PIERRE - Regulation of grain sales, a $6 billion piece of South Dakota's economy last year, was a huge but previously obscure responsibility for the state Public Utilities Commission.
That is, until the failure of Anderson Seed Co. at Redfield in January.
Now, the incident is a dividing line in the election campaigns for two PUC seats. The rival sides outlined their opposing proposals Wednesday.
The two Democratic candidates, former Rep. Nick Nemec of Holabird and Matt McGovern of Sioux Falls, called for adding another check-off fee on farmers.
Nemec and McGovern would put proceeds from a voluntary surcharge of 1 cent per bushel into an emergency fund until the balance reached $5 million or $10 million.
The fund would serve as a financial safety net for farmers when a grain buyer became insolvent. The check-off fee would be reinstated whenever necessary to return the fund to its full level.
Two Republican incumbents on the commission face election this fall: chairman Chris Nelson of Pierre and vice chairwoman Kristie Fiegen of Sioux Falls. They don't support creation of as an indemnity fund.
Nelson said it would shift $5 million to $10 million from farmers' pockets into the financial sector.
The two pairs stand apart on a related issue, too.
Nemec and McGovern said they favor changing state law so farmers are first in line, ahead of banks, in recovery of any assets from failed grain buyers.
But Fiegen and Nelson see a down side: Bankers could become more reluctant to loan money to grain buyers if farmers come ahead of them.
Nemec and McGovern stood at the back of the small room and listed as Nelson and Fiegen, acting in their official capacity as PUC members, announced their proposed changes.
Fiegen said the Republican proposals would provide more financial transparency.
One step would require current financial information at the time of initial licensing, rather than an audited statement from the previous year.
A perjury penalty would be added for applicants.
The method for calculating bond amounts would be changed.
Grain buyers would be required to immediately notify the PUC at any time the business is out of financial compliance with state regulations.
And grain buyers based out of state would also be required to file financial documents with the PUC.
The PUC's third commissioner, Republican Gary Hanson of Sioux Falls, reportedly supports the proposals that Fiegen outlined, Nelson said.
Nelson said the goal is to provide additional tools to the PUC for detecting financial weaknesses.
Prevention is much more important than some 'after the fact' issue that might come up, Nelson said.
Anderson Seed carried a $100,000 bond, which the PUC seized recently.
But farmers were owed in excess of $2 million. Nearly all of that debt was in voluntary credit sales, where a producer knowingly agrees to a deferred pricing arrangement or delayed payment
Nelson said simply raising bond amounts or creating an indemnity fund would be counter-productive because money would be shifted out of the agriculture sector.
It also makes it harder for people to get into the grain buying business, he said.
Nelson didn't specifically oppose creation of the indemnity fund. That's a policy decision on the part of the Legislature, he said.