NORTH DAKOTA LEGISLATIVE HIGHLIGHTS AS OF JANUARY 20

January 22, 2007

Two page broadcast fax

TO:   North Dakota Elevator Managers and Allied Members

NORTH DAKOTA LEGISLATIVE HIGHLIGHTS AS OF JANUARY 20

HB 1185 says the dry pea and lentil checkoff is not to be collected on dry peas and lentils “grown in a state or province that levies and imposes its own assessment on that crop.”  It is being pushed by the Northern Pulse Growers Association, formerly Dry Pea and Lentil Growers.   The Montana Dept of Agriculture has sent a letter to ND elevators along the border saying they must collect the MT checkoff on peas and lentils coming in from MT and remit that to MT MONTHLY.   So some MT peas and lentils sold in ND are assessed both MT and ND checkoffs.   Pulse Growers’ solution to this is HB 1185.  Grain Dealers testified against this bill, saying it is not the job of grain elevators to determine origin and remit out-of-state checkoffs.   Grain Dealers questions the authority of MT to order ND elevators to collect the MT checkoff.    Steve Strege said the better simpler solution is for checkoffs of the state where sold to be collected and remitted in that state.   There are seven commodity checkoffs – wheat, barley, corn, soybeans, oilseeds, dry beans, dry peas and lentils.  The statutory language on all of them is similar in requiring the collection on all that commodity sold in this state.  Now Pulse Growers want to change that for their crops.  (There have been and may still be some gentlemen’s agreements about grain from one state being sold in another state being assessed the origin state’s checkoff, but current law doesn’t read that way.)

THIS HB 1185 IS AN ACTION ITEM.  Contact members of the House Ag Committee (page 38 of Lawmakers booklet) to urge opposition to this bill.  Montana and other states or provinces can collect their own checkoffs and ND elevators can collect ours on all grain sold in this state.  Just because MT seeks to push ND elevators into collecting the MT checkoff is no reason for Pulse Growers to change ND law.

SB 2247 is another bill advocated by Pulse Growers.  It changes the definition of a roving grain buyer so the buyers their processors sell to out of state will not have to be licensed and bonded.  Under current ND law anyone soliciting grain in the state from a farmer or a licensed entity must be bonded and licensed.   Companies like Cargill, FGDI, Lansing Grain and others (page 166 of ND elevator directory, updated at www.psc.state.nd.us/jurisdiction/grain-entities.html) are licensed as Roving Grain Buyers.  Pulse Growers say this limits their markets because some of their buyers don’t want to get licensed.  SB 2247 says the term “roving grain buyer” will no longer include “a person that purchases from a public warehouseman licensed and bonded under chapter 60-02 or from a facility-based grain buyer licensed and bonded under chapter 60-02.1 grain that has been cleaned and processed and has had value added to it.”  This matter was discussed by the Grain Dealers Association Board of Directors and


at the annual business meeting in Fargo.   In the end the Board decided to oppose the bill because it opens things up to firms that haven’t passed the muster of getting a bond.  Some of this goes on already, but why legalize it?  The other concern is with the bill language about cleaned and processed with value added.  What does it mean?  Is simple removal of dockage a process that adds value?  Is blending 15 pro and 13 pro wheat a process that adds value?  Proponents say this is an economic development bill.  But is it economic development to lower standards for entry into business?  This bill will be heard in the Senate Ag Committee, but not scheduled yet.

HB 1181 lowers the cap on the credit sale contract indemnity fund from $10 million to $4 million.   Heard in the House Ag Committee on January 19.  No action taken.  Sponsor Reps Craig Headland and Mike Brandenburg spoke for the bill.  They say $4 million is enough, that there have been no claims, that farmers should be keeping the money, and that a big fund laying around attracts raids for other uses.  Headland said similar funds in Iowa and Illinois are capped at less than $10 million.  He said this fund was a knee-jerk reaction to the Wimbledon bankruptcy.  At 12/31/06 the fund stood at $3.35 million.   It will hit $4 million later in 2007.  Farm Bureau testified for the bill.  Its policy opposes the fund.  Rep Headland wants to amend the bill so the State Treasurer, instead of the Bank of ND, can invest the fund for higher return.

Speaking opposed to HB 1181 were Ag Commissioner Roger Johnson, Rep Phil Mueller, Farmers Union, and Wimbledon farmer Mike Clemens.  They say $4 million is not enough, and that higher crop prices and grain elevator consolidation have increased loss exposure.  Headland countered that consolidations are made to strengthen balance sheets.  At Rep Mueller’s request the PSC had surveyed elevators on the amount of credit sale contract obligations outstanding at 12/31/06.  Of the 242 licensees, 77 responded.  The highest was $11 million.  There were three at $5-$10 mil; ten at $2.5-$5 mil; ten at $1-$2.5 mil; ten at $500,000-$1 million; 21 under $500,000 and 21 others at $0.  Because opinions within NDGDA range from leaving the cap at $10 million to eliminating the fund altogether, your Association did not speak for or against.  House Ag Chmn Dennis Johnson indicated the committee will work on the bill Thursday January 25. 

HB 1470 deals with grain storage contracts (warehouse receipts) and notice of their termination.  These sections of state law, 60-02-30 and 60-02-31, were amended in the 2005 session.  A quirky twist in the wording now says elevators must notify receiptholders of their intention to sell all the grain when the contract expires, in most cases June 30.  That may NOT be the elevator’s intention.  Grain Dealers drafted this bill to correct that wording and clean up some duplicative wording in these two sections.  Elevators will still have the right to sell sufficient grain to pay accrued storage charges and to discontinue the storage contract at the termination date.

SB 2285 says the Sec'y of State or County Recorder shall reject a processor's, supplier's or agister's lien filing unless it is "accompanied by proof of mailing of notification of the lien to the debtor's last-known address by registered or certified mail with return receipt requested."  Present law says before a lien is filed a billing statement must state that if the amount isn’t paid a lien may be filed.  This bill adds certified mail notice and requires a copy be sent with the lien filing.  Sponsor Senator Krauter’s target is one or more custom harvesters.   Steve Strege visited with Sen Krauter and he has agreed to take ag suppliers out of the bill.  This is a huge step in the right direction.  It still may not be necessary to burden all processors and agisters with the additional step, plus the burden of handling more paper by the Sec’y of State and County Recorders.  FYI, an agister’s lien is one taken to secure payment for the care of animals.