Aren registered grain dealers bonded?
A Yes, the Michigan Grain Dealers Act requires bonding, but only to cover warehouse receipts and open storage obligations, and the maximum required bond for any elevator is $400,000. When the Act was rewritten, additional bonding requirements were explored, however the cost to raise the bond level was excessive. Cost to cover higher bonding requirements, while technically paid by the elevator, would likely be passed on to producers anyway. The trend toward more price later agreements (PLA’s) (which are not covered by the bond) was also discussed. The committee working on the rewrite, as well as Farm Bureau policy, recommended the creation of an insurance program as opposed to bonding. The recommendation was based on lower projected cost and premiums paid by producers. Because premiums are paid by producers, the FPIA retains producer control over the program, and provides coverage for all types of sales transactions.
