond Delaware brokers may submit evidence satisfactory to the Secretary that they have net assets in the State with value equal to or exceeding the bonding requirements of this section.”

Del. Code Ann. tit. 3 § 2504 (2024)

Default

“The bond referred to in this chapter shall be executed by the applicant and by a surety company authorized and qualified to do business in this State as surety in favor of the Secretary in the Secretary’s official capacity for the benefit of all producers with whom the applicant shall transact business, for the period that the license is in force. Such bond shall be upon a form prescribed or approved by the Department and shall be conditioned to secure the faithful accounting for payment to producers, agents or representatives, of all agricultural products purchased, handled or sold by the dealer. Any producer claiming to be injured by the nonpayment, fraud, deceit or negligence of any dealer may bring action therefor upon the bond against the principal or the surety, or both, by the filing of a verified complaint. Such verified complaint shall be upon a form prescribed or approved by the Secretary.”

Del. Code Ann. tit. 3 § 2505 (2024)

Florida

General Requirements

“Unless the department refuses the application on one or more of the grounds provided in this section, it shall issue to an applicant, upon the payment of required fees and the execution and delivery of a bond or certificate of deposit as provided in this section, a state license entitling the applicant to conduct business as a dealer in agricultural products for a 1-year period to coincide with the effective period of the bond or certificate of deposit furnished by the applicant. During the 1-year period covered by a license, if the supporting surety bond or certificate of deposit is canceled for any reason, the license shall automatically expire on the date the surety bond or certificate of deposit terminates, unless an acceptable replacement is in effect before the date of termination so that continual coverage occurs for the remaining period of the license. A surety company shall give the department a 30-day written notice of cancellation by certified mail in order to cancel a bond. Cancellation of a bond or certificate of deposit shall not relieve a surety company or financial institution of liability for purchases or sales occurring while the bond or certificate of deposit was in effect. The license fee, which must be paid for the principal place of business for a dealer in agricultural products, shall be based upon the amount of the dealer’s surety bond or certificate of deposit furnished by each dealer under the provisions of s. 604.20 and may not exceed $500. For each additional place in which the applicant desires to conduct business and which the applicant names in the application, the additional license fee must be paid but may not exceed $100 annually. Should any dealer in agricultural products fail, refuse, or neglect to apply and qualify for the renewal of a license on or before the date of expiration thereof, a penalty not to exceed $100 shall apply to and be added to the original license fee and shall be paid by the applicant before the renewal license may be issued. The department by rule shall prescribe fee amounts sufficient to fund ss. 604.15-604.34.”

Fla. Stat. § 604.19 (2024)

Fla. Stat. § 604.20 (2024)

“Each grain dealer doing business in the state shall maintain liquid security, in the form of grain on hand, cash, certificates of deposit, or other nonvolatile security that can be liquidated in 10 days or less, or cash bonds, surety bonds, or letters of credit, that have been assigned to the department and that are conditioned to secure the faithful accounting for and payment to the producers for grain stored or purchased, in an amount equal to the value of grain which the grain dealer has received from grain producers for which the producers have not received payment. The bonds must be executed by the applicant as principal and by a surety corporation authorized to transact business in the state. The certificates of deposit and letters of credit must be from a recognized financial institution doing business in the United States. The department may make at least one spot check annually of each grain dealer to determine compliance with the requirements of this section.”

Fla. Stat. § 604.33 (2024)

Exemptions

“Except for s. 604.22(2), the provisions of ss. 604.15-604.34 do not apply to:

Fla. Stat. § 604.16 (2024)

Default 

“(1)(a) Any person, partnership, corporation, or other business entity claiming to be damaged by any breach of the conditions of a bond or certificate of deposit assignment or agreement given by a dealer in agricultural products as hereinbefore provided may enter complaint thereof against the dealer and against the surety company, if any, to the department, which complaint shall be a written statement of the facts constituting the complaint. Such complaint shall include all agricultural products defined in s. 604.15(1), as well as any additional charges necessary to effectuate the sale unless these additional charges are already included in the total delivered price. Such complaint shall be filed within 6 months from the date of sale in instances involving direct sales or from the date on which the agricultural product was received by the dealer in agricultural products, as agent, to be sold for the producer. No complaint shall be filed pursuant to this section unless the transactions involved total at least $500 and occurred in a single license year. Before a complaint can be processed, the complainant must provide the department with a $50 filing fee. In the event the complainant is successful in proving the claim, the dealer in agricultural products shall reimburse the complainant for the $50 filing fee as part of the settlement of the claim.

…

(e) A dealer in agricultural products who is in compliance with ss. 604.15-604.34 may file a complaint with the department against another licensed dealer in agricultural products. However, payment from a bond or certificate of deposit to a dealer shall occur only after all claims of producers or producers’ agents or representatives have been paid in full except as provided pursuant to paragraph (c).

…

(g) The surety company or financial institution shall be responsible for payment of properly established complaints filed against a dealer, notwithstanding the dealer’s filing of a bankruptcy proceeding.

(2) Upon the filing of a complaint pursuant to this section, the department shall investigate the matters complained of and if, in the opinion of the department, the facts contained in the complaint warrant such action, the department shall serve notice of the complaint to the dealer against whom the complaint has been filed at the last address of record. The notice shall be accompanied by a copy of the complaint. A copy of the notice and complaint shall also be served to the surety company, if any, that provided the bond for the dealer, which surety company shall become party to the action. The notice shall inform the dealer of a reasonable time within which to answer the complaint by advising the department in writing that the allegations in the complaint are admitted or denied or that the complaint has been satisfied. The notice shall also inform the dealer and the surety company or financial institution of a right to a hearing on the complaint, if requested.

…

(6) Any party whose substantial interest is affected by a proceeding pursuant to this section shall be granted a hearing upon request as provided by chapter 120. Such hearing shall be conducted pursuant to chapter 120. The final order of the department, when issued pursuant to the recommended order of an administrative law judge, shall be final and effective on the date filed with the department’s agency clerk. Any party to these proceedings adversely affected by the final order is entitled to seek review of the final order pursuant to s. 120.68 and the Florida Rules of Appellate Procedure. Should a complaint forwarded by the department to the Division of Administrative Hearings be settled prior to a hearing pursuant to chapter 120, the department shall issue a notice closing the complaint file upon receipt of the administrative law judge’s order closing the complaint file, and the matter before the department shall be closed accordingly.

Fla. Stat. § 604.21(1)(a)-(c), (e), (g), (2), (6)-(12) (2024)

Georgia

General Requirements

“Before any license is issued the applicant shall make and deliver to the Commissioner a surety bond executed by a surety corporation authorized to transact business in this state and approved by the Commissioner. Any and all bond applications shall be accompanied by a certificate of “good standing” issued by the Commissioner of Insurance. If any company issuing a bond shall be removed from doing business in this state, it shall be the duty of the Commissioner of Insurance to notify the Commissioner of Agriculture within 30 days. The bond shall be in such amount as the Commissioner may determine, not exceeding an amount equal to the maximum amount of products purchased from or sold for Georgia producers or estimated to be purchased or sold in any month by the applicant; provided, however, that the minimum amount of such bond shall be $10,000.00 and the maximum amount of such bond shall be $230,000.00; provided, further, that in the case of pecans, such bond shall not exceed $500,000.00. Such bond shall be upon a form prescribed or approved by the Commissioner and shall be conditioned to secure the faithful accounting for and payment to producers or their agents or representatives of the proceeds of all agricultural products handled or sold by such dealer. However, in lieu of a surety bond, the Commissioner may accept a cash bond, which shall in all respects be subject to the same claims and actions as would exist against a surety bond. Whenever the Commissioner shall determine that a previously approved bond has for any cause become insufficient, the Commissioner may require an additional bond or bonds to be given, conforming with the requirements of this Code section. Unless the additional bond or bonds are given within the time fixed by written demand therefor, or if the bond of a dealer is canceled, the license of such person shall be immediately revoked by operation of law without notice or hearing and such person shall be ineligible to reapply for such license for a period of four years after such revocation.”

O.C.G.A. § 2-9-5 (2024)

“(a) Before any license is issued, the applicant shall make and deliver to the Commissioner a surety bond in the amount of 20 percent of the average of the highest dollar volume of grain purchases from producers made in any single month for each of the three preceding calendar years or such shorter period of years as the applicant has done business as a grain dealer, provided that the minimum amount of such bond shall be $20,000.00 and the maximum amount of such bond shall be $300,000.00. If a licensed grain dealer operates his or her grain-dealing activities at more than one physical location, he or she shall furnish a surety bond for each location of grain-dealing activities, each bond to be computed as stated in this Code section and each bond to be subject to the minimum and maximum amounts stated in this Code section. The bonds shall be executed by a surety corporation authorized to transact business in this state and approved by the Commissioner. Any and all bond applications shall be accompanied by a certificate of “good standing” issued by the Commissioner of Insurance. If any company issuing a bond shall be removed from doing business in this state, it shall be the duty of the Commissioner of Insurance to notify the Commissioner of Agriculture within 30 days. Such bonds shall be upon forms prescribed by the Commissioner and shall be conditioned to secure the faithful accounting for and payment to the producers or their agents or representatives of the proceeds of all grain handled or sold by such dealer. Whenever the Commissioner shall determine that a previously approved bond has for any cause become insufficient, the Commissioner may require an additional bond or bonds to be given, conforming with the requirements of this Code section. Unless the additional bond or bonds are given within the time fixed by written demand therefor, or if the bond of a dealer is canceled, the license of such person shall be immediately revoked by operation of law without notice or hearing.

…

(c) If the surety bond or cash bond of a licensed grain dealer is canceled, the license of such grain dealer shall immediately be revoked by operation of law without notice or hearing.”

O.C.G.A. § 2-9-34(a), (c) (2024)

Exemptions

“… However, in lieu of a surety bond, the Commissioner may accept a cash bond, which shall in all respects be subject to the same claims and actions as would exist against a surety bond.”

O.C.G.A. § 2-9-5 (2024)

“(b) In lieu of a surety bond, the Commissioner may accept a cash bond which shall be subject in all respects to the same claims and actions as would exist against a surety bond.”

O.C.G.A. § 2-9-34(b) (2024)

Default

“(a) Any person claiming that he or she has been damaged by a breach of the conditions of a bond given by a licensee as provided in Code Section 2-9-5 may enter a complaint to the Commissioner. Such complaint shall be a written statement of the facts constituting the complaint and must be made within 180 days of the alleged breach. If the Commissioner determines that the complaint is prima facie a breach of the bond, and the matter can not be amicably resolved within 15 days, the Commissioner shall publish a solicitation for additional complaints regarding breaches of the bond for a period of not less than five consecutive issues in a newspaper of general circulation and in such other publications as the Commissioner shall prescribe. Additional complaints must be filed within 60 days following initial public notification of a breach of the bond. Civil actions on the breach of such bond shall not be commenced less than 120 days nor more than 547 days from the initial date of public notification of such breach of the bond.

O.C.G.A. § 2-9-6 (2024)

“(a) Any person claiming that he or she has been damaged by a breach of the conditions of a bond given by a licensee as provided in Code Section 2-9-34 may enter a complaint to the Commissioner. Such complaint shall be a written statement of the facts constituting the complaint and must be made within 180 days of the alleged breach. If the Commissioner determines that the complaint is prima facie a breach of the bond, and the matter can not be amicably resolved within 15 days, the Commissioner shall publish a solicitation for additional complaints regarding breaches of the bond for a period of not less than five consecutive issues in a newspaper of general circulation and in such other publications as the Commissioner shall prescribe. Additional complaints must be filed within 60 days following initial public notification of a breach of the bond. Civil actions on the breach of such bond shall not be commenced less than 120 days nor more than 547 days from the initial date of public notification of such breach of the bond.

O.C.G.A. § 2-9-35 (2024)

Idaho

General Requirements

Except as provided in chapter 2, title 69, Idaho Code, an applicant for a license to operate as a commodity dealer shall, before a license will be issued, file with the department a bond in favor of the commodity indemnity fund with a corporate surety approved by the department with the condition that the applicant will pay the purchase price of any agricultural commodity to the seller. The aggregate annual liability of the surety shall in no event exceed the sum of the bond.

…

The amount of bond to be furnished for each commodity dealer shall be fixed at whichever of the following amounts is greater:

(1) The combined total indebtedness paid and owed to producers for agricultural commodity and seed crop for the previous license year; or

(2) The indebtedness owed and estimated to be owed to producers for agricultural commodity and seed crop for the current license year.

Subsequent to determining whichever of the preceding amounts is greater, and based on that amount, the amount of bond shall be calculated as follows:

Gross Dollars:                               Amount of Bond: 

$0 – $450,000                              $20,000 bond or 6% of the gross dollars, whichever is less

$450,001 – $1,000,000              $40,000 bond

$1,000,001 – $8,000,000         $100,000 bond

Over $8,000,000                        $500,000 bond

In any case, the amount of the bond shall not be more than five hundred thousand dollars ($500,000). A surety shall notify the commodity dealer and the department by certified mail at least ninety (90) days prior to the cancellation of a bond issued under the provisions of this chapter. The liability of the surety shall cover purchases made by the commodity dealer during the time the bond is in force. A commodity dealer’s bond filed with this department shall be continuous until canceled by the surety upon ninety (90) days’ notice. The director reserves the right to waive the ninety (90) day cancellation period.

If a commodity dealer is licensed pursuant to chapter 51, title 22, Idaho Code, that same commodity dealer may obtain a single bond, certificate of deposit or irrevocable letter of credit as a surety under chapter 5, title 69, Idaho Code, and chapter 51, title 22, Idaho Code. If a single bond, certificate of deposit or irrevocable letter of credit is written covering chapter 5, title 69, Idaho Code, and chapter 51, title 22, Idaho Code, the bond, certificate of deposit or irrevocable letter of credit shall be made out in favor of the commodity indemnity fund and the seed indemnity fund. In the event a commodity dealer fails as defined in section 69-202(8), Idaho Code, and a single bond, certificate of deposit or irrevocable letter of credit is written in favor of the commodity indemnity fund and seed indemnity fund, the proceeds of the bond, certificate of deposit or irrevocable letter of credit will be allocated based on the dollar amount of the verified claims approved pursuant to chapter 2, title 69, Idaho Code, and chapter 51, title 22, Idaho Code.

Idaho Code § 69-506 (2024)

Exemptions

“Any person currently licensed under chapter 2, title 69, Idaho Code, is exempt from the licensing provisions of this chapter.”

Idaho Code § 69-505 (2024)

“At the discretion of the director, any person required to submit a bond to the department in accordance with this chapter, may give to the department a certificate of deposit or irrevocable letter of credit payable to the commodity indemnity fund in lieu of the bond required herein. The principal amount of the certificate of deposit or irrevocable letter of credit shall be the same as that required for a surety bond pursuant to this chapter. Accrued interest upon the certificate of deposit shall be payable to the purchaser of the certificate. The certificate of deposit or irrevocable letter of credit shall remain on file with the department until it is released, canceled or discharged by the director. The provisions of this chapter that apply to a bond required pursuant to this chapter apply to each certificate of deposit or irrevocable letter of credit given in lieu of such bond. The certificate of deposit or irrevocable letter of credit shall remain on file with the department until it is released, canceled, or discharged by the director, or until the director is notified ninety (90) days in advance, by registered or certified mail, return receipt requested, that the certificate of deposit or irrevocable letter of credit is renewed, canceled or amended. Failure to notify the director may result in the suspension or revocation of the commodity dealer’s license. Under the provisions of this chapter, an irrevocable letter of credit or certificate of deposit shall not be accepted unless it is issued by a national bank or federal thrift institution in Idaho or by a state-chartered bank or thrift institution authorized to conduct business in Idaho and insured by the federal deposit insurance corporation. A certificate of deposit shall be submitted with an audited or reviewed financial statement prepared in accordance with the rules of the department by an independent Idaho certified public accountant or Idaho licensed public accountant.”

Idaho Code § 69-506 (2024) 

Default

“Any producer injured by the breach of any obligation for which a bond, certificate of deposit or irrevocable letter of credit is written, under the provisions of section 69-506, Idaho Code, must petition the director to make demand upon the commodity dealer, certificate of deposit, irrevocable letter of credit or bond. The director may thereupon make demand for payment of such damages and in the event such damages are not promptly paid the director may commence an action to enforce payment of such damages. The liability of the bank on a certificate of deposit or irrevocable letter of credit, and the surety upon the bond required to be given by a commodity dealer as provided by section 69-506, Idaho Code, for any one (1) annual licensing period shall be limited to the amount specified in the bond, certificate of deposit, or irrevocable letter of credit and in case of recoveries had by two (2) or more producers for violation of the conditions of this chapter in excess of the amount of the bond, certificate of deposit, or irrevocable letter of credit, such recovery shall be prorated and the total recovery for any one (1) annual licensing period shall not exceed the amount of the bond, certificate of deposit, or irrevocable letter of credit. In the event the director sues and obtains a judgment against the commodity dealer and/or his surety or bank for payment of such damages under this chapter, he shall be entitled to recover a reasonable attorney’s fee.”

Idaho Code § 69-522 (2024)

Indiana

General Requirements

“(a) Each applicant for a license under this chapter shall, as a condition of licensure, file or have on file with the director:

(1) a cash deposit;

(2) an irrevocable letter of credit;

(3) a bond; or

(4) any combination of the above;

as provided in section 10 of this chapter.

(b) A bond filed under this chapter shall:

(1) be conditioned upon the faithful performance of all obligations of the licensee under this chapter and the rules adopted under this chapter from the effective date of the bond until the earlier of the date the license is revoked or the bond is canceled as provided in this chapter; and

(2) be further conditioned upon the faithful performance of all obligations from the effective date of the bond and thereafter, regardless of whether the licensee’s facility or facilities exist on the effective date of the bond or are thereafter assumed prior to the date the licensee’s license is revoked or the bond is canceled as provided in this chapter.

(c) The bond must remain in effect during a violation, a temporary suspension of the licensee’s license, or a period during which the licensee is subject to a cease and desist order.”

Ind. Code § 26-3-7-9 (2024)

“(a) The minimum amount of bond, letter of credit, or cash deposit required from a licensee is as follows:

(1) For a grain bank license or a warehouse license:

(A) fifty thousand dollars ($50,000); and

(B) ten cents ($0.10) multiplied by the licensed bushel storage capacity of the grain bank or warehouse.

(2) For a grain buyer, including a grain buyer that is also a licensee under the warehouse act:

(A) fifty thousand dollars ($50,000); or

(B) five-tenths percent (0.5%) of the total amount the grain buyer paid for grain purchased from producers during the grain buyer’s most recent fiscal year;

whichever is greater.

(3) For a buyer-warehouse:

(A) an amount equal to the sum of:

(i) fifty thousand dollars ($50,000); and

(ii) ten cents ($0.10) multiplied by the licensed bushel storage capacity of the buyer-warehouse’s facility; or

(B) five-tenths percent (0.5%) of the total amount the buyer-warehouse paid for grain purchased from producers during the buyer-warehouse’s most recent fiscal year;

whichever is greater.

(b) Except as provided in subsections (g) and (h), the amount of bond, letter of credit, or cash deposit required by this chapter may not exceed three hundred twenty-five thousand dollars ($325,000) per license and may not exceed a total of one million two hundred fifty thousand dollars ($1,250,000) per person.

(c) The licensed bushel storage capacity is the maximum number of bushels of grain that the licensee’s facility could accommodate as determined by the director or the director’s designated representative and shall be increased or reduced in accordance with the amount of space being used for storage from time to time.

…

(g) If a licensee has a deficiency in the minimum positive net worth required under section 16(a)(2)(B), 16(a)(3)(B), 16(a)(4)(B), or 16(a)(5)(B) of this chapter, the licensee shall add to the amount of bond, letter of credit, or cash deposit determined under subsection (a) an amount equal to the deficiency or provide another form of surety as permitted under the rules of the agency.

(h) Except as provided in subsections (i) and (j), a licensee may not correct a deficiency in the minimum positive net worth required by section 16(a)(1), 16(a)(2)(A), 16(a)(3)(A), 16(a)(4)(A), or 16(a)(5)(A) of this chapter by adding to the amount of bond, letter of credit, or cash deposit required by subsection (a).

(i) A buyer-warehouse that has a bushel storage capacity of less than one million (1,000,000) bushels or purchases less than one million (1,000,000) bushels of grain per year may correct a deficiency in minimum positive net worth by adding to the amount of bond, letter of credit, or cash deposit determined under subsection (a) if the buyer-warehouse has a minimum positive net worth of at least fifty thousand dollars ($50,000), not including the amount added to the bond, letter of credit, or cash deposit.

(j) A buyer-warehouse that has a bushel storage capacity of at least one million (1,000,000) bushels, or purchases at least one million (1,000,000) bushels of grain per year, may correct a deficiency in minimum positive net worth by adding to the amount of bond, letter of credit, or cash deposit determined under subsection (a) if the buyer-warehouse has a minimum positive net worth of at least one hundred thousand dollars ($100,000), not including the amount added to the bond, letter of credit, or cash deposit.

(k) If the director or the director’s designated representative finds that conditions exist that warrant requiring additional bond or cash deposit, there shall be added to the amount of bond or cash deposit as determined under the other provisions of this section, a further amount to meet the conditions.

…

(m) If a licensee fails to correct a deficiency in minimum net worth within sixty (60) days of receiving a fine under subsection (l), the director may issue a temporary suspension of not more than thirty (30) days. The director or the director’s designated representative shall grant an opportunity for a hearing as soon as possible following a temporary suspension under this subsection.”

Ind. Code § 26-3-7-10(a)-(c), (g)-(k), (m) (2024)

“Whenever the director determines that a previously approved bond, letter of credit, cash deposit, or previously approved insurance is insufficient, the director shall require an additional bond, letter of credit, cash deposit, or insurance to be given by the licensee in the form and upon the terms and conditions required by this chapter and rules adopted under this chapter.”

Ind. Code § 26-3-7-13 (2024)

“(a) A licensee may not cancel an approved bond or approved insurance unless the director has given prior written approval for the cancellation and has received a substitute cash deposit or has approved a substitute bond or insurance. The surety on a bond may cancel a bond required by this chapter only after the expiration of ninety (90) days from the date the surety mailed a notice of intent to cancel, by registered or certified mail, to the director. An insurance company may cancel insurance required by this chapter only after the expiration of a thirty (30) day period from the mailing, by certified mail, of notice of intent to cancel, to the director. The surety and the insurance company shall, at the time of giving notice to the director, send a copy of the notice to the licensee.

(b) Notwithstanding any other provision of this chapter, the license of a licensee shall automatically be suspended for failure to:

(1) file a new bond, letter of credit, or cash deposit within the ninety (90) day period as provided in this section;

(2) file new evidence of insurance within the thirty (30) day period as provided in this section; or

(3) maintain at all times a bond or cash deposit and insurance as provided in this chapter.

The suspension shall continue until the licensee complies with the bonding and insurance requirements of this chapter.”

Ind. Code § 26-3-7-14 (2024)

Exemptions

“(d) Instead of a bond or cash deposit, an irrevocable letter of credit in the prescribed amount may be provided with the director as the beneficiary. The director shall adopt rules under IC 4-22-2 to establish acceptable form, substance, terms, and conditions for letters of credit. The director may not release a party from the obligations of the letter of credit within eighteen (18) months of the termination of the licensee’s license.

(e) The director shall adopt rules under IC 4-22-2 to provide for the receipt and retention of cash deposits. However, the director shall not return a cash deposit to a licensee until the director has taken reasonable precautions to assure that the licensee’s obligations and liabilities have been or will be met.

(f) If a person is licensed or is applying for licenses to operate two (2) or more facilities in Indiana, the person may give a single bond, letter of credit, or cash deposit to satisfy the requirements of this chapter and the rules adopted under this chapter to cover all the person’s facilities in Indiana.

…

(l) If the director or the director’s designated representative finds a deficiency in minimum net worth before the licensee’s next audit by the agency, the director shall issue a notice of deficiency to the licensee stating that the licensee has thirty (30) days to correct the deficiency. If a licensee fails to correct a deficiency in minimum net worth within the thirty (30) day period, the director may issue a fine of not more than one thousand dollars ($1,000).”

Ind. Code § 26-3-7-10(d)-(f), (l) (2024)

Default

“(n) The director may accept, instead of a single cash deposit, letter of credit, or bond, a deposit consisting of any combination of cash deposits, letters of credit, or bonds in an amount equal to the licensee’s obligation under this chapter. The director shall adopt rules under IC 4-22-2 to establish standards for determining the order in which the forms of security on deposit must be used to pay proven claims if the licensee defaults.”

Ind. Code § 26-3-7-10(n) (2024)

“(a) Upon learning of the possibility that a shortage exists, either as a result of an inspection or a report or complaint from a depositor, the agency, based on an on-premises inspection, shall make a preliminary determination as to whether a shortage exists. If a shortage is not discovered, the agency shall treat the audit as it would any other audit.

(b) If it is determined that a shortage may exist, the director or the director’s designated representative shall hold a hearing as soon as possible to confirm the existence of a shortage as indicated by the licensee’s books and records and the grain on hand. Only the licensee, the surety company named on the licensee’s bond, the issuer of the irrevocable letter of credit, and any grain depositor who has made a claim or complaint to the agency in conjunction with the shortage shall be considered as interested parties for the purposes of that hearing, and each shall be given notice of the hearing. At the hearing, the director or the director’s designated representative shall determine whether there appears to be a reasonable probability that a shortage exists. If it is determined that a reasonable probability exists and that the bond or letter of credit proceeds or the cash deposit should be distributed, a preliminary determination shall be entered to the effect that the licensee has failed to meet its obligations under this chapter or the rules adopted under this chapter. At the hearing, the director or the director’s designated representative may order that all proceeds from grain sales are to be held in the form in which they are received and to be kept separate from all other funds held by the licensee. The order may also provide for informal conferences between agency representatives and persons who have or who appear to have grain deposited with the licensee. The surety company shall be permitted to participate in those conferences.

(c) In the event that the director determines that the bond or letter of credit proceeds or cash deposit is to be distributed, the agency shall hold a hearing on claims. Notice shall be given to the surety company named on the licensee’s bond, the issuer of the irrevocable letter of credit, and to all persons shown by the licensee’s books and records to have interests in grain deposited with the licensee. If the agency has actual knowledge of any other depositor or person claiming rights in the grain deposited with the licensee, the bond, the irrevocable letter of credit, or the cash deposit, notice shall also be provided to that person. In addition, public notice shall be provided in newspapers of general circulation that serve the counties in which licensed facilities are located, and notices shall be posted on the licensed premises. At the hearing on claims, the director or the director’s designated representative may accept as evidence of claims the report of agency representatives who in informal conferences with depositors have concluded that a claim is directly and precisely supported by the licensee’s books and records. When there is disagreement between the claims of a depositor and the licensee’s books and records, the director or the director’s designated representative shall hear oral claims and receive written evidence of claims in order to determine the validity of the claim.

(d) Any depositor who does not present a claim at the hearing may bring the claim to the agency within fifteen (15) days after the conclusion of the hearing. However, a depositor who has a claim that was involved in the probate of an estate at the time of the claims hearing has one (1) year from the conclusion of the claims hearing to present the claim to the agency.

(e) Only grain that has been delivered to a first purchaser licensee for sale or storage under a bailment not more than fifteen (15) months before the date of failure of the licensee may be considered by the director or the director’s designated representative in determining the total proven storage and financial obligations due to depositors and the loss sustained by each depositor who has proven a claim.

(f) Following the hearing on claims, the director or the director’s designated representative shall make a determination as to the total proven storage and financial obligations due to depositors and the loss sustained by each depositor who has proven a claim. Depositors found to have proven their claims for storage or financial loss shall be proven claimants. In arriving at that loss, in accordance with section 19 of this chapter, the director shall apply all grain on hand or its identifiable proceeds to meet the licensee’s obligations to grain depositors of grain of that type. Initial determinations of loss shall be made on the amount of grain on hand, or identifiable proceeds, and shall reduce the amount to which a depositor may have a proven claim. With respect to the remaining unfulfilled obligations, the director shall, for the sole purpose of establishing each depositor’s claim under this chapter, establish a date upon which the loss is discovered, shall price the grain as of that date, shall treat all outstanding grain storage obligations not covered by grain on hand or identifiable proceeds as being sold as of that date, and shall determine the extent of each depositor’s loss as being the actual loss sustained as of that date. Grain of a specific type on the premises of a licensee must first be applied to meet the licensee’s storage obligations with respect to that type of grain. If there is insufficient grain of a specific type on hand to meet all storage obligations with respect to that type of grain, the grain that is present shall be prorated in accordance with the procedures described in this section and section 16.8 of this chapter.

(g) Upon the failure of the agency to begin an audit, which would serve as the basis for a preliminary administrative determination, within forty-five (45) days of the agency’s receipt of a written claim by a depositor, a depositor shall have a right of action upon the bond, letter of credit, or cash deposit. A depositor bringing a civil action need not join other depositors. If the agency has undertaken an audit within the forty-five (45) day period, the exclusive remedy for recovery against the bond, letter of credit, or cash deposit shall be through the recovery procedure prescribed by this section.

(h) When the proven claims exceed the amount of the bond, letter of credit, or cash deposit, recoveries of proven claimants shall be prorated in the same manner as priorities are prorated under section 16.8 of this chapter.

(i) The proceedings and hearings under this section may be undertaken without regard to, in combination with, or in addition to those undertaken in accordance with section 17.1 of this chapter.

(j) The findings of the director shall be final, conclusive, and binding on all parties.

(k) The director may adopt rules under IC 4-22-2 to determine how the agency may distribute the interest that may accrue from funds held by the agency for the payment of claims.

(l) A claim of a licensee for stored grain may not be honored until the proven claims of all other claimants arising from the purchase, storage, and handling of the grain have been paid in full.

(m) A claim is considered to be adjudicated if the claimant has:

(1) agreed with the director’s determination on the claim and not filed an appeal under IC 4-21.5-3; or

(2) exhausted the claimant’s administrative appeal and judicial review remedies.

(n) Subject to the requirements under this chapter, if one (1) or more claimants are not paid in full for the claimants’ proven claims, the director shall forward to the Indiana grain indemnity fund board of directors a list of the claimants who are owed money and the balance due each claimant along with a copy of the final order.”

Ind. Code § 26-3-7-16.5 (2024)

Iowa

General Requirements

“1. A person shall not engage in the business of a grain dealer in this state without having obtained a license issued by the department.

2. The type of license required shall be determined as follows:

a. A class 1 license is required if the grain dealer purchases any grain by credit-sale contract, or if the value of grain purchased by the grain dealer from producers during the grain dealer’s previous fiscal year exceeds five hundred thousand dollars. Any other grain dealer may elect to be licensed as a class 1 grain dealer.

b. A class 2 license is required for any grain dealer not holding a class 1 license. A class 2 licensee whose purchases from producers during a fiscal year exceed a limit of five hundred thousand dollars in value shall file within thirty days of the date the limit is reached a complete application for a class 1 license. If a class 1 license is denied, the person immediately shall cease doing business as a grain dealer.

3. An application for a license to engage in business as a grain dealer shall be filed with the department and shall be in a form prescribed by the department. The application shall include the name of the applicant, its principal officers if the applicant is a corporation or the active members of a partnership if the applicant is a partnership and the location of the principal office or place of business of the applicant. A separate license shall be required for each location at which records are maintained for transactions of the grain dealer. The application shall be accompanied by a complete financial statement of the applicant setting forth the assets, liabilities and the net worth of the applicant. The financial statement must be prepared according to generally accepted accounting principles. Assets shall be shown at original cost less depreciation. Upon a written request filed with the department, the department or a designated employee may allow asset valuations in accordance with a competent appraisal. Unpriced contracts shall be shown as a liability and valued at the applicable current market price of grain as of the date the financial statement is prepared.

b. The grain dealer shall submit, as required by the department, a financial statement that is accompanied by an unqualified opinion based upon an audit performed by a certified public accountant licensed in this state. However, the department may accept a qualification in an opinion that is unavoidable by any audit procedure that is permitted under generally accepted accounting principles. An opinion that is qualified because of a limited audit procedure or because the scope of an audit is limited shall not be accepted by the department. The department shall not require that a grain dealer submit more than one such unqualified opinion per year. The grain dealer may elect, however, to submit a financial statement that is accompanied by the report of a certified public accountant licensed in this state that is based upon a review performed by the certified public accountant in lieu of the audited financial statement specified in this paragraph. However, at any time the department may require a financial statement that is accompanied by the report of a certified public accountant licensed in this state that is based upon a review performed by a certified public accountant if the department has good cause. A grain dealer shall submit financial statements to the department in addition to those required in this paragraph if the department determines that it is necessary to verify the grain dealer’s financial status or compliance with this section.

c. A grain dealer shall submit a report to the department according to procedures required by the department, if the grain dealer provides a bond based in part on the number of bushels of unpaid grain purchased by the grain dealer, as provided in rules adopted by the department, in order to satisfy the current assets to current liabilities ratio requirement of this section. The report shall contain information required by the department, including the number of bushels of unpaid grain purchased by the grain dealer. The grain dealer shall submit the report not more than once each month. However, the department may require that a grain dealer submit a report on a more frequent basis, if the department has good cause.

d. The grain dealer shall have and maintain current assets equal to at least one hundred percent of current liabilities or provide a bond under the following conditions:

(1) A grain dealer with current assets equal to at least fifty percent of current liabilities shall provide a bond of two thousand dollars for each one thousand dollars or fraction of one thousand dollars of current assets that the grain dealer is lacking to meet the minimum requirement. After the amount of the bond equals one million dollars, the grain dealer may elect to base the remainder of the amount of the bond on the number of bushels of unpaid grain being purchased by the grain dealer, as provided for by rules which shall be adopted by the department. The remaining amount shall equal two thousand dollars for each one thousand dollars of the highest amount of bushels of unpaid grain purchased by the grain dealer during each month.

(2) A grain dealer with current assets equal to less than fifty percent of current liabilities shall provide a bond of two thousand dollars for each one thousand dollars or fraction of one thousand dollars of current assets that the grain dealer is lacking to meet the minimum requirement. However, the bond shall not be used for longer than thirty consecutive days in a twelve-month period.

6. The department shall adopt rules relating to the form and time of filing of financial statements. The department may require additional information or verification with respect to the financial resources of the applicant and the applicant’s ability to pay producers for grain purchased from them.

7.

a. When the net worth or current ratio of a licensee in good standing is less than that required by this section, the grain dealer shall correct the deficiency or file a deficiency bond or an irrevocable letter of credit within thirty days of written notice by the department. Unless the deficiency is corrected or the deficiency bond or irrevocable letter of credit is filed within thirty days, the grain dealer license shall be suspended.

b. If the department finds that the welfare of grain producers requires emergency action, and incorporates a finding to that effect in its order, immediate suspension of a license may be ordered notwithstanding the thirty-day period otherwise allowed by paragraph “a”.

8. A deficiency bond or irrevocable letter of credit filed with the department pursuant to this section shall not be canceled by the issuer on less than ninety days’ notice by certified mail to the secretary of agriculture and the principal.”

Iowa Code § 203.3 (2024)

“4. c. (2)(a) The bond filed with the department under this paragraph shall be used to indemnify sellers for losses resulting from a breach of a credit-sale contract as provided by rules adopted by the department. The rules shall include but are not limited to procedures and criteria for providing notice, filing claims, valuing losses, and paying claims. The bond provided in this paragraph shall be in addition to any other bond required in this chapter. 

Iowa Code § 203.15(4)(c)(2)(a) (2024)

Exemptions

“4. In order to receive and retain a class 1 license the following conditions must be satisfied: 

a. The grain dealer shall have and maintain a net worth of at least seventy-five thousand dollars, or maintain a deficiency bond or an irrevocable letter of credit in the amount of two thousand dollars for each one thousand dollars or fraction thereof of net worth deficiency. However, a person shall not be licensed as a class 1 grain dealer if the person has a net worth of less than thirty-seven thousand five hundred dollars. 

b. The grain dealer shall submit, as required by the department, a financial statement that is accompanied by an unqualified opinion based upon an audit performed by a certified public accountant licensed in this state.”

“5. In order to receive and retain a class 2 license the following conditions must be satisfied: 

a. The grain dealer shall have and maintain a net worth of at least thirty-seven thousand five hundred dollars, or maintain a deficiency bond or an irrevocable letter of credit in the amount of two thousand dollars for each one thousand dollars or fraction thereof of net deficiency. However, a person shall not be licensed as a class 2 grain dealer if the person has a net worth of less than seventeen thousand five hundred dollars. 

d. The grain dealer shall have and maintain current assets equal to at least one hundred percent of current liabilities or provide a bond … ”

Iowa Code § 203.3(4)(a)-(b), (5)(a), (5)(d) (2024)

“4. c.(1) A grain dealer must meet at least either of the following conditions: (a) The grain dealer’s last financial statement required to be submitted to the department pursuant to section 203.3 is accompanied by an unqualified opinion based upon an audit performed by a certified public accountant licensed in this state. (b) The grain dealer files a bond with the department in the amount of one hundred thousand dollars payable to the department.”

Iowa Code § 203.15(4)(c)(1) (2024)

Default

“5. The department may suspend the right of a grain dealer to purchase grain by credit-sale contract based on any of the following conditions: 

…

c. The grain dealer fails to maintain requirements relating to net worth or fails to maintain a ratio of current assets to current liabilities, as required in section 203.3. 

d. The grain dealer violates this section. 

Iowa Code § 203.15(5)(c)-(d) (2024)

Kentucky

General Requirements

“(1) The department shall not issue or renew a grain dealer or grain warehouse operator license under this chapter until the applicant or licensee has filed with the department satisfactory evidence of financial responsibility.

(2) Evidence of financial responsibility shall:

(a) Consist of:

1. A surety bond, executed by the applicant as principal, and issued by a corporate surety authorized to conduct business in this state;

2. A certificate of deposit issued by a federally insured financial institution in this state;

3. An irrevocable letter of credit issued by a federally insured financial institution in this state;

4. Other security, as deemed acceptable by the department; or

5. Any combination of subparagraphs 1. to 4. of this paragraph, so long as the aggregate value of the evidence meets the requirements of this section;

(b) Be made payable to the board; 

(c) Be in an amount meeting the requirements of this section;

(d) In the case of a bond, be conditioned upon the faithful performance of:

1. All obligations of a licensee under the terms of this chapter and any administrative regulations promulgated under it, from the effective date of the bond until the license is revoked, denied, or suspended or the bond is canceled, whichever comes first; and

2. Any obligations the applicant or licensee may contract for with producers, depositors, or other persons placing grains in the applicant’s or licensee’s facilities, from the effective date of the bond and thereafter, regardless of whether or not the applicant’s or licensee’s facility remains the subject of a valid license;

(e) Be filed with and remain in possession of the department until it is released, canceled, or discharged as provided for by the terms of this chapter and any administrative regulations promulgated under it;

(f) Be kept in force at all times while the licensee is operating as a grain warehouse operator or grain dealer. Failure to keep the bond or other security in force shall be cause for revocation of the license, and shall subject the licensee to criminal penalties set forth in KRS 251.990; and

(g) Contain a provision stating that it may not be canceled by any party, except upon ninety (90) days’ notice in writing to the department. A notice of cancellation shall not affect any liability accrued before the expiration of the notice period.

(3) Separate proof of financial responsibility shall be required for each facility that is licensed by the department. 

(4) For any security used as evidence under subsection (2) of this section that bears interest, the interest shall be made payable to the purchaser of the security.

(5) No person may release, cancel, or discharge security filed with the department under subsection (1) of this section without prior approval of the department and its approval of a substitute bond or other security.

(6) If the department questions a licensee’s ability to pay producers and depositors for grain, or if the department determines that the licensee does not have a sufficient net worth to meet the licensee’s financial obligations, the department shall require the licensee to file additional security with the department in an amount equal to the insufficiency. Failure to post the additional security shall constitute grounds for suspension or revocation of a license.

(7) The amount of the security required by subsection (1) of this section shall be in a principal amount, to the nearest one thousand dollars ($1,000), that is equal to ten percent (10%) of:

(a) For a licensed grain dealer, the aggregate dollar amount:

1. That was paid by the dealer for grain purchased in the dealer’s most recently completed fiscal year; or

2. That the department estimates will be paid by the grain dealer for grain purchased in the grain dealer’s current fiscal year, if records for the grain dealer’s most recently completed fiscal year do not exist or are not available; and

(b) For a licensed grain warehouse operator, the aggregate dollar value of:

1. The grain deposited in the grain warehouse operator’s most recently completed fiscal year; or

2. The grain the department estimates will be deposited in the operator’s warehouse during the current fiscal year, if records for the warehouse operator’s most recently completed fiscal year do not exist or are not available.

(8) In no event shall the required security for a licensee be less than twenty-five thousand dollars ($25,000) nor more than one million dollars ($1,000,000).”

KY. Rev. Stat. Ann. § 251.365 (2024)

Exemptions

“(2) No person shall engage in the business of buying grain from producers for resale, miling, or processing in the Commonwealth without holding a valid grain dealer license issued by the department; provided, however, that no license shall be required in order to buy grain from sellers who are not producers of grain.” 

KY. Rev. Stat. Ann. § 251.355(2) (2024)

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“(1) When the board determines there has been a failure involving a licensed grain dealer or licensed grain warehouse operator, the board shall have the authority to:

(a) Take receivership of any grain on the licensee’s premises to ensure that it is not destroyed, lost, stolen, or otherwise disposed of;

(b) Sell the grain and place the proceeds in escrow for the benefit of the owners, or for the benefits of claimants, when the identities of those persons have been identified;

(c) Establish a priority lien on any grain or other assets that remain in the licensee’s possession, custody, or control;

(d) Secure and take possession of any grains or other commodities in the possession, custody, or control of the failed grain dealer or grain warehouse operator for the purpose of using it to cover outstanding storage obligations. If there is insufficient grain to cover outstanding shortage obligations, the board shall determine each depositor’s pro rata share of the value of the remaining grain. Any remaining deficiency shall be considered a claim of the producer or depositor against the fund, if applicable. Each grade of grain shall be treated separately for the purpose of covering outstanding storage obligations and calculating claims against the fund;

(e) Commence action upon the surety bond, certificate of deposit, letter of credit, or temporary surety as required by KRS 251.365. The board may commence action against both the licensee and the surety or other financial institution in the Franklin Circuit Court or a Circuit Court in the county where the grain is located;

(f) Deposit into the fund any remaining assets of the failed grain dealer or grain warehouse operator for the purpose of using those assets to pay claimants;

(g) Establish a period of time, not less than thirty (30) days and not greater than one (1) year, for potential claimants to file their claims with supporting documentation;

(h) Make a public announcement of the procedure and deadline for potential claimants to file their claims;

(i) Examine timely filed claims and make such investigation as may be necessary for the board to determine whether a claim is a valid claim;

(j) Determine which of the claims that were submitted in advance of the deadline are valid claims;

(k) Assign to each valid claim an initial value computed as a percentage of the value of the grain on the date when it was delivered by the claimant to the licensee, relying on the value established for that grain by the Chicago Board of Trade on the date of delivery. If there is no price information from the Chicago Board of Trade for that grain on that date, then the board shall rely on price information from another exchange in the United States or Canada. If there is no price information from any exchange in the United States or Canada for that grain on that date, the board shall determine an alternative method for determining a value for that grain on that date;

(l) Compute claim values by applying these percentages to each valid claim’s initial value:

1. One hundred percent (100%), for valid claims that are evidenced by a grain warehouse receipt issued by a federally licensed warehouse; or

2. A minimum of ninety percent (90%), for all other valid claims; and

(m) Notify each claimant in writing of the board’s determination as to:

1. The validity of the claim;

2. The value of the grain claimed by the claimant;

3. The amount and percent of value that will be reimbursed by the fund; and

4. The claimant’s right to request a hearing on his or her claim within thirty (30) days of the claimant’s receipt of the written notification.

(2) The board shall not approve for payment from the fund any claims with respect to grains that are not fund-covered grains.

(3) The board shall not compute a claim’s value in reliance on the price or other terms of agreement between a claimant and a licensee.

(4) If a producer or other depositor fails to file a claim within the time announced by the board, then the board and the fund shall not be liable to that depositor.

(5) If the board fails to commence action against the surety bond, certificate of deposit, letter of credit, or temporary surety that KRS 251.365 required the licensee to obtain within thirty (30) days of a depositor making a written demand that the board commence action, then the depositor shall have a right of action against the licensee to recover damages suffered by reason of the licensee’s failure. The depositor shall give the board immediate written notice of the commencement of such action.

(6) The board shall deny payment from the fund to a claimant when the board determines that the claimant:

(a) Elected to opt out of coverage, as permitted by KRS 251.390; or

(b) Engaged in conduct or practices which substantially contributed to the claimant’s financial loss.

(7) A claimant who accepts payment from the fund shall be deemed to have assigned to the board all of the claimant’s rights, title, and interest in the grain and in any judgment with respect to the grain. The board shall have the authority to initiate or maintain any civil action it deems necessary to compel a licensee or a former licensee to repay to the fund any sums disbursed therefrom in relation to a claim.”

KY Rev. Stat. Ann. § 251.400 (2024)

“Any person injured by the violation of any provision in this chapter may bring an action against the person or corporation that committed the violation to recover damages sustained due to the violation without regard to whether or not the person or corporation committing the violation has been subjected to other civil or criminal penalties.”

KY Rev. Stat. Ann. § 251.405 (2024)

Louisiana

General Requirements

“C. The security required by this Chapter shall be in favor of the commission and shall be in the form of one of the following:

(1) A surety bond, issued by a bonding or surety company authorized to do business in this state.

…

E. The security provided by an applicant for a license as a grain dealer or cotton merchant shall be in the amount of fifty thousand dollars.

F. The security furnished by an applicant shall be approved by the commission prior to the issuance of the license.

G. Each form of security shall provide for ninety days written notice to the commission prior to cancellation.

I. The commission shall require every licensee to maintain a sufficient amount of provisional stock insurance issued by an insurance company authorized to do business in this state to provide adequate protection against fire and other disasters, for the full market value of all agricultural commodities physically in the possession of the licensee, which insurance shall provide for thirty days written notice to the commission prior to cancellation.

J.(1) The security and provisional stock insurance shall be

(a) Kept in full force and effect as a condition of continuing licensure.

(b) Open for public inspection by the commission.

(2) The licensee shall pay all fees and expenses involved in providing the security and provisional stock insurance.

K. The commission may suspend or revoke the license of any licensee who fails to maintain the required security and insurance in full force and effect.”

La. Stat. Ann. § 3:3409(C)(1), (E)-(G), (I)-(K) (2024)

Exemptions

“C. The security required by this Chapter shall be in favor of the commission and shall be in the form of one of the following:

(1) A surety bond, issued by a bonding or surety company authorized to do business in this state.

(2) A certificate of deposit from a financial institution whose deposits are insured by an agency of the federal government.

(3) An irrevocable letter of credit from a financial institution whose deposits are insured by an agency of the federal government.

(4) Participation in the Self-Insurance Fund in accordance with and as provided by R.S. 3:3412.

(5) Any other security determined to be adequate by the commission.”

La. Stat. Ann. § 3:3409(C) (2024)

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“H.(1) The commission shall be the sole owner of the security and shall be the sole party entitled to sue upon, recover, or enforce the security. Any other person or party, including, without limitation, any licensee, person, producer, cotton farmer or agent, or creditor who has a claim against a licensee, shall have no ownership or other interest in the security and shall have no right to sue upon, recover, or enforce the security, except pursuant to the commission’s administrative procedures.

(2) The security furnished by each licensee shall be for the exclusive use and benefit of any person, producer, or cotton farmer or agent that has a claim against that licensee pursuant to the provisions of this Chapter and as determined by the commission pursuant to its administrative procedures.

(3) Any claim on the security by a person against a warehouse licensee, a producer against a grain dealer licensee, or a cotton farmer or agent against a cotton merchant licensee shall be submitted to the commission pursuant to its administrative procedures and, after being determined by the commission to be a valid claim under this Chapter, shall be paid from the commission’s recovery on the security.

(4) Should the claim against the licensee not be satisfied in full through the commission’s administrative procedures the claimant shall retain all other rights possessed under the law without prejudice.

(5) Notwithstanding any other provision of law to the contrary, when paying any claim on the security under this Chapter, the commission shall make payments jointly payable to the claimant and to all other secured parties and lienholders that, ten days before the payment date, hold a security interest in or a lien on the crops, farm products, or agricultural commodities, perfected by the filing of a financing statement that:

(a) Identified those crops, farm products, or agricultural commodities as collateral.

(b) Was indexed under that producer’s name as debtor.

(c) Was filed in the office designated for filing a financing statement against the producer covering that collateral.”

La. Stat. Ann. § 3:3409(H) (2024)

Maine

General Requirements

“4. Bond.  In order to insure the licensee’s financial responsibility and to protect producers of licensed commodities, the commissioner shall require the licensee to file a bond in a form and amount satisfactory to the commissioner, but in any event not less than $5,000 nor more than $100,000, payable to the commissioner in his official capacity and conditioned on the full and prompt payment for all licensed commodities received or purchased from producers or other licensees during the effective period of the license.”

ME. Rev. Stat. Ann. tit. 7 § 455(4) (2024)

Exemptions

“1. Producers. Producers are exempt from this subchapter when selling licensed commodities which they have grown, which they are presently growing or which they intend to grow. 

2. Other persons. The commissioner, by rule, may provide an exemption from this subchapter for persons who deal in quantities of licensed commodities sufficiently small so as to not require the imposition of the standards of financial responsibility established by this subchapter.

3. Retailers. A retailer who sells licensed commodities to consumers is exempt from this subchapter with respect to those sales.”

ME. Rev. Stat. Ann. tit. 7 § 458 (2024)

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“If a licensee fails to make payment as provided in section 457, subsection 1, paragraph B, that licensee by reason of the nonpayment is in default as to all producers or licensees whose accounts then remain unpaid and the bond provided for must be forfeited to the extent of all sums then due from the licensee to the producers or licensees. Whenever the commissioner determines that a licensee has failed to make payment, the commissioner shall provide notice, in a manner consistent with the Maine Administrative Procedure Act, that payment under the bond will be sought and indicating the time within which other producer or licensee claims may be made known to the commissioner. Upon determination of the commissioner that there has been a default in payment by a licensee, the conditions of the bond are deemed to be broken and the commissioner may bring action on the defaulted bond for the benefit of producers or licensees. Whenever the amount of the bond is not sufficient to cover all valid claims, the commissioner shall distribute the amount available on a pro rata basis.” 

ME. Rev. Stat. Ann. tit. 7 § 459 (2024)

Maryland

General Requirements 

“(a) A license may not be issued or renewed under this subtitle until the applicant has: 

(1) (i) Filed with the Secretary a financial statement, as provided in subsection (b) of this section, establishing the net worth of the applicant’s grain business; or 

(ii) Posted a surety bond, irrevocable letter of credit, or cash guaranty at least as large as the following amounts for the different types of licenses: Type of license Minimum amounts A $ 15,000 B $ 35,000 C $100,000 D $100,000; and 

(2) Demonstrated proof of insurance coverage as required by this subtitle. 

(b) (1) An applicant for a Type A or B license shall submit a financial statement that: 

(i) Is prepared and signed by a person other than the applicant or a member of the applicant’s business or family; 

(ii) Establishes a net worth for the applicant; and 

(iii) Is signed by the applicant. 

(2) A Type C or D license may not be issued or renewed under this subtitle until the applicant has: 

(i) Filed with the Secretary a financial statement reviewed by a certified public accountant establishing the net worth of the applicant’s business as provided in paragraph (3) of this subsection; or

(ii) Filed with the Secretary a letter from a certified public accountant stating that a review of the applicant’s business records shows a net worth as provided in paragraph (3) of this subsection. 

(3) The financial statement shall indicate a minimum net worth for each type of grain dealer’s license as follows:

Type of License           Minimum amounts

A                                     $ 15,000

B                                     $35,000

C                                     $100,000

D                                    $100,000″

MD. Code Ann., Agric. § 13-212 (2024)

Exemptions

“(a) A license may not be issued or renewed under this subtitle until the applicant has: 

(1) (i) Filed with the Secretary a financial statement, as provided in subsection (b) of this section, establishing the net worth of the applicant’s grain business; or 

(ii) Posted a surety bond, irrevocable letter of credit, or cash guaranty at least as large as the following amounts for the different types of licenses: …”

MD. Code Ann., Agric. § 13-212(a)(1) (2024)

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N/A 

Michigan

General Requirements 

“(1) Before a license is issued to a grain merchandiser or farm produce trucker, the grain merchandiser or farm produce trucker shall provide a bond to the department in the amount of $100,000.00.

(2) A bond provided under this section shall name the department as payee, be executed by the applicant as principal, and be issued by a surety authorized to conduct business in this state. The department shall prescribe the form and terms and conditions of the bond.

(3) A bond provided under this section shall secure the faithful performance of the grain merchandiser or farm produce trucker of his or her obligations in any farm produce transaction outstanding on or after the effective date of the bond and outstanding at the time the license of the grain merchandiser or farm produce trucker is revoked or the bond is canceled as provided in this act, whichever occurs first. The bond shall secure the faithful performance by the grain merchandiser or farm produce trucker of those obligations whether the grain merchandiser or farm produce trucker is licensed or not.

(4) The total aggregate liability of a surety under a bond provided under this section is limited to the amount of the bond without regard to the number of claimants involved in a transaction in which a claim on the bond is made. The liability of a surety on a bond provided under this section shall not accumulate for any successive license period. 

…

(6) If the department determines that a bond previously provided under this section is insufficient, the department shall require that the grain merchandiser or farm produce trucker provide an additional bond. The additional bond shall be in an amount determined by the department and conform with all other requirements of this section.

(7) A grain merchandiser or farm produce trucker shall not cancel a bond required by this section without the consent of the department and the department’s prior approval of a substitute bond.

(8) The surety on a bond required by this section may not cancel the bond unless it sends a notice of intent to cancel to the department more than 60 days before it cancels the bond. If the department receives a notice from a surety under this subsection, it shall promptly notify the grain merchandiser or farm produce trucker that provided the bond. The department shall revoke the license of a grain merchandiser or farm produce trucker who fails to provide a new bond within 60 days after the department receives notice of intent to cancel from a surety.”

Mich. Comp. Laws § 285.88(1)-(4), (6)-(8) (2024)

“(3) Subject to subsection (4), the department may refuse to issue or renew a license to a grain dealer unless the grain dealer meets at least 1 of the following at the time the grain dealer submits the application:

(a) Has allowable net assets of $100,000.00 or more and handled 1,000,000 or fewer bushels of farm produce in the grain dealer’s most recent fiscal year.

(b) Has allowable net assets of $100,000.00 or more, and the allowable net assets equal or exceed the product of 10 cents multiplied by the number of bushels of farm produce handled by the grain dealer in the grain dealer’s most recent completed fiscal year.

(4) If a grain dealer fails to meet any of the allowable net asset requirements under subsection (3), the department may issue or renew the license if the grain dealer provides the department with a negotiable bond issued by a surety authorized to conduct business in this state, or proof of establishment of a restricted account in a financial institution that conducts business in this state, acceptable to the department and of which the department is the sole beneficiary, that is in an amount equal to the amount by which the grain dealer’s allowable net assets failed to meet the allowable net asset requirement applicable under subsection (3).”

Mich. Comp. Laws § 285.63(3)-(4) (2024)

Exemptions

“(5) A grain merchandiser or farm produce trucker required to provide a bond to the department under this section may at his or her option provide the department with a certificate of deposit or other security acceptable to the department in lieu of all or part of the bond, payable to the department as trustee. The principal amount of the certificate of deposit or other security provided, or the aggregate amount of the bond provided and the principal amount of the certificate of deposit or other security provided, shall be the same as the amount of the bond otherwise required under this section. The interest on the certificate of deposit or other security provided under this subsection shall be made payable to the grain merchandiser or farm produce trucker or other purchaser of the certificate of deposit or other security. The certificate of deposit or other security shall remain on deposit until it is released, canceled, or discharged as provided for by rule of the department. The provisions of this section that apply to a bond required under this section apply to a certificate of deposit or other security provided under this subsection.”

Mich. Comp. Laws § 285.88(5) (2024)

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“(5) A person that acts or offers to act as a grain dealer without a license is guilty of a misdemeanor. Each day that the person acts or offers to act as a grain dealer without a license is a separate misdemeanor.

(6) If the director has probable cause to believe that a person is acting or offering to act as a grain dealer without a license, the director may review the books and records relating to the operations of the person.

(7) On the application of the department, a court in this state shall issue a temporary or permanent injunction that enjoins a person from acting as a grain dealer without a license, issuing a warehouse receipt or price later agreement without a license, or interfering with an employee of the department or a receiver appointed under this act that is performing his or her duties under this act.”

Mich. Comp. Laws § 285.63(5)-(7) (2024)

Minnesota

General Requirements

“Subd. 5a. Grain purchases from unlicensed producers. No grain buyer may refuse to purchase grain from a producer solely because the producer is not bonded or is not licensed by the commissioner; provided, that any producer who buys grain from other producers shall be licensed and bonded as required by this chapter.

…

Subd. 7a.Bond requirements. For entities licensed under this chapter and chapter 232, the bond requirements and actions against the bond are governed under section 223.28.”

Minn. Stat. § 223.17(5a), (7a) (2024)

“(a) Except as provided in paragraph (b), before the commissioner issues a grain buyer or public grain warehouse operator license, a person who has not been licensed to buy grain or operate a public grain warehouse in the previous licensing period must file with the commissioner a grain bond in a penal sum of $100,000. A grain bond must remain in effect for the first three years of the license.

(b) A grain buyer who purchases grain immediately upon delivery solely with cash; a certified check; a cashier’s check; or a postal, bank, or express money order is exempt from this subdivision if the grain buyer’s gross annual purchases are $1,000,000 or less.

(c) The commissioner may require a supplemental bond in an amount prescribed by the commissioner based on the financial statements required in section 223.17, subdivision 6.

(d) A grain bond must be on a form provided by the commissioner.

(e) A grain bond required under paragraphs (a) and (c) must provide for the payment of any loss caused by the grain buyer’s failure to pay upon the owner’s demand, including loss caused by the grain buyer’s failure to pay within the time required. The grain bond must be conditioned upon the grain buyer being duly licensed.

(f) A grain bond required under paragraphs (a) and (c) that is obtained by a public grain warehouse operator must be conditioned that the public grain warehouse operator issuing a grain warehouse receipt is liable to the depositor for the delivery of the kind, grade, and net quantity of grain called for by the receipt. A grain bond must be conditioned upon the operator being duly licensed.

(g) A grain bond must not be cumulative from one licensing period to the next. The maximum liability of the grain bond must be the grain bond’s face value for the licensing period.

(h) A grain bond must be continuous until canceled. To cancel a grain bond, a surety must provide 90 days’ written notice of the grain bond’s termination date to the licensee and the commissioner.

(i) Upon the commissioner’s determination that a claim is valid, the surety for any claims against the grain bond must make payments to the grain indemnity account.”

Minn. Stat. § 223.28 (2024)

Exemptions

“Subd. 6. Financial statements. (c) A grain buyer who purchases grain immediately upon delivery solely with cash; a certified check; a cashier’s check; or a postal, bank, or express money order is exempt from this subdivision if the grain buyer’s gross annual purchases are $1,000,000 or less.”

Minn. Stat. § 223.17(6)(c) (2024)

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“Subd. 7. Breach of contract. A producer claiming to be damaged by a breach of a contract for the purchase of grain by a grain buyer may file a written claim with the commissioner. The claim must state the facts constituting the claim. If a claim is valid, the commissioner may immediately suspend the license, in which case the licensee shall surrender the license to the commissioner. Within 15 days the licensee may request an administrative hearing subject to chapter 14 to determine whether the license should be revoked. If no request is made within 15 days, the commissioner shall revoke the license.

…

Subd. 9. Defaults; violations. It is a violation under this chapter if the commissioner finds, after an investigation is conducted, that a complaint is valid or that a licensee is in violation of the provisions of this chapter.”

Minn. Stat. § 223.17(7),(9) (2024)

Mississippi

General Requirements

Missouri

General Requirements

 “1. Every person licensed as a grain dealer shall have filed with the director a surety bond executed and signed by the grain dealer as principal and issued by a responsible corporate surety licensed to execute surety bonds in the state of Missouri.  It is a violation of sections 276.401 to 276.582 for any person to engage in the business of being a grain dealer without a sufficient surety bond on file with the department, on a form prescribed and furnished by the director.

2. Such bond shall be in favor of the state of Missouri, except as authorized by section 276.581, with the director as trustee for the benefit of all persons selling grain to the grain dealer, and their legal representatives, attorneys or assigns, and shall be conditioned upon the following:

(1) The dealer as a buyer paying to the seller the agreed-upon purchase price of the grain purchased from the seller where title to said grain transferred from the seller to the buyer within the state of Missouri;

(2) The grain dealer’s faithful performance of his duties as a licensed grain dealer and his compliance with sections 276.401 to 276.582 and regulations promulgated hereunder.  This section applies to purchases made from the effective date of the bond until the bond is cancelled, except as otherwise provided in sections 276.401 to 276.582;

(3) The bond required by this section shall cover the agreed-upon minimum price of any valid minimum price contract;

(4) The bond required by this section shall not cover payment for any promissory note accepted by the seller of grain.  To be considered a promissory note, the note must contain the signature of both seller and buyer, date the note was executed, dollar amount of the note, payment terms and interest rate.

3. A surety bond required or allowed by sections 276.401 to 276.582 shall be effective on the date of issue, shall not be affected by the expiration of the license period, and shall continue in full force and effect until cancelled.  The continuous nature of a bond, however, shall in no event be construed to allow the liability of the surety under a bond to accumulate for each successive license period during which the bond is in force, but shall be limited in the aggregate to the amount stated on the bond or as changed, from time to time, by appropriate endorsement or rider.

4. The required bond shall be kept in force at all times while the dealer is conducting business as a licensed grain dealer.  Failure to keep such bond in force is cause for revocation of the license, and the dealer is subject to the penalties provided in this chapter.  No dealer may cancel an approved bond without the prior written approval of the director and the director’s approval of a substitute bond.

5. A grain dealer filing bonds required under sections 276.401 to 276.582, or regulations promulgated thereunder who is also licensed under chapter 411 shall utilize the same corporate surety for all bonds required to be licensed under chapter 411 and as a grain dealer.

6. Upon written demand of the director for payment, the surety shall either pay over to the director the sum demanded up to the full face amount of the bond, or shall deposit the sum demanded in an interest-bearing escrow account at the highest rate of interest available.  When a surety pays the director upon demand, the director shall either interplead the sum in court or hold an administrative hearing for the determination of the liability of the surety, and the validity of claims against the bond, and upon the conclusion thereof, the director shall distribute the bond proceeds accordingly.  The determination of the director shall be final, subject to the surety’s or a claimant’s right to appeal to the circuit court pursuant to the provisions of chapter 536. Refusal or failure of the surety to pay the sum demanded to the director within ten days of receipt of the director’s demand letter or the refusal or failure to deposit the sum demanded in an interest-bearing escrow account at the highest rate of interest available, shall be grounds for withdrawal of the surety’s license and authorization to conduct business in this state, and grounds for the court to penalize the surety, for refusal to pay or to deposit within the ten days of demand, in the amount of twenty-five percent of the full face amount of the bond, plus interest at the rate of nine percent, or at the rate that the director can establish he would have received had the money been paid or deposited by the surety, whichever rate of interest is higher.  In the event that the surety pays as demanded and the director or court determines the surety is not liable, the director shall return to the surety the sum paid to the director plus all accumulated interest, or any pro rata part of the sum, plus interest, as applicable in the event of liability less than the sum demanded.  In the event that the surety elects to deposit the demanded sum in an interest-bearing escrow account and the director holds an administrative hearing determining the liability of the surety and the validity of claims, and upon the exhaustion of appeals, if any, the surety immediately shall pay to the director for distribution to claimants the amount for which the surety has been determined to be liable plus accumulated interest on that amount.

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9. Verbal or written surety bond binders issued by a surety on behalf of a grain dealer for original or replacement bonds are hereby recognized as legally effective in the state of Missouri as if the bond were fully executed when such binders meet the following conditions:

(1) The dealer or principal has paid, or has promised to pay, the surety an agreed upon or tentatively agreed upon premium or other consideration;

(2) The surety provides the department, either in writing or verbally:

(a) A bond number;

(b)  The amount of the bond;

(c)  The effective date of the bond;

(d) Either verbal or written assurance that the person providing the preceding information has authority to commit the surety.  Such binders may be cancelled only in the manner provided in subsection 8 of this section. The director may or may not accept such a binder depending on the particular circumstances involved and consistent with the orderly administration of this chapter.”

Mo. Rev. Stat. § 276.426(1)-(6), (9) (2024)

“1. The total amount of the surety bond required of a dealer licensed pursuant to sections 276.401 to 276.582 shall be established by the director by rule, but in no event shall such bond be less than fifty thousand dollars nor more than six hundred thousand dollars, except as authorized by other provisions of sections 276.401 to 276.582.

2. The formula for determining the amount of bond shall be established by the director by rule and shall be computed at a rate of no less than the principal amount to the nearest one thousand dollars, equal to two percent of the aggregate dollar amount paid by the dealer for grain purchased in the state of Missouri and those states with whom Missouri has entered into contracts or agreements as authorized by section 276.566 during the dealer’s last completed fiscal year, or, in the case of a dealer who has been engaged in business as a grain dealer for less than one year or who has not previously engaged in such business, two percent of the estimated aggregate dollar amount to be paid by the dealer for grain purchased in the state of Missouri and those states with whom Missouri has entered into contracts or agreements as authorized by section 276.566 during the applicant’s initial fiscal year.

3. Any licensed grain dealer or applicant who has, at any time, a net worth less than the amount required by subsection 7 of section 276.421 shall be required to obtain a surety bond in the amount of one thousand dollars for each one thousand dollars or fraction thereof of the net worth deficiency.  Failure to post such additional bond is grounds for refusal to license or the suspension or revocation of a license issued under sections 276.401 to 276.582. This additional bond can be in addition to or greater than or both in addition to and greater than the maximum bond as set by this section.

4. The director may, when the question arises as to a grain dealer’s ability to pay for grain purchased, require a grain dealer to post an additional bond in a dollar amount deemed appropriate by the director.  Such additional bond can be in addition to or greater than or both in addition to and greater than the maximum bond as set by this section. The director must furnish to the dealer, by certified mail, a written statement of the reasons for requesting additional bond and the reasons for questioning the dealer’s ability to pay.  Failure to post such additional bond is a ground for modification, suspension or revocation by the director of a license issued under sections 276.401 to 276.582. The determination of insufficiency of a bond and of the amount of the additional bond shall be based upon evidence presented to the director that a dealer:

(1) Is or may be unable to meet his dollar or grain obligations as they become due;

(2) Has acted or is acting in a way which might lead to the impairment of his capital;

(3) As a result of his activity, inactivity, or purchasing and pricing practices and procedures, including, but not limited to, the dealer’s deferred pricing or deferred payment practices and procedures, is or may be unable to honor his grain purchase obligations arising out of his dealer business.  The amount of the additional bond required under this subsection shall not exceed the amount of the dealer’s current loss position. Current loss position shall be the sum of the dealer’s current liabilities less current assets or the amount by which he is currently unable to meet the grain purchase obligations arising out of his dealer business.

5. One bond, cumulative as to minimum requirements, may be given where a dealer has multiple licenses; except however, that in computing the amount of the single bond the grain dealer may add together the total purchases of grain of all locations to be covered thereby and use the aggregate total purchases for the fiscal year for the purpose of computing bond.  However, this single cumulative bond must be at least equal to fifty thousand dollars per dealer license issued up to the six hundred thousand dollar maximum bond amount specified in subsection 1 of this section. When a grain dealer elects to provide a single bond for a number of licensed locations, the total assets of all the licensed locations shall be subject to liabilities of each individual licensed location. 

6. Failure of a grain dealer to provide and file a bond and financial statement and to keep such bond in force shall be grounds for the suspension or revocation, by the director, of a license issued under sections 276.401 to 276.582.

7. A dealer shall be required to post additional surety bond when he surpasses the estimated aggregate dollar amount to be paid for grain purchased as set forth in subsection 2 of this section.  Such additional bond shall be determined by the director so as to effectively protect sellers of grain dealing with such dealer.”

Mo. Rev. Stat. § 276.436 (2024)

“Any bond required by sections 276.401 to 276.581 may be made copayable to any state with whom Missouri has entered into contracts or agreements as authorized by section 276.566, for the benefit of sellers of grain in that state.”

Mo. Rev. Stat. § 276.581 (2024)

Exemptions

“2. A grain dealer may, in lieu of the bond required under this chapter, submit an irrevocable letter of credit, payable to the director for the benefit of claimants, and issued by a federally or state chartered bank.  The director may refuse to accept a letter of credit in lieu of the bond required by this chapter if the director finds that the issuing bank is or may become insolvent, or for any other reason may be unable to honor the terms of the letter of credit.  The director may require an issuing bank to submit evidence of its financial condition, and the director may seek the cooperation of the division of finance in evaluating the financial condition of an issuing bank. The director shall promulgate all necessary regulations pertaining to certificates of deposit, and irrevocable letters of credit.”

Mo. Rev. Stat. § 276.431(2) (2024)

“1. Any grain dealer who is of the opinion that his net worth is sufficient to guarantee payment for grain purchased by him may make a formal, written request to the director that he be relieved of the obligation of filing a bond in excess of the minimum bond of fifty thousand dollars.  Such request shall be accompanied by a financial statement of the applicant, prepared within four months of the date of such request and accompanied by such additional information concerning the applicant and his finances as the director may require which may include the request for submission of a financial statement audited by a public accountant.

2. If such financial statement discloses a net worth equal to at least five times the amount of the bond otherwise required by sections 276.401 to 276.582, and the director is otherwise satisfied as to the financial ability and resources of the applicant, the director may waive that portion of the required bond in excess of fifty thousand dollars for each license issued.”

Mo. Rev. Stat. § 276.441 (2024)

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“3. Upon written demand of the director for payment, the bank shall either pay over to the director the sum demanded, up to the full face amount of the irrevocable letter of credit, or shall deposit the sum demanded in an escrow account at the highest rate of interest available.  When a bank pays the director upon demand, the director shall either interplead the sum in court or hold an administrative hearing for the determination of the liability of the bank and the validity of the claims against the irrevocable letter of credit, and upon the conclusion thereof, the director shall distribute the irrevocable letter of credit proceeds accordingly.  The determination of the director shall be final, subject to the licensee’s or claimant’s right to appeal to the circuit court pursuant to the provisions of chapter 536. Refusal or failure of the issuing bank to pay the sum demanded to the director within three days of the bank’s receipt of such written demand shall result in a penalty assessment of ten percent of the amount demanded, up to the full face amount of the irrevocable letter of credit, per week until the amount demanded and the penalty are paid.  When funds have been received, and the director or court determines that the bank is not liable for claims against the irrevocable letter of credit, the director shall return to the bank the sum paid to the director and all accumulated interest earned, minus any penalties due or paid. In the event that the liability is less than the sum demanded, the director shall return the appropriate pro rata portion of the funds received, and interest earned as applicable.”

Mo. Rev. Stat. § 276.431(3) (2024)

“6. Upon written demand of the director for payment, the surety shall either pay over to the director the sum demanded up to the full face amount of the bond, or shall deposit the sum demanded in an interest-bearing escrow account at the highest rate of interest available.  When a surety pays the director upon demand, the director shall either interplead the sum in court or hold an administrative hearing for the determination of the liability of the surety, and the validity of claims against the bond, and upon the conclusion thereof, the director shall distribute the bond proceeds accordingly.  The determination of the director shall be final, subject to the surety’s or a claimant’s right to appeal to the circuit court pursuant to the provisions of chapter 536.  Refusal or failure of the surety to pay the sum demanded to the director within ten days of receipt of the director’s demand letter or the refusal or failure to deposit the sum demanded in an interest-bearing escrow account at the highest rate of interest available, shall be grounds for withdrawal of the surety’s license and authorization to conduct business in this state, and grounds for the court to penalize the surety, for refusal to pay or to deposit within the ten days of demand, in the amount of twenty-five percent of the full face amount of the bond, plus interest at the rate of nine percent, or at the rate that the director can establish he would have received had the money been paid or deposited by the surety, whichever rate of interest is higher.  In the event that the surety pays as demanded and the director or court determines the surety is not liable, the director shall return to the surety the sum paid to the director plus all accumulated interest, or any pro rata part of the sum, plus interest, as applicable in the event of liability less than the sum demanded.  In the event that the surety elects to deposit the demanded sum in an interest-bearing escrow account and the director holds an administrative hearing determining the liability of the surety and the validity of claims, and upon the exhaustion of appeals, if any, the surety immediately shall pay to the director for distribution to claimants the amount for which the surety has been determined to be liable plus accumulated interest on that amount.

7. Every bond filed shall contain a provision that it may not be cancelled by the principal or surety company except upon ninety days’ prior notice in writing, by certified mail, to the director at his Jefferson City office.  In the case of a surety giving notice of cancellation, a copy of such notice shall be mailed, by certified mail, on the same day to the principal.  The cancellation does not affect the liability accrued or which may accrue under such bond before the expiration of the ninety days.  The notice shall contain the termination date.  In the event such notice procedures are not followed, the bond shall remain in full force and effect until properly cancelled.

8. Whenever the director receives notice from a surety that it intends to cancel the bond of a dealer, the director shall automatically suspend the dealer’s license if a new bond is not received by the director within thirty days of receipt of the notice of intent to cancel.  If a new bond is not received within sixty days of receipt of the notice of intent to cancel, the director shall revoke the dealer’s license.  The director may cause an inspection of the grain dealer at the end of this sixty-day period.  Such inspection may include an attempt to identify all possible grain sellers and related claimants of the dealer by advertising for same in local news media.”

Mo. Rev. Stat. § 276.426(6)-(8) (2024)

Montana

General Requirements

“(1) An applicant for a license to operate as a commodity dealer shall, before a license may be issued, file with the department a surety bond or its equivalent, as established by department rule, payable to the state.

(2) Except as provided in 80-4-601(5)(b) and subsection (3) of this section:

(a) the bond for a commodity dealer may not exceed 2% of the value of the agricultural commodities purchased by the commodity dealer from the producer during the previous 12-month period;

(b) the bond for all new applicants is 2% of the estimated value of all agricultural commodities to be purchased during the coming 12-month period; and

(c) the minimum amount of bond required by any commodity dealer is $20,000 and the maximum is prescribed in 80-4-405.

(3) (a) A commodity dealer acting as a broker and contracting or otherwise conducting business with a commodity dealer licensed in Montana shall post the minimum amount of bond pursuant to subsection (2)(c).

(b) A commodity dealer acting as a broker and contracting or otherwise conducting business with a buyer not licensed as a commodity dealer in Montana shall:

(i) post the maximum amount of bond required by 80-4-405; and

(ii) be held jointly liable with the buyer for failure to comply with terms of a written contract or failure to pay for a commodity purchase under an oral agreement pursuant to 80-4-612.

(4) A surety shall notify the commodity dealer and the department by certified mail at least 60 days prior to the cancellation of the bond. A commodity dealer’s bond filed with the department is continuous until canceled by the surety upon 60 days’ notice; however, cancellation does not terminate any liability of the surety incurred prior to the date of cancellation.”

Mont. Code Ann. § 80-6-604 (2023)

“The maximum amount of any public warehouse operator bond may not exceed $1 million and the maximum amount of a commodity dealer bond may not exceed $1 million, except:

(1) any bonds compensating for equity or working capital deficiencies prescribed in parts 5 and 6 of this chapter must be added to the maximum bond amount. If the public warehouse operator is also licensed as a commodity dealer, only one bond amount is required.

(2) if required as part of a commodity warehouse operator’s or commodity dealer’s license modified by the department pursuant to 80-4-421.”

Mont. Code Ann. § 80-4-405 (2023)

Exemptions

N/A

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“(1) All claims against a bond must be made by and through the department. A person injured by the breach of an obligation for which a bond is given to the department may file a complaint with the department. The department shall then investigate the complaint and determine whether it is valid and whether there are any other outstanding obligations due. If the department finds that there are one or more valid obligations, the department shall make demand upon the warehouse operator or commodity dealer and the commodity dealer’s surety for payment. If the payment is not made promptly, the department shall commence an action on the bond to enforce payment. If the department determines that a complaint is without merit, the department shall notify the complainant of that determination in writing. The complainant may then bring a contested case under Title 2, chapter 4, part 6, to the department for a determination of whether the department should pursue the claim against the bond.

(2) If two or more persons are injured by breach of the obligation for which the bond is given and the damages for violating the conditions of the bond exceed the specified amount of the bond, the recovery on the bond must be prorated by the surety among all of those injured.

(3) The liability of a surety under a bond extends to all obligations from commodity dealers’ or public warehouse operators’ transactions entered into during the year in which the bond was in effect, up to the maximum amount of the bond. Claims must be brought against the bond within 2 succeeding license years.”

Mont. Code Ann. § 80-4-425(1)-(3) (2023)

“(1) If the department finds that a commodity dealer has failed to comply with the terms of a written contract or has failed to pay for a commodity purchase under an oral agreement in the manner and within the time provided in 80-4-608, the department may petition the district court of the first judicial district, Lewis and Clark County, for an order authorizing the department to seize and take possession of:

(a) any agricultural commodities in the facilities owned, operated, or controlled by the commodity dealer;

(b) all books, papers, and property used in connection with the operation of the commodity dealer business; and

(c) any material that pertains in any way to that business.

(2) If during or after an audit or at any other time the department has evidence that the commodity dealer is insolvent or is unable to satisfy the claims of all commodity dealer creditors covered by the bond, the department may petition the district court of the first judicial district, Lewis and Clark County, for the appointment of the department to operate or liquidate the business of the commodity dealer.

(3) All necessary expenses incurred by the department in carrying out the provisions of this part may be recovered at the discretion of the department from:

(a) the bond;

(b) the assets of the licensee;

(c) the agricultural commodities delivered for purchase but not yet paid for; or

(d) in a separate civil action brought by the department in the first judicial district court.

(4) The department is authorized to include as part of the recoverable expenses the cost of adequate liability insurance necessary to protect the department, its officers, and others engaged in carrying out the provisions of this part.”

Mont. Code Ann. § 80-4-612 (2023)

“A person injured by the breach of an obligation for which the bond is given may file a claim with the department. Claims will be accepted only from producers and for agricultural commodities grown in Montana.”

Mont. Code Ann. § 80-4-614 (2023)

Nebraska

General Requirements

“All grain dealers doing business in this state shall be licensed by the commission. If the applicant is an individual, the application shall include the applicant’s social security number. To procure and maintain a license, each grain dealer shall:

…

(2) File security which may be a bond issued by a corporate surety company and payable to the commission, an irrevocable letter of credit, or a certificate of deposit, subject to the approval of the commission, for the benefit of any producer who files a valid claim arising from a sale to a grain dealer. The security shall be in an amount set by the commission of not less than thirty-five thousand dollars and not more than one million dollars. Amounts used in the calculation of the security shall include all direct delivery grain purchases and exchanges valued on the date delivery is made. Amounts used in the calculation of the security shall not include any transactions in which direct delivery grain is exchanged for a post-direct delivery storage position and the post-direct delivery storage position is created by an in-store transfer on the same date as the delivery of the direct delivery grain. Such security shall be furnished on the condition that the licensee will pay for any grain purchased upon demand, not later than fifteen days after the date of the last shipment of any contract. The liability of the surety shall cover purchases made by the grain dealer during the time the bond is in force. A grain dealer’s bond filed with the commission shall be in continuous force and effect until canceled by the surety. The liability of the surety on any bond required by this section shall not accumulate for each successive license period during which the bond is in force …”

Neb. Rev. Stat. § 75-903(2) (2024)

“(1) No seller shall have recourse to the grain dealer’s security unless the seller:

(a) Demands payment from the grain dealer within fifteen days after the date of the last shipment of any contract;

(b) Negotiates any negotiable instrument issued as payment for grain by the grain dealer within fifteen days after its issuance; and

(c) Notifies the commission within fifteen days after any apparent loss to be covered under the terms of the grain dealer’s security.

(2) The grain dealer’s security shall provide security for direct delivery grain until any post-direct delivery storage position is created for a period not to exceed fifteen days after the date of the last shipment of the contract.”

Neb. Rev. Stat. § 75-905 (2024)

Exemptions

N/A

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“In the event the commission determines that the conditions of a grain dealer’s security have been violated, the commission may demand that such dealer’s security be forfeited and may place the proceeds of the security in an interest-bearing trust until it fully determines each claim on the security. The commission shall disburse the security according to each claim determined. If the amount of the security is less than the claims against it, the security shall be distributed pro rata among the claimants. If the security is a bond or letter of credit, the surety or the issuer of such letter shall pay over the security on demand by the commission. If such issuer of a letter of credit or surety for a grain dealer fails or refuses to pay the security to the commission within ten days, the commission may file a lawsuit in an appropriate court and recover the amount of the security plus interest at the highest legal rate from the date of its demand on the issuer of a letter of credit or surety if the court finds that any claim determined by the commission against the grain dealer’s security was valid.”

Neb. Rev. Stat. § 75-906 (2024)

New York

General Requirements

“1. (a) No person shall act as a dealer unless licensed as provided in this article. Application shall be made upon such forms and at such times as prescribed by the commissioner. Renewal applications shall be submitted to the commissioner at least thirty days prior to the expiration of the existing license. No action will be taken on applications deemed incomplete by the commissioner. The applicant shall furnish evidence of his or her good character, financial statements, prepared and certified by a certified public accountant when required by the commissioner, and evidence that he or she has adequate physical facilities for receiving and handling farm products or processing farm products if he or she is to act as a dealer. The commissioner, if so satisfied, shall issue to such applicant, upon the filing of a bond or letter of credit and upon payment of a fee to be deposited into the agricultural producers security fund as hereinafter provided, a license entitling the applicant to conduct the business of a dealer in farm products for a period of one year. Notwithstanding any other provision of this section, an applicant who intends to pay and a licensee who pays upon delivery for purchases of farm products from producers, in cash, or cash equivalent, including only certified or bank check, money order, electronic funds transfer, or by debit card, shall be exempt from filing a bond or letter of credit. In the event that a licensee who has been so exempted from filing a bond or letter of credit fails to pay cash or a cash equivalent upon delivery for any purchase of farm products from a producer, such licensee shall file a bond or letter of credit as otherwise required by this section with the commissioner no later than ten business days from the date the commissioner notifies the licensee that such bond or letter of credit is required.

(b) The commissioner is authorized to stagger the commencement of the license year among licensees, and shall prorate the license application fee and agricultural producers security fund fee accordingly. Notwithstanding any other provision of law to the contrary, the commissioner is hereby authorized and directed to deposit all license fees received pursuant to this section in the agricultural producers security fund.

2. Before commencing or doing any business for the time for which a license has been issued, said license shall be enclosed in a suitable wood or metal frame having a clear glass space and a substantial wood or metal back so that the whole of said license may be seen therein, and shall be posted and at all times displayed in a conspicuous place in the room where such business is carried on, so that all persons visiting such place may readily see the same.”

N.Y. A.G.M. Law § 248 (2024)

1. (a) The bond or letter of credit required by section two hundred forty-eight of this article shall be upon a form prescribed by the commissioner and shall be in the sum fixed by the commissioner, provided that the sum shall not be less than three thousand dollars nor more than four hundred thousand dollars, and shall be conditioned on the faithful compliance by the licensee with the provisions of this article. Upon notice, the commissioner may increase the security based upon review of the applicant’s or licensee’s financial statements and other materials in support of its application. In the case of an applicant or licensee owned in whole or in part by a producer, said producer may execute a waiver of his or her right to recover from the applicant or licensee’s security and the agricultural producers security fund and the amount of the security said applicant or licensee is required to provide shall be adjusted accordingly.

(b) In addition to the bond or letter of credit required by section two hundred forty-eight of this article, a fee for deposit in the agricultural producers security fund shall be paid annually to the commissioner at the time application is made for a license. Such fee shall be determined on the basis of the annual dollar volume of purchases of farm products as shown in the application for license under this article in accordance with the following schedule:

Annual Volume Fee

$5,000,000 and over $2,500

3,000,000 – 4,999,999 1,750

1,000,000 – 2,999,999 1,000

500,000 – 999,999 750

300,000 – 499,999 500

50,000 – 299,999 300

20,000 – 49,999 200

…

(e) There is hereby established in the joint custody of the comptroller and commissioner of taxation and finance a fund to be designated as the agricultural producers security fund. The commissioner shall deposit all moneys received from dealers pursuant to paragraph (b) of this subdivision into the fund. The moneys so received and deposited in the agricultural producers security fund shall not be deemed state funds. The comptroller shall be empowered to invest such funds pursuant to section ninety-eight-a of the state finance law consistent with the purposes of this article. The commissioner is hereby authorized to draw upon such funds, in his or her discretion, to purchase credit insurance for the benefit of the agricultural producers security fund. The expense of administering the licensing and bonding provisions of this article shall be paid from the fund upon vouchers certified by the commissioner. Payments from the fund for administrative expenses shall not exceed five percent of the maximum amount authorized for the fund. The commissioner shall make an annual report of the receipts to and disbursements from the fund, including the costs of administration of the fund, which report shall be made available to each dealer and to any other person having an interest in the fund, and any person who may request a copy of that report.

…

2. When and as required by the commissioner, a licensee shall file with the commissioner a verified statement of his or her disbursements during a period to be prescribed by the commissioner which shall contain the names of the producers from whom farm products were received or purchased and the amount due to the producers. Prior to acceptance of such statement for filing, the commissioner may require, at the expense of the licensee, the submission of an audit by a certified public accountant. If, in the judgment of the commissioner, it appears from such statement or from facts otherwise ascertained by him or her that the security afforded to producers delivering or selling farm products to such licensee does not protect such producers to the extent intended by this section, the commissioner may require such licensee to give an additional bond or letter of credit in a sum to be determined by the commissioner, but in no event shall the combined bonds for the licensee exceed four hundred thousand dollars.”

N.Y. A.G.M. Law § 250(1)(a)-(b), (e), (2) (2024)

“If upon investigation by the commissioner, the licensee is found to have fully paid all the producers of farm products received or purchased by him or her, the commissioner may cancel the license of such licensee upon request of the licensee and release security deposited with a bank or trust company pursuant to section two hundred fifty of this article, other than contributions to the agricultural producers security fund. Such contributions to the agricultural producers security fund shall not be construed to create a legal and equitable interest in such funds for any licensee or producer.”

N.Y. A.G.M. Law § 250-G (2024)

Exemptions

“(c) In lieu of filing the bond or letter of credit required by section two hundred forty-eight of this article and paying the fee as provided for in paragraph (b) of this subdivision, the applicant may elect to file a bond or letter of credit in the amount determined by the commissioner, but which shall not be less than an amount covering ninety percent of the previous year’s dollar volume of purchases of New York state farm products.”

N.Y. A.G.M. Law § 250(c) (2024)

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North Carolina

General Requirements

“All applications shall be accompanied by an initial or renewal license fee of fifty dollars ($50.00) plus thirty dollars ($30.00) per certificate or decal for each separate buying station or truck and a good and sufficient bond in the amount of one hundred thousand dollars ($100,000) to satisfy the initial license application. A fee of five dollars ($5.00) shall be charged for each duplicate license, certificate or decal …”

N.C. Gen. Stat. § 106-604 (2024)

“(a) Such bond shall be signed by the grain dealer and by a company authorized to execute surety bonds in North Carolina and shall be made payable to the State of North Carolina. The bond shall be conditioned on the grain dealer’s faithful performance of his duties as a grain dealer and his compliance with this Article, and shall be for the use and benefit of any person from whom the grain dealer has purchased grain and who has not been paid by the grain dealer. The bond shall be given for the period for which the grain dealer’s license is issued.”

N.C. Gen. Stat. § 106-605(a) (2024)

Exemptions

“… ‘Cash buyers’ upon written request to the Commissioner showing proof satisfactory to the Commissioner that the person is a ‘cash buyer’ under this Article shall be exempted from the bonding requirements of this section. The exemption shall be granted within 20 days of the receipt of the exemption request or unless the Commissioner requests the dealer to provide additional necessary information or unless the request is denied.”

N.C. Gen. Stat. § 106-604 (2024)

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“(b) Any person claiming to be injured by nonpayment, fraud, deceit, negligence or other misconduct of a grain dealer may institute a suit or suits against said grain dealer and his sureties upon the bond in the name of the State, without any assignment thereof.”

N.C. Gen. Stat. § 106-605(b) (2024)

North Dakota

General Requirements

“1. Before a license is effective for a grain buyer under this chapter, the applicant for the license shall file a bond with the commissioner which must:

a. Be in a sum not less than one hundred thousand dollars.

b. Be continuous, unless the corporate surety by certified mail notifies the licensee and the commissioner the surety bond will be canceled ninety days after receipt of the notice of cancellation.

c. Run to this state for the benefit of all persons selling grain to or through the grain buyer.

d. Be conditioned:

(1) For the faithful performance of the licensee’s duties as a grain buyer.

(2) For compliance with the provisions of law and the rules of the commissioner relating to the purchase of grain by the commissioner monthly.

e. Be for the specific purpose of:

(1) Protecting the sellers of grain.

(2) Covering the costs incurred by the commissioner in the administration of the licensee’s insolvency.

f. Not accrue to the benefit of any person entering a credit-sale contract with a grain buyer.

2. The aggregate liability of the surety under a bond does not accumulate for each successive annual license renewal period during which the bond is in force but, for losses during any annual license renewal period, is limited in the aggregate to the bond amount stated or changed by appropriate endorsement or rider.

3. The commissioner shall set the amount of the bond and may require an increase in the amount of a bond as the commissioner deems necessary to accomplish the purposes of this section.

4. The amount of the bond for a grain buyer must be based on the dollar value of the grain purchased, solicited, or merchandised.

5. A grain buyer shall report purchases, solicitations, and merchandising agreements to the commissioner monthly.

6. The surety on the bond must be a corporate surety company, approved by the commissioner and authorized to do business within the state. The commissioner may accept cash, a negotiable instrument, or a bond executed by personal sureties in lieu of a surety bond when, in the commissioner’s judgment, cash, a negotiable instrument, or a personal surety bond properly will protect the holders of outstanding receipts.”

N.D. Cent. Code § 4.1-59-09 (2025)

“The surety on a bond is released from all future liability accruing on the bond after the expiration of ninety days from the date of receipt by the commissioner of notice of cancellation by the surety or on a later date specified by the surety. This provision does not operate to relieve, release, or discharge the surety from any liability already accrued or which accrues before the expiration of the ninety-day period. Unless the grain buyer files a new bond at least thirty days before liability ceases, the commissioner, without hearing, immediately shall suspend the grain buyer’s license and the suspension may not be removed until a new bond has been filed and approved by the commissioner.”

N.D. Cent. Code § 4.1-59-11 (2025)

Exemptions

“The licensee may request a bond reduction based upon the licensee’s payment policy. a. The required bond is reduced by thirty percent for a licensee that establishes and follows a payment policy approved by the commissioner of ten days or fewer. b. The required bond is reduced by fifteen percent for a licensee that establishes and follows a payment policy approved by the commissioner of eleven to twenty-one days. 2. A reduction under this section may not be used to reduce required bond below the minimum bond set by law.”

N.D. Cent. Code § 4.1-59-10 (2025)

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“A licensee is insolvent when the licensee refuses, neglects, or is unable upon proper written demand, including electronic communication, to pay for grain purchased or marketed by the licensee or is unable to make redelivery upon proper written demand, including electronic communication. The licensee may not assess receiving or redelivery fees on grain.”

N.D. Cent. Code § 4.1-59-21 (2025)

“1. Upon the insolvency of a licensee, a trust fund must be established for the benefit of noncredit-sale receiptholders and to pay the costs incurred by the commissioner in the administration of the insolvency. The trust fund consists of the following:

a. Nonwarehouse receipt grain of the insolvent licensee held in storage or the proceeds obtained from the conversion of the grain.

b. The proceeds, including accounts receivable, from any grain sold from the time of the filing of the claim that precipitated an insolvency until the commissioner is appointed trustee must be remitted to the commissioner and included in the trust fund.

c. The proceeds of insurance policies on destroyed grain.

d. The claims for relief, and proceeds from the claims for relief, for damages upon bond given by the licensee to ensure faithful performance of the duties of a licensee.

e. The claim for relief, and proceeds from the claim for relief, for the conversion of any grain stored in the warehouse.

f. Unencumbered accounts receivable for grain sold before the filing of the claim that precipitated an insolvency.

g. Unencumbered equity in grain hedging accounts.

h. Unencumbered grain product assets.

2. Upon the insolvency of a grain buyer, the commissioner shall act as trustee of the trust fund.

3. All funds received by the commissioner as trustee must be deposited in the Bank of North Dakota.”

N.D. Cent. Code § 4.1-59-22 (2025)

“Each surety on the insolvent licensee’s bonds must be joined as a party to the insolvency proceeding. If it is in the best interests of the receiptholders, the court may order a surety to deposit some or all of the penal sum of the bond into the trustee’s trust account pending determination of the surety’s liability under the bond.”

N.D. Cent. Code § 4.1-59-23 (2025)

“A receiptholder does not have a separate claim for relief upon any insolvent licensee’s bond, for insurance, against any person converting grain, nor against any other receiptholder, except through the trustee, unless, upon demand of five or more receiptholders, the commissioner fails or refuses to apply for the commissioner’s own appointment or unless the district court denies the application. This chapter does not prohibit a receiptholder, either individually or with other receiptholders, from pursuing concurrently any other remedy against the person or property of the licensee.”

N.D. Cent. Code § 4.1-59-26 (2025)

Oregon

General Requirements

“The administrator and any other person authorized to receive or disburse moneys received by the Oregon Wheat Commission shall file with the commission a fidelity bond executed by a surety company authorized to do business in this state, or an irrevocable letter of credit issued by an insured institution, as defined in ORS 706.008, in either case in favor of the commission and the State of Oregon, in such amount equal to the maximum amount of moneys the commission determines such person will have subject to the control of the person at any one time and upon such conditions as the commission shall prescribe. The cost of the bond or letter of credit shall be paid by the commission.”

OR. Rev. Stat. Ann. § 578.110 (2023)

Exemptions

N/A

Default

N/A

South Carolina

General Requirements

“(A) Before any license shall be issued the applicant shall make and deliver to the commissioner a surety bond or equivalent security in an amount of either twenty-five thousand, fifty thousand, or one hundred thousand dollars as determined by the method set forth below, executed by a surety corporation authorized to transact business in the State or provided by equivalent security approved by the commissioner with the advice of the State Treasurer. The amount of the bond required is determined based upon ten percent of the applicant’s annual business. If ten percent of annual business is twenty-five thousand dollars or less, the applicant must obtain a twenty-five thousand dollar bond. If ten percent of annual business is fifty thousand dollars or less, a fifty thousand dollar bond is required. If ten percent of annual business is more than fifty thousand dollars, a one hundred thousand dollar bond is required. The bond or equivalent security shall be upon a form prescribed or approved by the commissioner and shall be conditioned to secure the faithful accounting for any payment to producers, their agents or representatives, of the proceeds of all agricultural products handled or sold by such dealer.

(B) The amount of the bond or equivalent security shall, upon the order of the commissioner at any time, be increased, if in his discretion the commissioner finds that an increase is warranted by the volume of agricultural product being handled by the principal or maker of the bond or equivalent security. In the same manner, the amount of the bond or equivalent security may be decreased when a decrease in volume of products handled warrants such decrease in bond or equivalent security. The provisions contained in this section shall apply to any bond or equivalent security, regardless of the anniversary date of its issuance, expiration, or renewal.

(C) In order to effectuate the purposes of this section, the commissioner or his agents may require from any licensee verified statements of the volume of his business, and failure to furnish such statement or make and deliver a new or additional bond or equivalent security shall be cause for suspension of license. If, at a hearing after reasonable notice, the commissioner finds such failure to be wilful, the license may be revoked.”

S.C. Code Ann. § 46-41-60 (2024)

Exemptions

N/A

Default 

“Any person claiming himself to be damaged by any breach of the conditions of a bond given by a licensed dealer in agricultural products or by any alleged injurious practice or transaction by a dealer in agricultural products may enter a complaint to the Commissioner, which complaint shall be a written statement of the facts constituting such complaint. Such complaint shall be filed within six months from the date of the last transaction between the complaining producer and the dealer complaint against. Upon filing such complaint, the Commissioner shall investigate the charges made; whereupon, if in the opinion of the Commissioner the facts contained in the complaint warrant such action, a copy of the complaint shall be forwarded by the Commissioner to such dealer who shall be called upon to answer the complaint in writing within a reasonable time to be prescribed by the Commissioner. At his discretion the Commissioner may order a hearing before him giving the complainant and the respondent notice of the time and place of such hearing. At the conclusion of such hearing the Commissioner shall report his findings and make his order upon the matters complained of to the complainant and the respondent in each case, who shall then have fifteen days in which to make effective and satisfy the Commissioner’s order. If such settlement is not effected within such time, the Commissioner or the producer may maintain a civil action against the principal and surety on the bond of the party against whom the order was directed, setting forth briefly in the complaint in such civil action the causes for which damages are complained. In any such suit, if the party who was successful before the Commissioner finally prevails, he shall be allowed court costs and a reasonable attorney’s fee to be taxed and collected as a part of the cost of the suit. If the order of the Commissioner is against the producer and if the producer is not satisfied with such ruling, he may commence and maintain an action against the principal and surety on the bond of the parties complained of and the party prevailing shall be entitled to court costs and attorney’s fee to be taxed and collected as a part of the suit. If the bond thus posted is insufficient to pay in full the valid claims of producers, the Commissioner shall direct that the proceeds of such bond be divided pro rata among such producers.”

S.C. Code Ann. § 46-41-70 (2024)

South Dakota

General Requirements

“Before transacting the business of a grain buyer in this state, a person shall obtain a grain buyer license from the commission.

A violation of this section is a Class 5 felony if the person holds himself or herself out to be a grain broker and a Class 1 misdemeanor in all other cases. Each purchase of grain without a license is a separate offense.

A grain buyer transacting business without a license may be enjoined upon complaint of the commission.

The commission may assess a civil fine against an unlicensed grain buyer in the amount of five thousand dollars for each purchase of grain, up to a maximum fine of fifty thousand dollars per licensing period, as set forth in § 49-45-3.

For purposes of this section, the term, purchase of grain, means a transaction evidenced by the issuance of a uniform scale ticket or receipt, as described in § 49-45-10.1.”

S.D. Codified Laws § 49-45-1 (2024)

“The commission shall supervise the business of grain buyers in this state and administer the laws in relation thereto. The commission may promulgate rules, pursuant to chapter 1-26, concerning:

(1) The form of a grain buyer’s bond and application and the information required to be included for licensing;

(2) Requirements for posting grain buyer’s licenses;

(3) Notice requirements to sellers who enter into voluntary credit sale agreements;

(4) Requirements for filing financial statements with the commission and the financial standards by which the statements are approved when considering whether to license a grain buyer;

(5) Requirements for grain buyers to provide information to sellers regarding the statutes and rules relating to grain buyers;

(6) Requirements and procedures for releasing bonds; and

(7) Procedures and requirements for license suspension, revocation, transfer of ownership, or insolvency by a grain buyer.”

S.D. Codified Laws § 49-45-6 (2024)

“Before any grain buyer license is issued by the commission, the applicant must file with the commission a bond conditioned to secure the faithful performance of the applicant’s obligations as a grain buyer and the applicant’s full and unreserved compliance with the laws of this state and the rules of the commission, relating to the purchase of grain by the grain buyer. The bond is for the specific purpose of protecting persons selling grain to the grain buyer. However, the bond may not benefit any person entering into a voluntary credit sale with a grain buyer. Any person who does business as a grain buyer without a bond is guilty of a Class 1 misdemeanor. Each day a person conducts the business of a grain buyer without a bond is a separate offense.

The amount of the bond for a Class A or Class B grain buyer’s license must be based on a rolling average of the dollar amount of grain purchased by the applicant in this state during the last three license years. For a new grain buyer, the first year’s bond must be based on projected purchases. For a grain buyer with less than three years of experience as a grain buyer, the bond must be based on the average actual purchases made by the grain buyer in all of its previous years as a grain buyer or projected purchases, whichever amount is higher. The bond applies to all grain purchases for all of the grain buyer’s business locations.

The amount of the bond for a Class A grain buyer’s license is:

Dollar Amount of Grain Purchased                  Bond Requirement

Less than $2,000,001                                          $50,000

$2,000,001 – $5,000,000                                   $100,000

$5,000,001 – $10,000,000                                 $150,000

$10,000,001 – $20,000,000                              $200,000

$20,000,001 – $30,000,000                             $250,000

$30,000,001 – $40,000,000                             $300,000

$40,000,001 – $55,000,000                             $350,000

$55,000,001 – $70,000,000                             $400,000

$70,000,001 – $85,000,000                             $450,000

$85,000,001 – $100,000,000                           $500,000

Bond requirements are increased twenty-five thousand dollars for each additional ten million dollars in purchases above one hundred million dollars.

The amount of the bond for a Class B grain buyer’s license is:

Dollar Amount of Grain Purchased                  Bond Requirement

Less than §2,000,001                                          $50,000

$2,000,001 – $5,000,000                                  $100,000

The grain buyer may stipulate to a higher bond amount requested by the commission or may post additional security in another form.”

S.D. Codified Laws § 49-45-9 (2024)

Exemptions

“If the commission determines, because a corporate surety company becomes insolvent or ceases to write grain buyer bonds in this state, that a bond in the sum required by § 49-45-9 cannot be executed, or if a grain buyer is in the process of chapter 11 reorganization and a bond cannot be obtained, the commission may authorize the filing of other financial documents in lieu of a corporate surety bond.”

S.D. Codified Laws § 49-45-9.1 (2024)

Default 

“Any person injured by the breach of any obligation of a grain buyer, for the performance of which a bond has been given under any of the provisions of this chapter, may sue on the bond in the person’s own name in any court of competent jurisdiction to recover any damages the person may have sustained by reason of the breach. However, a person may sue on the bond only if the person has notified the commission of the person’s intent to sue on the bond and if the commission has stated in writing that it does not intend to institute any proceedings regarding the bond. The commission shall respond in writing within sixty days of notification stating whether the commission intends to institute any proceedings regarding the bond. If the commission fails to respond in writing within the sixty days, the person may proceed to sue on the bond in the person’s own name.”

S.D. Codified Laws § 49-45-17 (2024)

Tennessee

General Requirements

“(a) No person shall engage in business as a commodity dealer or warehouseman in the state of Tennessee without a license therefor issued by the department.

(b) Application for a license to engage in business as a commodity dealer or warehouseman shall be filed with the department and shall contain information and be in a form as prescribed by the department by lawfully promulgated rule.

(c) The application for an initial license may be filed at any time prior to beginning business as a commodity dealer or warehouseman. However, the license shall terminate ninety (90) days after the close of the commodity dealer’s or warehouseman’s fiscal year.

(d) The application for a renewal of a license shall be filed with the department annually within ninety (90) days after the close of the commodity dealer’s or warehouseman’s last completed fiscal year or within such further time, not exceeding sixty (60) days, as the department, upon application, may allow.

(e) For all commodity dealer or warehouseman licenses, with the exception of incidental commodity dealers, nonsecured, the application shall be accompanied by a financial statement setting forth information as prescribed by the commissioner by lawfully promulgated rule.

(f) The application for a license to operate as a commodity dealer or warehouseman, as defined in this chapter, or a renewal thereof, shall be accompanied by a filing fee of one hundred fifty dollars ($150). The application for a license to operate as an incidental commodity dealer as defined in this chapter, or a renewal thereof, shall be accompanied by a filing fee of fifty dollars ($50.00).

(g) The license or renewal thereof issued by the department under this section shall be posted in the principal office of the licensee in this state. A certificate shall be posted in each location listed on a licensee’s application where the licensee engages in the business of buying or storing commodities. In the case of a licensee operating a truck or tractor trailer unit, the licensee is required to have a certificate that the license is in effect, and that a bond or certificate of deposit has been filed, carried in each truck or tractor trailer unit used in connection with the purchase of commodities from producers. Upon request of a licensee and payment of the fee therefor, the department shall issue to the licensee a certificate that a license has been issued or renewed and a bond filed as required by this chapter.

(h) The license issued to an incidental commodity dealer, nonsecured shall clearly state: “Producers are not eligible to receive indemnification from the Tennessee grain indemnity fund if payment is not made for commodities delivered to this dealer.” Additionally, this statement shall also be posted adjacent to the license issued to the dealer in the location required by this part. The notice shall be in print no smaller than two inches (2″) in letter height. This statement shall also be placed on the receipt or scale ticket issued to the seller, with a place for the seller’s signature provided on each receipt or scale ticket. The signature of the seller or the seller’s representative shall be affixed to each receipt or scale ticket.”

Tenn. Code. Ann. § 43-32-105 (2024)

“(a) With the exception of incidental commodity dealers, nonsecured, every person licensed as a commodity dealer or warehouseman shall have a surety bond and a fire and extended coverage insurance policy, or proof thereof, both of which shall be noncancellable for the term of the license.

(b) The surety bond shall provide a reasonable level of protection for those persons storing commodities in the warehouse or selling commodities to a dealer in the event of bankruptcy, fraud, or other occurrence that would deprive the person storing or selling commodities from recovering its value. This surety bond shall be in an amount established by the commissioner by duly promulgated rules. These bonding requirements are subject to a twenty thousand dollar ($20,000) minimum and a five hundred thousand dollar ($500,000) maximum limit.

(c) The fire and extended coverage insurance policy shall be in an amount set by the commissioner by rule and regulation.

(d) The bond and insurance policy shall be for the benefit of the persons storing commodities with the warehouseman, and shall be conditioned to provide the protection described in this section.

(e) The premiums on the bond or insurance shall be paid by the licensee.

…

(g) The surety bond or certificate of deposit in effect on the date of a warehouseman’s license revocation, license suspension, cessation of operation or date of default as determined by the department shall be liable for and accrue liabilities not to exceed the principal of the surety bond or certificate of deposit.

(h) When the department determines that an applicant’s or licensee’s ability to pay producers for commodities purchased is in question, or when it determines that a commodity dealer or warehouseman does not meet the financial requirements of this chapter, it may require additional collateral security. Such collateral security may include, but is not limited to, irrevocable letters of credit, certificates of deposit, commercial surety bonds, and, on a negotiated basis, mortgages or deeds of trust on real property, personal or corporate guarantees or other guarantees. Failure to post collateral security shall constitute grounds for suspension or revocation of a license issued under this chapter.

(i) Any commodity dealer or warehouseman who is of the opinion that such person’s net worth and assets are sufficient to guarantee payment to producers for commodities purchased or stored by that person may request the department to be relieved of the obligation of filing a bond in excess of the minimum bond of twenty thousand dollars ($20,000). The conditions under which such requests shall be granted shall be established by the commissioner in duly promulgated rules.”

Tenn. Code Ann. § 43-32-106(a)-(e), (g)-(i) (2024)

Exemptions

“(f) Any commodity dealer or warehouseman may file with the department, in lieu of a surety bond, a certificate of deposit or an irrevocable letter of credit payable to the department with the commissioner as trustee. The principal amount of the certificate shall be the same as that required for a surety bond under this chapter and the interest thereon shall be made payable to the purchaser thereof.

…

(j) A commodity dealer shall be exempt from the bonding requirements of this section if the commodity dealer paid producers in full prior to or on the date of every delivery of commodities accepted for one (1) year prior to the date the request to be exempt is submitted to the department.

(k) A commodity dealer exempt from bonding requirements under subsection (j) who pays less than the full amount for commodities prior to or upon delivery, issues a check at the time of delivery that is later dishonored for any reason, or takes any action subsequent to delivery that causes the producer to receive less than the full amount paid at delivery, shall file and maintain a surety bond in the amount required by this section.”

Tenn. Code Ann. § 43-32-106(f), (j)-(k) (2024)

Default

“(a) If it is discovered that any commodity dealer or warehouseman is insolvent, or that its continuance in business will seriously jeopardize the interest of its creditors or commodities depositors, it is the duty of the commissioner to close that dealer or warehouseman and to take charge of all the property and effects thereof, and to notify the surety. Upon taking charge of any such dealer or warehouseman, the commissioner shall, as soon as practicable, ascertain by a thorough examination into its affairs, its actual financial condition, and whenever the commissioner becomes satisfied that the commodity dealer or warehouseman cannot resume business or liquidate its indebtedness to the satisfaction of its creditors, the commissioner shall report the fact of its insolvency to the attorney general and reporter, who shall immediately upon receipt of this notice institute proper proceedings in the proper court for the purpose of having a receiver appointed.

(b) With the exception of incidental commodity dealers, nonsecured, if a commodity dealer or warehouseman fails or refuses to make payment for or deliver to a producer for commodities when requested, the producer shall notify the commissioner in writing of the failure or refusal within one hundred sixty (160) days of the date of sale or the date of delivery of the commodities to the commodity dealer or warehouseman, whichever is later, but in case of deferred pricing, delayed pricing, priced later, or similar contractual arrangements, no more than two hundred seventy (270) days after the date of delivery. The commissioner, upon receiving this notice, shall take whatever action is necessary. The producer furnishing written notice within the prescribed length of time is entitled to the benefits of the commodity dealer’s or warehouseman’s bond if such bond is required in accordance with § 43-32-106. However, if a producer fails to furnish written notice to the commissioner within the prescribed time, then that producer is not entitled to any benefits under the commodity dealer’s or warehouseman’s bond and part 2 of this chapter. Commodity dealer liability under price later contracts, open price contracts, deferred price contracts, or similar agreements shall accrue under the bond in effect at the date of default as determined by the commissioner.

(c) With the exception of incidental commodity dealers, nonsecured, when the commissioner has determined that a commodity dealer has defaulted payment to producers for commodities that the dealer has purchased from them, or that a warehouseman failed to deliver value for commodities stored, the commissioner shall determine through appropriate legal procedures the producers and the amount of defaulted payment, and as trustee of the bond, shall immediately after such determination call for the commodity dealer’s surety bond or bonds to be paid to the commissioner for distribution to those producers who should receive the benefits. Should the defaulted amount owed producers be less than the principal amount of the bond or bonds, then the surety shall be obligated to pay only the amount of the default.

(d) Notwithstanding subsections (b) and (c), an incidental commodity dealer, nonsecured, by opting not to maintain a security instrument, causes the producers from whom the dealer purchases commodities to be ineligible to receive indemnification from the Tennessee grain indemnity fund in the event the dealer fails to make payment for the commodities delivered to the dealer.”

Tenn. Code Ann. § 43-32-108 (2024)

Virginia

General Requirements

“A. All applications a for license or license renewal shall be accompanied by a license fee of $40, $10 for each branch location and agent, and a good and sufficient bond in an amount of $2,000 or an amount equal to the maximum amount of gross business done in any month in the Commonwealth during the preceding year by the applicant, whichever is greater, but in no event shall the amount of bond required exceed $40,000. An irrevocable letter of credit for the full amount of required bond may be submitted in lieu of a surety bond …

B. Any licensed grain dealer who fails to apply and qualify for the renewal of a license on or before the date of expiration, shall pay a penalty of $25, which shall be added to the original license fee and shall be paid by the applicant before the renewal may be issued.”

VA. Code Ann. § 3.2-4755 (2024)

Exemptions

” … A person, who upon written request shows proof satisfactory to the Commissioner that he is a cash buyer, shall be exempted from the bonding or irrevocable letter of credit requirements. The exemption shall be granted within 20 days of the receipt of the exemption request, unless the Commissioner requests the dealer to provide additional necessary information or unless the request is denied.”

VA. Code Ann. § 3.2-4755(A) (2024)

Default 

“The bond shall be executed by the applicant as principal and by a surety company authorized and qualified to do business in the Commonwealth as surety. An irrevocable letter of credit may be issued on such terms as the Commissioner may require. The Commissioner shall be designated as the trustee of the bond or beneficiary of the irrevocable letter of credit, and a copy of the bond or irrevocable letter of credit shall be filed with him. The bond shall be in a form prescribed or approved by the Commissioner and shall be conditioned to secure the faithful accounting for payment to producers, agents or representatives, of all grain purchased, stored, handled or sold by the dealer. Any producer claiming to be injured by the nonpayment, fraud, deceit or negligence of any dealer may bring action upon the bond against the principal, or the surety, or both in an appropriate court. In the event the Commissioner receives written complaint from an injured producer of nonpayment, fraud, deceit or negligence of a dealer, the Commissioner may investigate such complaint and make recommendations to the surety company as to the culpability of the dealer, if any.”

VA. Code Ann. § 3.2-4756 (2024)

“The Commissioner may accept the proceeds from any bond on which he is trustee or any letter of credit on which he is beneficiary, and deposit the proceeds in the state treasury at interest in favor of the claimants. The Commissioner may institute and prosecute suits or action in the name of the Commonwealth on behalf of claimants known and approved by him in any appropriate court for any purpose in connection with the collection or distribution of the proceeds. It shall be the duty of any person having a claim against a grain dealer to notify the Commissioner of his claim. The Commissioner shall have no duty to prosecute any claim unless he has received such notice and believes the claim is valid. If the Commissioner believes the claim to be invalid, he shall notify the claimant. The claimant shall then have his remedy pursuant to § 3.2-4756. The Commissioner may appeal a decision of any court that is contrary to any distribution recommended or authorized by him.”

VA. Code Ann. § 3.2-4757 (2024) 

Washington

General Requirements

Wash. Rev. Code § 22.09.090(1)-(5), (7) (2024)

Wash. Rev. Code § 22.09.095(1)-(2) (2024)

Wash. Rev. Code § 22.09.100 (2024)

Exemptions 

“Except as provided in RCW 22.09.405(2), no warehouse or grain dealer license may be issued to an applicant before a bond, certificate of deposit, or other security is given to the department as provided in RCW 22.09.090, or in RCW 22.09.095. No warehouse license may be issued to an applicant before a certificate of insurance as provided in RCW 22.09.110 has been filed with the department. Grain dealers may be exempted by rule from the bonding requirement if the grain dealer does not do more than one hundred thousand dollars in business annually and makes payments solely in coin or currency of the United States at the time of obtaining possession or control of grain. However, a cashier’s check, certified check, or bankdraft may be considered as cash for purposes of this section.”

Wash. Rev. Code § 22.09.060 (2024)

“(6) Any person required to submit a bond to the department under this chapter has the option to give the department a certificate of deposit or other security acceptable to the department payable to the director as trustee, in lieu of a bond or a portion thereof. The principal amount of the certificate or other security shall be the same as that required for a surety bond under this chapter or may be in an amount which, when added to the bond, will satisfy the licensee’s requirements for a surety bond under this chapter, and the interest thereon shall be made payable to the purchaser of the certificate or other security. The certificate of deposit or other security shall remain on deposit until it is released, canceled, or discharged as provided for by rule of the department. The provisions of this chapter that apply to a bond required under this chapter apply to each certificate of deposit or other security given in lieu of such a bond.”

Wash. Rev. Code § 22.09.090(6) (2024)

Default 

Wash. Rev. Code § 22.09.381 (2024)

“If a depositor creditor after notification fails, refuses, or neglects to file in the office of the director his or her verified claim against a warehouse operator or grain dealer bond as requested by the director within thirty days from the date of the request, the director shall thereupon be relieved of further duty or action under this chapter on behalf of the depositor creditor.”

Wash. Rev. Code § 22.09.580 (2024)

“Where by reason of the absence of records or other circumstances making it impossible or unreasonable for the director to ascertain the names and addresses of all the depositor creditors, the director after exerting due diligence and making reasonable inquiry to secure that information from all reasonable and available sources, may make demand on a warehouse operator’s or grain dealer’s bond on the basis of information then in his or her possession, and thereafter shall not be liable or responsible for claims or the handling of claims that may subsequently appear or be discovered.”

Wash. Rev. Code § 22.09.590 (2024)

“Upon ascertaining all claims and statements in the manner set forth in this chapter, the director may then make demand upon the warehouse operator’s or grain dealer’s bond on behalf of those claimants whose claims and statements have been filed, and has the power to settle or compromise the claims with the surety company on the bond, and is empowered in such cases to execute and deliver a release and discharge of the bond involved.”

Wash. Rev. Code § 22.09.600 (2024)

Wash. Rev. Code § 22.09.610 (2024)

Wash. Rev. Code § 22.09.615 (2024)

West Virginia

General Requirements

“A person engaged in the business of a commission merchant in this state dealing in the sale, purchase, or consignment of agricultural products shall before carrying on such business procure a license from the commissioner. Application for such license shall be made on forms prescribed by the commissioner and shall be accompanied by a fee of $10. Such license shall be renewed annually on or before July 1.”

W. Va. Code § 19-3-1 (2024)

W. Va. Code § 19-3-2 (2024)

Exemptions 

N/A

Default 

W. Va. Code § 19-3-4 (2024)

“A commission merchant who violates any of the provisions of this article shall be guilty of a misdemeanor and, upon conviction shall be fined not more than $100 for the first offense, and not less than $100 nor more than $200 for each subsequent offense. Each transaction engaged in by an unlicensed commission merchant shall constitute a separate offense.

All moneys collected under this article shall be deposited with the treasurer of the State of West Virginia and shall be kept in a separate fund to be designated as the “general marketing fund” and reappropriated to the Department of Agriculture for the administration of this article.”

W. Va. Code § 19-3-5 (2024)

Wisconsin

General Requirements 

“(1) Department may acquire. Using moneys appropriated under s. 20.115 (1) (v), the department may acquire contingent financial backing to secure payment under s. 126.72 (2) of claims against contributing contractors, as defined in s. 126.68 (1). The contingent financial backing may be in one or more of the following forms:

(a) A surety bond.

(b) A contract to provide a cash loan to the fund whenever the department requests a loan payable as provided in sub. (3).

(c) Trade credit insurance.

(d) Any other form that the department determines is appropriate.

(2) Amount.

(a) Except as provided in par. (b), the department may determine the amount of any contingent financial backing that it obtains under sub. (1), up to the amount that, in the department’s judgment, is sufficient to meet reasonably foreseeable needs under s. 126.72 (2). In making this determination, the department shall consider acquisition costs and repayment liabilities.

(b) The department may not acquire contingent financial backing in an amount that exceeds $17,000,000, unless the department establishes a different maximum amount by rule.

(3) Repayment. The department shall pay principal and interest costs of any loan provided under sub. (1) (b) only from the appropriation from the agricultural producer security fund under s. 20.115 (1) (wc).”

Wis. Stat. § 126.06 (2024)

“(1) Security required.

(a) A grain dealer shall file security with the department, and maintain that security until the department releases it under sub. (8) (a), if all of the following apply when the department first licenses the grain dealer under s. 126.11:

1. The grain dealer reports more than $500,000 in grain payments under s. 126.11 (9) (a).

2. The grain dealer files an annual financial statement under s. 126.13 (1) (a) and that financial statement shows negative equity.

(b) A grain dealer who reports any deferred payment contract obligations under s. 126.11 (9) (c) or 126.13 (1) (d), other than deferred payment contract obligations to a grain producer or producer agent who permanently waived eligibility to file a default claim under s. 126.70 (1) (b) and (c), shall file security with the department, and maintain that security until the department releases it under sub. (8) (b), unless the grain dealer’s annual financial statement under s. 126.13 (1) shows that the grain dealer has positive equity and a debt to equity ratio of not more than 4.0 to 1.0.”

Wis. Stat. § 126.16(1)(a)-(b) (2024)

Exemptions

“(2) Exempt grain dealers. The following grain dealers are not required to hold a license under this section, but may volunteer to be licensed:

(a) A grain dealer who pays cash on delivery for all producer grain.

(b) A grain dealer who buys producer grain solely for the grain dealer’s own use as feed or seed and who spends less than $400,000 per license year for that grain.”

Wis. Stat. § 126.11(2) (2024)

Default 

“(1) Default claims.

(a) A person who is one of the following may file a default claim with the department against a contractor who is licensed, or required to be licensed, under this chapter, unless the person has waived eligibility to file a claim as provided in pars. (b) and (c):

1. A grain producer or producer agent, as defined in s. 126.10 (13), who claims that a grain dealer has failed to pay, when due, for producer grain that the grain dealer procured in this state.

2. A depositor who is either a grain producer or a producer agent, as defined in s. 126.10 (13), and who claims that a grain warehouse keeper has failed to return stored grain or its equivalent upon demand.

3. A milk producer or producer agent, as defined in s. 126.40 (13), who claims that a milk contractor has failed to pay, when due, for producer milk procured in this state.

4. A vegetable producer or producer agent, as defined in s. 126.55 (12), who claims that a vegetable contractor has failed to make payment when due under a vegetable procurement contract.

(b) A producer or producer agent may permanently waive eligibility to file a default claim against a grain dealer, milk contractor, or vegetable contractor if, at the time of the waiver, any of the following applies:

1. The producer or producer agent has a greater than 50 percent ownership interest in the grain dealer, milk contractor, or vegetable contractor.

2. Persons who collectively have a greater than 50 percent ownership interest in the producer or producer agent also collectively have a greater than 50 percent ownership interest in the grain dealer, milk contractor, or vegetable contractor.

(c) A producer or producer agent shall file a waiver under par. (b) with the department in writing, on a form provided by the department. In the waiver, the producer or producer agent shall include documentation to show that the requirements in par. (b) are satisfied and that the individuals signing the waiver are authorized to do so on behalf of the producer or producer agent.

(2) Filing default claims. A claimant shall file a default claim under sub. (1) within 30 days after the claimant first learns of the default, subject to sub. (3). The claimant shall specify the nature and amount of the default. The department may investigate the alleged default and may require the claimant to provide supporting documentation.

(3) Initiating a recovery proceeding.

(a) The department may initiate a recovery proceeding in response to one or more default claims under sub. (1). The department shall issue a written notice announcing the recovery proceeding. The department shall mail or deliver a copy of the notice to the contractor and each claimant in the proceeding.

(b) If the department has reason to believe that other persons may have default claims under sub. (1) against the same contractor, the department may invite those persons to file their claims in the recovery proceeding. The department may publish the invitation in any of the following ways:

1. By posting it at the contractor’s place of business.

2. By publishing it as a class 3 notice under ch. 985.

3. By mailing or delivering it to prospective claimants known to the department.

4. By other means that the department considers appropriate.

(c) In its invitation under par. (b), the department may specify a deadline date and a procedure for filing default claims. An invitation may indicate the amount of a prospective claimant’s apparent claim and may ask the prospective claimant to verify or correct that amount.

(d) The department may initiate separate recovery proceedings for default claims that comply with sub. (2) but are filed after the deadline date under par. (c).

…

(5) Allowed claim amounts.

(a) The department shall determine the amount of an allowed claim based on the contract between the parties. If the contract terms are unclear, the department may determine the allowed claim amount based on local market prices, applicable milk marketing order prices, customs in the trade, or other evidence that the department considers appropriate.

(b) Notwithstanding par. (a), if the default involves a grain warehouse keeper’s failure to return stored grain to a depositor upon demand, the department shall calculate the value of the grain based on local market prices on the day on which the depositor made the demand.

(c) The department shall subtract from the allowed claim amount any offsetting payments made by the contractor and any obligations for which the claimant is liable to the contractor.”

Wis. Stat. § 126.70(1)-(3), (5) (2024)

“(1) Claims against contributing contractor. Except as provided in sub. (2) or (3), the department shall pay from the appropriate sources under s. 126.72 the following default claim amounts:

(a) For each default claim allowed under s. 126.70 against a grain dealer or milk contractor who was a contributing contractor when the default occurred:

1. Eighty percent of the first $60,000 allowed.

2. Seventy-five percent of any amount allowed in excess of $60,000.

(b) For each default claim allowed under s. 126.70 against a grain warehouse keeper who was a contributing contractor when the default occurred, 100 percent of the first $100,000 allowed.

(c) For each default claim allowed under s. 126.70 against a vegetable contractor who was a contributing contractor when the default occurred:

1. Ninety percent of the first $40,000 allowed.

2. Eighty-five percent of the next $40,000 allowed.

3. Eighty percent of the next $40,000 allowed.

4. Seventy-five percent of any amount allowed in excess of $120,000.

(1m) When default occurs. For the purposes of this chapter, a default occurs on the date on which payment or delivery becomes overdue.”

Wis. Stat. § 126.71(1) (2024)

“(1) Generally. Except as provided in sub. (2) or (3), the department may demand and collect from a contractor any claim amounts that the department pays under s. 126.72 (1) or under s. 126.72 (2) with the proceeds of contingent financial backing under s. 126.06 (1) because of the contractor’s default.

(2) Bond payments. A bond surety may demand and collect, from a contractor, any claim amounts that the bond surety pays to the department under s. 126.72 (2) because of the contractor’s default. The bond surety shall provide the department with a copy of each demand under this subsection.”

Wis. Stat. § 126.73(1)-(2) (2024)