Grain Dealer Licensing
Who needs a grain dealer license
Maryland law requires all persons who are in the business of buying, receiving, exchanging or storing grain from a grain producer to obtain a license from the Maryland Department of Agriculture annually. Persons purchasing grain for use in their own farming operation are exempt from the licensing requirement. Failure to obtain a license when operating as a Grain Dealer is considered a misdemeanor. Violators may be assessed a civil penalty up to $5,000.00 or upon conviction may be subject to a fine up to $10,000.00.
Licensing requirements
- Documentation of financial net worth
- Handles 1 to 49,999 bushels - $15,000.00 net worth
- Handles 50,000 to 99,999 bushels - $35,000.00 net worth
- Handles 100,000 and above bushels - $100,000.00 net worth
- For dealers handling 100,000 or more bushels per year, the financial statement must be reviewed by a certified public accountant. Alternative methods of meeting the financial documentation requirements are the posting of a surety bond or obtaining an irrevocable letter of credit.
- Documentation of insurance coverage for grain.
- Payment of license fee ($50.00 to $300.00 depending on volume of grain handled).
- Submission of completed application
What the Grain Law does
The Maryland Grain Law provides a grain producer with limited assurance of the licensed dealer's financial stability. Additionally, the producer knows the dealer has insurance coverage to prevent loss of stored grain due to natural disasters. Farmers selling to non licensed grain dealers have no way to verify if the dealer has insurance on the grain or is financially stable.
What the Grain Law does not do
Many aspects of the grain business are not regulated by the Maryland Grain Law. Grain buyers who only purchase grain from other grain buyers are not required to obtain a license. Persons purchasing grain for use in their own farming operation are not required to obtain a license. The law does not guarantee producers payment, regulate contract terms or prompt payment.
Verify a grain dealer's license
Producers can maximize the protection offered by the Grain Law by verifying the license status of potential buyers of their grain. A listing of licensed Grain Dealers is published by the Maryland Department of Agriculture annually and can be obtained by contacting the Grain Laws Section. All reports of unlicensed Grain Dealers are investigated by MDA inspectors.
Common complaints received by our office
- Grain dealers who are paying producers cash upon delivery feel it is unnecessary to be licensed. Regardless of payment arrangements, they are still subject to the financial and insurance requirements.
- Grain producers who are not paid promptly. This area is not regulated by MDA.
- Anonymous complaints concerning unlicensed suspected dealers. Our office must have sufficient evidence that a person is acting as a grain dealer to obtain a court order to subpoena their records.