§ 203.3 — License required — financial responsibility

Iowa § 203.3

• Jurisdiction: Iowa
• Title V: AGRICULTURE
• Ch. 203: GRAIN DEALERS

Text

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
thousanddollarsinvalueshallfilewithinthirtydaysofthedatethelimitisreachedacomplete
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. Anapplicationforalicensetoengageinbusinessasagraindealershallbefiledwiththe
departmentandshallbeinaformprescribedbythedepartment. Theapplicationshallinclude

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, liabilitiesandthenetworthoftheapplicant. Thefinancialstatementmustbeprepared
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.
4. Inordertoreceiveandretainaclass1licensethefollowingconditionsmustbesatisfied:
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. The department shall not require that a grain
dealer submit more than one such unqualified opinion per year. A grain dealer shall submit
financial statements to the department in addition to the financial statement accompanied
by an unqualified opinion as 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. Agraindealershallsubmitareporttothedepartmentaccordingtoproceduresrequired
by the department, if the grain dealer provides a bond based in part on the number of bushels
ofunpaidgrainpurchasedbythegraindealer,asprovidedinrulesadoptedbythedepartment,
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.
5. Inordertoreceiveandretainaclass2licensethefollowingconditionsmustbesatisfied:
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.
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. The department shall not require that a grain
dealer submit more than one such unqualified opinion per year. A grain dealer shall submit
financial statements to the department in addition to the financial statement accompanied
by an unqualified opinion 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. Agraindealershallsubmitareporttothedepartmentaccordingtoproceduresrequired
by the department, if the grain dealer provides a bond based in part on the number of bushels
ofunpaidgrainpurchasedbythegraindealer,asprovidedinrulesadoptedbythedepartment,
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
oranirrevocableletterofcreditwithinthirtydaysofwrittennoticebythedepartment. 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.

Legislative History

[C75, 77, 79, 81, §542.3; 81 Acts, ch 180, §4; 82 Acts, ch 1093, §1]