About Grain Warehouse Program
The Grain Warehouse Inspection program administers and enforces the Kansas Public Warehouse Law relating to grain storage. It requires that any entity that stores grain for the public be licensed. It ensures that Kansas grain producers have safe, solvent warehouses where they may store their commodities. To achieve this, the program examines state-licensed facilities at least once each year. More examinations are made on licensed facilities that meet only the minimum financial requirements.
- Eliminate fraud in the grain industry.
- Ensure the quantity of stored commodities in Kansas licensed warehouses.
- Maintain the percentage of loss to producers at zero.
The Grain Warehouse Inspection program has a new statute that allows grain companies to furnish an irrevocable letter of credit along with a bond to obtain a license. The licensed elevator, with the approval of the Grain Warehouse Inspection program, is allowed to move warehouse-receipted grain to another licensed, bonded terminal elevator. This allows smaller facilities to free up bin space for the next harvest. Also, with the program's approval, licensed facilities may use emergency or conditional storage space during harvest when storage space is in short supply. This allows the elevator to better serve Kansas crop producers.
Grain warehouse laws may be found at K.S.A. 34-101 through 34-2,113.
During fiscal year 2009, the Grain Warehouse Inspection program had 108 licensed elevators and 262 additional locations. The program performed 83 random examinations on the 108 licensed facilities. The program wasn’t able to exam all elevators due to falling revenues. Facilities meeting only the minimum financial requirements, or facilities with serious compliance problems, were examined more than once during the year.
The number of state-licensed elevators continues to decline. The decline in state licensed facilities can be attributed to grain companies merging, being sold to another federally licensed or state-licensed facility, or elevators going out of business. When elevators merge, it is to reduce operating costs and to increase productivity. Although the number of licenses continues to decline the total number of licensed bushels continues to increase.
A licensed elevator, with the approval of the Grain Warehouse Inspection program, may move open stored grain to another licensed, bonded terminal elevator. This allows smaller facilities to free up bin space for the next harvest. Also, with approval from the program, licensed facilities may use emergency or conditional storage space during harvest when storage space is in short supply. This allows the elevator to better serve Kansas crop producers.
During the 2005 legislative session, the statutes were changed to grant grain examiners the authority to obtain representative samples whenever they suspect grain quality is in jeopardy. If quality problems are confirmed in a representative sample, the statute gives the secretary of agriculture authority to require the warehouse to have suspect grain thoroughly sampled and graded by the Kansas Grain Inspection Service. If the facility does not comply with the required sampling, the secretary may order it done at the facility’s expense.
During fiscal year 2010, warehouses will begin moving toward electronic receipts. USDA already has implemented electronic warehouse receipts for cotton, coffee and peanuts, and is beginning to implement their use for grains. Authorizing electronic receipts should reduce the amount of time examiners spend on examinations and they may even help reduce fraud.