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Terms Used In Wisconsin Statutes 126.16

  • Contract: A legal written agreement that becomes binding when signed.
  • Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
  • Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
  • in writing: includes any representation of words, letters, symbols or figures. See Wisconsin Statutes 990.01
  • Month: means a calendar month unless otherwise expressed. See Wisconsin Statutes 990.01
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
  • Preceding: when used by way of reference to any statute section, means the section next preceding that in which the reference is made. See Wisconsin Statutes 990.01
  • State: when applied to states of the United States, includes the District of Columbia, the commonwealth of Puerto Rico and the several territories organized by Congress. See Wisconsin Statutes 990.01
  • Year: means a calendar year, unless otherwise expressed; "year" alone means "year of our Lord". See Wisconsin Statutes 990.01
   (1)    Security required.
      (a)    A grain dealer shall file security with the department, and maintain that security until the department releases it under sub. (8) (a), if all of the following apply when the department first licenses the grain dealer under s. 126.11:
         1.    The grain dealer reports more than $500,000 in grain payments under s. 126.11 (9) (a).
         2.    The grain dealer files an annual financial statement under s. 126.13 (1) (a) and that financial statement shows negative equity.
      (b)    A grain dealer who reports any deferred payment contract obligations under s. 126.11 (9) (c) or 126.13 (1) (d), other than deferred payment contract obligations to a grain producer or producer agent who permanently waived eligibility to file a default claim under s. 126.70 (1) (b) and (c), shall file security with the department, and maintain that security until the department releases it under sub. (8) (b), unless the grain dealer’s annual financial statement under s. 126.13 (1) shows that the grain dealer has positive equity and a debt to equity ratio of not more than 4.0 to 1.0.
      (c)   
         1.    In this paragraph, ” estimated default exposure” means the sum of the following:
            a.    Thirty-five percent of the grain dealer’s average monthly payment for the 3 months, during the preceding 12 months, in which the grain dealer made the largest monthly payments for producer grain procured in this state.
            b.    The grain dealer’s highest total, at any time during the preceding 12 months, of unpaid obligations for producer grain procured in this state under deferred payment contracts, excluding any unpaid obligations under a deferred payment contract, for grain procured in this state, with a grain producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.
         2.    A grain dealer shall file security with the department, and maintain that security until the department releases it under sub. (8) (bm), if the grain dealer files an annual financial statement under s. 126.13 (1) that shows negative equity, a current ratio of less than 1.25 to 1.0, or a debt to equity ratio of more than 4.0 to 1.0 and the grain dealer’s estimated default exposure is greater than $20,000,000.
   (3)   Amount of security.
      (a)    A grain dealer who is required to file or maintain security under sub. (1) (a) shall at all times maintain security that is at least equal to the sum of the following:
         1.    Thirty-five percent of the grain dealer’s average monthly payment for the 3 months, during the preceding 12 months, in which the grain dealer made the largest monthly payments for producer grain procured in this state, except that this amount is not required of a contributing grain dealer.
         2.    The grain dealer’s highest total, at any time during the preceding 12 months, of unpaid obligations for producer grain procured in this state under deferred payment contracts, excluding any unpaid obligation under a deferred payment contract, for grain procured in this state, with a grain producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.
      (am)    A grain dealer who is required to file or maintain security under sub. (1) (b) shall at all times maintain security that is at least equal to the grain dealer’s highest total, at any time during the preceding 12 months, of unpaid obligations for producer grain procured in this state under deferred payment contracts, excluding any unpaid obligation under a deferred payment contract, for grain procured in this state, with a grain producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the grain dealer.
      (b)    A grain dealer who is required to file or maintain security under sub. (1) (c) 2. shall at all times maintain security at least equal to the grain dealer’s estimated default exposure, as defined in sub. (1) (c) 1., less $20,000,000.
      (c)    If more than one of pars. (a) to (b) applies to a grain dealer, the grain dealer shall at all times maintain security at least equal to the greatest amount of security that the grain dealer is required to maintain under any one of pars. (a) to (b).
   (4)   Form of security. The department shall review, and determine whether to approve, security filed or maintained under this section. The department may approve only the following types of security:
      (a)    Currency.
      (b)    A commercial surety bond if all of the following apply:
         1.    The surety bond is made payable to the department for the benefit of grain producers and producer agents.
         2.    The surety bond is issued by a person authorized to operate a surety business in this state.
         3.    The surety bond is issued as a continuous term bond that may be canceled only with the department’s written agreement or upon 90 days’ prior written notice served on the department in person or by certified mail.
         4.    The surety bond is issued in a form, and subject to any terms and conditions, that the department considers appropriate.
      (c)    A certificate of deposit or money market certificate if all of the following apply:
         1.    The certificate is issued or endorsed to the department for the benefit of grain producers and producer agents who deliver grain to the grain dealer.
         2.    The certificate may not be canceled or redeemed without the department’s written authorization.
         3.    No person may transfer or withdraw funds represented by the certificate without the department’s written permission.
         4.    The certificate renews automatically without any action by the department.
         5.    The certificate is issued in a form, and subject to any terms and conditions, that the department considers appropriate.
      (d)    An irrevocable bank letter of credit if all of the following apply:
         1.    The letter of credit is payable to the department for the benefit of grain producers and producer agents.
         2.    The letter of credit is issued on bank letterhead.
         3.    The letter of credit is issued for an initial period of at least one year.
         4.    The letter of credit renews automatically unless at least 90 days before the scheduled renewal date the issuing bank gives the department written notice, in person or by certified mail, that the letter of credit will not be renewed.
         5.    The letter of credit is issued in a form, and subject to any terms and conditions, that the department considers appropriate.
   (5)   Department custody of security. The department shall hold, in its custody, all security filed and maintained under this section. The department shall hold the security for the benefit of grain producers and producer agents who deliver grain to a grain dealer.
   (6)   Monthly reports. A grain dealer who is required to file or maintain security under this section shall file monthly reports with the department. The grain dealer shall file a report on or before the 10th day of each month, in a form specified by the department. In a monthly report, a grain dealer shall provide information reasonably required by the department, including all of the following:
      (a)    The grain dealer’s average monthly payment for the 3 months, during the preceding 12 months, in which the grain dealer made the largest monthly payments for producer grain procured in this state.
      (b)    The grain dealer’s highest total unpaid obligations, at any time during the preceding 12 months, for producer grain procured in this state under deferred payment contracts. If the amount owed on deferred price contracts has not yet been determined, the grain dealer shall estimate the amount based on contract terms and prevailing market prices on the last day of the previous month.
   (7)   Additional security.
      (a)    The department may, at any time, demand additional security from a grain dealer if any of the following applies:
         1.    The grain dealer’s existing security falls below the amount required under sub. (3) for any reason, including depreciation in the value of the security filed with the department, an increase in grain payments or grain prices, or the cancellation of any security filed with the department.
         2.    The grain dealer fails to provide required information that is relevant to a determination of security requirements.
      (b)    The department shall issue a demand under par. (a) in writing. The department shall indicate why the security is required, the amount of security required, and the deadline date for filing security. The department may not specify a deadline for filing security that is more than 30 days after the date on which the department issues its demand for security.
      (c)    A grain dealer may request a hearing, under ch. 227, on a demand for security under par. (b). A request for hearing does not automatically stay a security demand.
      (d)    If a grain dealer fails to comply with the department’s demand for security under this subsection, the grain dealer shall give written notice of that fact to all grain producers and producer agents from whom the grain dealer procures producer grain in this state. If the grain dealer fails to give accurate notice under this paragraph within 5 days after the deadline for filing security under par. (b) has passed, the department shall promptly notify those grain producers and producer agents by publishing a class 3 notice under ch. 985. The department may also give individual notice to those grain producers or producer agents of whom the department is aware.
      (e)    If a grain dealer fails to comply with the department’s demand for security under this subsection, the department may do any of the following:
         1.    Issue a summary order under s. 126.85 (2) that prohibits the grain dealer from procuring producer grain or requires the grain dealer to pay cash on delivery for all producer grain.
         2.    Suspend or revoke the grain dealer’s license.
   (8)   Releasing security.
      (a)    The department may release security filed under sub. (1) (a), except for any amount of security that the grain dealer is required to file because sub. (1) (b) or (c) applies to the grain dealer, if any of the following applies:
         1.    The grain dealer reports, for at least 2 consecutive years, no more than $500,000 in annual grain payments under s. 126.11 (9) (a) and the grain dealer pays the quarterly fund assessment that would have been required of the grain dealer if the grain dealer had been a contributing grain dealer on the most recent quarterly installment date under s. 126.15 (7).
         2.    The grain dealer’s annual financial statement under s. 126.13 shows positive equity for at least 2 consecutive years and the grain dealer pays the quarterly fund assessment that would have been required of the grain dealer if the grain dealer had been a contributing grain dealer on the most recent quarterly installment date under s. 126.15 (7).
      (b)    The department may release security filed under sub. (1) (b), except for any amount of security that the grain dealer is required to file because sub. (1) (a) or (c) applies to the grain dealer, if any of the following applies:
         1.    The grain dealer has not had any deferred payment contract obligations since the beginning of the grain dealer’s last completed fiscal year.
         2.    The grain dealer files 2 consecutive annual financial statements under s. 126.13 showing that the grain dealer meets the applicable equity requirement and debt to equity ratio under sub. (1) (b).
      (bm)    The department may release security filed under sub. (1) (c), except for any amount of security that the grain dealer is required to file because sub. (1) (a) or (b) applies to the grain dealer, if the grain dealer files 2 consecutive annual financial statements under s. 126.13 showing that the grain dealer no longer has negative equity, a current ratio of less than 1.25 to 1.0, or a debt to equity ratio of more than 4.0 to 1.0.
      (d)    The department may release security to the extent that the security exceeds the amount required under sub. (3).
      (e)    The department may release security if the grain dealer files alternative security, of equivalent value, that the department approves.
      (f)    The department shall release security if the grain dealer is no longer in business and has paid all grain obligations in full.

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