251.375 Forward pricing contracts -- Requirements governing -- Administrative
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/ky/251-375A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
regulations.
(1)No licensee shall enter into forward pricing contracts without first attaining
approval from the department to enter into these contracts. A licensee entering into
forward pricing contracts shall keep any records and ledgers the department deems
necessary to document the licensee’s obligations.
(2)A licensee that has entered into a forward pricing contract shall make a copy
available for inspection by the department or the board upon request.
(3)Forward pricing contracts shall be in writing.
(4)The board, in conjunction with the department, shall promulgate administrative
regulations setting forth the minimum information that shall be included in any
forward pricing contract entered into by a licensee.
(5)By the tenth day of each month, any licensee that has entered into a forward pricing
contract shall submit to the department a report accurately reflecting its position on
the last day of the previous month.
(6)A licensee which has entered into one
(1)or more forward pricing contracts shall
maintain at least eighty percent (80%) of the value of the licensee’s unpaid
obligations for all grain purchased under forward pricing contracts, using one
(1)or
more of the following:
(a)Grain maintained in storage in the licensee’s warehouse or other storage
facilities;
(b)Rights to grain as evidenced by a warehouse receipt or scale ticket for storage
of the grain under an agreement with another warehouse approved by a
representative of the department; or
(c)Proceeds from the sale of grain as evidenced by one
(1)or more of the
following:
1. Funds held in a separate account, designated for the benefit of unpaid
sellers of grain that was delivered under forward pricing contracts, in a
state or federally licensed financial institution or a lending agency of the
Farm Credit Administration;
2. Short-term investments held in time accounts, designated for the benefit
of unpaid sellers of grain that was delivered under forward pricing
contracts, in a state or federally licensed financial institution or a lending
agency of the Farm Credit Administration; or
3. Other evidence of unencumbered security or assets acceptable to the
department, including but not limited to an irrevocable letter of credit or
surety bond.
(7)If the department or the board determines that a licensee does not have sufficient net
worth to satisfy the indebtedness, the department shall prohibit the transfer or
disbursement of any grain, property, or assets except for the satisfaction of unpaid
obligations for grain that was delivered under forward pricing contracts.
Disbursements of payments to sellers shall be made on a pro rata basis of the value of the remaining grain.