September 21, 2022 – Its harvest time in South Dakota! The countryside is abuzz with combines, grain carts, and trucks bringing in the soybean, corn, and sunflower harvest. As farmers work feverishly to combine the crop at the right moisture level and get it in the bin before the weather turns, PUC grain inspectors are on the job making sure that farmers are paid for their grain when it is sold.

One of the commission’s responsibilities is licensing grain buyers and grain warehouses in the state. The whole purpose of that responsibility is to ensure that the farmers who produce grain get paid when the grain is sold to an elevator or other grain buyer in South Dakota.

Our state law requires these grain buyers to annually renew their license to buy grain. A key part of that license renewal is a requirement that the grain buyer submit financial statements to the PUC with their license application. PUC staff scrutinizes the finances of the grain buyer to ensure that the buyer meets certain financial minimums for operation. State law also requires the buyer to post a bond the size of which is based on the amount of grain being purchased in a year.

In addition to these annual license and bond reviews, the PUC employs inspectors who make periodic unannounced inspections of grain buyers to do on-site examination of financial, contract, and inventory records. A key financial metric for grain buyers is to maintain adequate working capital so that cash is available to pay farmers for their grain on a timely basis.

State law allows farmers to demand immediate payment for their sold grain. However, farmers may choose to enter into a contract to defer their payment for sold grain or defer the pricing of the grain to a later time. All of these arrangements are spot checked by PUC inspectors to make sure the grain buyer is in a position to make payment.

Does all of this effort by PUC mean that no grain buyer will ever go out of business? No. In the free market system, sometimes businesses don’t survive. The roll of the PUC in those cases is to find the struggling businesses early to make sure that farmers get paid before the business closes or is sold. The Farmers Coop Elevator at Avon and Kingsburg Grain and Feed are two recent examples of the PUC working with struggling grain buyers to make sure all farmers got paid for their grain. The PUC is currently working closely with the Roslyn Elevator toward a positive outcome for all involved.

Photo Credit Chet Edinger.