Grain Dealers Program - 791-0240-21

Description of Agency

Michigan Department of Agriculture and Rural Development’s (MDARD’s) Grain Dealers Program (GDP) administers the Grain Dealers Act, Public Act 141 of 1939, to regulate the storage, warehousing, buying, and selling of farm produce. GDP licenses approximately 200 grain dealers in Michigan including 13 owned by out-of-state entities. GDP conducts four types of audits of the grain dealers to ensure compliance with GDP requirements and to monitor grain dealer’s financial stability. GDP performs a risk analysis of the grain dealers to determine which type of audit will be performed. Each dealer should have at least one audit every 12 to 18 months. The four types of audits are: Tradition, Working Capital, Internal Control Exam, and Commodity. The Farm Produce Insurance Act, Public Act 198 of 2003, authorizes the Farm Produce Insurance Authority (FPIA) to employ MDARD personnel to provide commodity assessment reviews and administrative services for assessment and refund verification through a memorandum of understanding with the GDP. FPIA reimburses GDP for up to $500,000 each year for these services. In the event a grain dealer is no longer solvent and unable to pay their obligations to the producers (farmers), GDP audits the producers’ claims and assists in closing the failed grain dealer. Between 2004 and 2020, there have been 11 grain dealer failures with FPIA paying out approximately $5.6 million to the producers.

 

Audit Objectives

1. To assess the effectiveness of GDP’s efforts to administer the Grain Dealer Program.
2. To assess the effectiveness of GDP’s efforts to license grain dealers.
3. To assess the effectiveness of GDP’s efforts to validate producer loss claims.
 
 

Timing

Estimated Release Date: December 2021


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