PUC Legislation Protecting SD Grain Producers

January 31, 2022 – One of the important missions of the Public Utilities Commission is protecting South Dakota farmers when their grain is marketed. The legislature has established a system of licensure and inspection for grain buyers to ensure that those buyers have the financial ability to pay for the grain which they purchase.

As the grain business changes the PUC periodically brings bills to the legislature asking for the grain buying laws to be updated. Over the last six eight months the PUC has worked with representatives of the grain industry and Senator Mary Duvall (Pierre) to craft three bills to strengthen these laws on behalf of farmers. All three of these bills have passed both houses of the legislature and now await the governor’s signature to become law effective on July 1.

The first bill updated the maximum penalty for violating grain buying laws. As grain prices and volumes have increased, there is a need for the penalty amounts to keep pace lest paying a penalty for a violation simply becomes a cost of doing business instead of a deterrent to illegal activity. Even though the bill increases the maximum penalty, the PUC has the ability to levy lower amounts if circumstances warrant.

The second bill provides a definition of a “grain broker”. A grain broker negotiates grain sales between a seller and a buyer for a commission. If a grain broker negotiates a grain sale to an unlicensed buyer, the farmer has no bond protection nor any of the other protections afforded in state law when selling to a licensed buyer. This bill makes it illegal for a grain broker to negotiate a deal between a grain seller and an unlicensed buyer. Grain brokers can readily check the PUC website to know that the buyers they are soliciting are licensed buyers.

The third bill reduces the waiting period for a grain seller who is entitled to bond proceeds when a buyer goes out of business. Current law requires the sellers to wait six months for the processing of the bond proceeds. The PUC has found that the process can be done in much less time and hence this bill reduces the waiting period to 90 days.

I appreciate the support of grain buyer organizations and the South Dakota Farm Bureau who testified for the bills and the legislature in overwhelmingly passing these three bills knowing they will help South Dakota farmers.