WAREHOUSE LICENSE
Any person desiring to engage in business as a public warehouseman in this state shall make written application to the secretary for a license. Along with this application, a copy of the year end financial statement, at an audited or reviewed level, is required. A proof of in bound and out bound scale tickets must be submitted and approved prior to operation. Stock insurance is required. A deductible of $10,000 may be used. Once the capacity is determined, appropriate fees and either a bond or irrevocable letter of credit must be in place.
Several items are examined in the financial statements. The allowable net worth must be at $25,000 or greater. This amount increases to $50,000 if the elevator is going to apply for a Uniform Grain & Rice Storage Agreement. If this amount is deficient, the only remedy is a cash injection into the warehouse. Once the capacity is determined, the allowable net worth requirement is 25 cents per licensed bushel. An elevator with a 1,000,000 bushel capacity would need an allowable net worth of $250,000. If there is a deficiency in allowable net worth, and the minimum ($25,000/$50,000) is met, the elevator may cover the deficiency with additional bond or an increase in their irrevocable letter of credit. The warehouse must maintain a one to one relationship between the current assets and current liabilities. If this is not met, an available line of credit may be used from an appropriate financial institution.
Finally, in order to be licensed, a warehouse must furnish a bond based on their licensed capacity. The bond must be in favor of the secretary of agriculture. The bond is calculated as follows: 20 cents on the first million bushels, 15 cents on the next million bushels, and 10 cent for every bushel over 2 million. All bonds are rounded up to the next hundred dollars. An elevator with a capacity of 2,500,000 would be calculated as follows:
1,000,000 X .20 = $200,000.00
1,000,000 X .15 = $150,000.00
500,000 X .10 = $ 50,000.00
Total Bond -- $400,000.00
The minimum amount for a bond is $10,000 and maximum is $500,000, assuming no deficient net worth to cover. If you are interested in becoming a licensed public warehouse in the state of Kansas, we invite you to contact our program at 785-296-3786. We have a new application package that we will gladly mail to you. Or, we will be happy to answer any specific question you have.