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SDFU Testifies on Proposed PUC Grain Buyer Rules Changes

Pierre S.D. (KELO AM) - South Dakota Farmers Union testified at a hearing Tuesday, July 30, in Pierre held by the South Dakota Public Utilities Commission to adopt new grain buyer and grain warehouse rules. The new rules deal with voluntary credit sale contracts, agreements made between a grain buyer and seller to delay payment or deliver grain on credit. The new rules were proposed as part of the issues surrounding the Anderson Seed Company insolvency in February 2012 that cost producers an estimated $2.6 million.

“South Dakota Farmers Union supports flexibility for our producers in allowing them to make voluntary credit sale contracts over the phone, especially in the midst of harvest,” said Mike Traxinger, South Dakota Farmers Union’s legislative director. “We appreciate the work of the PUC to adopt these rules and the changes they have made in response to Anderson Seed’s insolvency.” It cost producers an estimated $2.6 million.

The PUC has proposed rules to enforce legislation that passed during the 2013 legislative session. The PUC has also proposed an addition to the voluntary credit sale contract rule to allow a contract that is not signed by both parties to be enforceable if a writing that validates that contract is mailed to the producer and the producer does not object in 48 hours. 

A judge ruled in a case involving Orient-area farmer Ray Martinmaas that he was due a portion of Anderson Seed’s bond after the company went under because even though he entered into a voluntary credit sale, Martinmaas never signed the contract. The bond wouldn’t have covered voluntary credit sales, but without his signature, the judge said Martinmaas didn’t agree to sell the grain on credit.

“The only recommended change South Dakota Farmers Union is calling for is to change the time frame from 48 hours to five days,” Traxinger continued. “We understand the balance that needs to be struck with markets constantly changing, however, the South Dakota Farmers Union Board made the determination that five days, one business week, was a reasonable amount of time to allow a producer to respond if there is an error, discrepancy, or a miscommunication in the writing mailed to a producer to indicate that they have a contract with a grain buyer.” 

In Nebraska, its respective law gives the producer 10 days to object. 

The PUC is taking comments on the rule until August 9. Producers can mail their comments to the South Dakota Public Utilities Commission, State Capitol, 500 East Capitol, Pierre, South Dakota 57501-5070.

South Dakota Farmers Union strongly encourages producers to contact the PUC with their comments. The proposed rules can be found here