Claim Valuation

PURPOSE: This rule establishes procedures to be followed in settling storage claims and in determining the value of storage claims. It also sets forth the methods and procedures to be used in allowing claims against the bond (security) files with the Department of Agriculture. (1) The following words, terms and phrases when used in this rule, except where the context clearly indicates otherwise, shall mean: (A) Board price—purchase price offered by grain warehouses for grain delivered or sold from storage. Generally this price is posted in public view and is changed periodically as market prices change; (B) Claimant—any person who has a grain storage claim against a licensed warehouse; (C) Costs of liquidating grain—costs incurred by the department in liquidating and loading out the grain contained in the warehouse. This includes labor to monitor the warehouse facility until the grain is loaded out, load-out of the grain and charges for grading, as well as trucking expenses; (D) Daily Market Summary—report published daily by the market news section of the marketing division of the Missouri Department of Agriculture which notes among other things, the range of cash truck bids paid for grain to producers for different areas of the state; (E) Department—the Missouri Department of Agriculture; (F) Depositor—any person who deposits grain in a warehouse for storage, handling, shipment or processing, or who is the owner or holder of a warehouse receipt, or who is otherwise lawfully entitled to possession of the grain; (G) Director—the director of the Missouri Department of Agriculture or his/her designated representative; (H) Licensed warehouse—a warehouse for which the department has issued a license to operate as a public warehouse in accordance with the provisions of Chapter 411, RSMo; (I) Local paying price—purchase price offered by grain warehouses and grain dealers, with receiving and shipping capabilities similar to the warehouse with storage claims, located in a twenty (20)-mile radius; (J) Pricing date—the date that a claimant loses the ability, by action of the warehouse or the Missouri Department of Agriculture, to demand redelivery of grain deposited at the warehouse or sell the grain to the warehouse; (K) Storage claim—occurs upon the inability of a licensed warehouse to redeliver grain to a depositor upon demand; (L) Storage grain—any grain received in a warehouse, including grain bank grain, unless sold in accordance with the provisions of section(s) 411.325 or 276.401–276.582, RSMo; (M) Total gross claim value—claimant’s quantity of a commodity multiplied times the unit claim value; (N) Total net claim value—total gross claim value less warehouse charges and other charges approved by the director or circuit court; (O) Unit claim value—the price determined by the department in accordance with this rule to be the value per normally traded unit of individual commodities stored by the warehouse as of the pricing date; and (P) Warehouse charges—amounts charged by the licensed warehouse in accordance with the schedule of charges filed with the department. Allowable charges include: storage, receiving, load-out, cleaning, drying, quality discounts and other charges applicable to the conditioning or processing of grain delivered. (2) When a license of a warehouse is revoked or expires, when a renewal is refused or when an examination conducted by the department shows storage claims, these claims shall be settled in accordance with this rule or as approved by the department. (3) The department shall determine if a shortage of grain, either in quantity or quality, in the warehouse versus storage grain obligations may exist. If a shortage does exist, the department shall determine if redelivery of grain in the warehouse to storage customers on a pro rata basis shall be allowed. This determination may be made on the basis of each commodity. (4) If the department determines that a shortage may exist, the earlier of either the date the license is revoked or expires or renewal is refused, or the date that the redelivery period ends shall be considered the pricing date. (5) If redelivery is an option, the department shall verify storage claims prior to allowing redelivery. This shall be done by contacting known storage customers, as noted in the records of the warehouse, and public notice of claim filing procedures. This public announcement shall be made by the news media serving the county the warehouse is located in as well as adjoining counties or other counties the warehouse is known to do business in which, all storage claims shall be filed on an affidavit of grain claim form available from the department. The department shall verify all claims based on records of the warehouse, records of the claimant and other means necessary. (6) The period for filing claims shall be set by the department and shall not be less than seven (7) days after public notice is made. The failure of a claimant to file a claim within the time period set by the department shall limit the claimant’s ability to participate in redelivery of storage obligations. (7) To be considered as a claim under the security filed by the warehouse with the department, the period for filing claims shall be sixty (60) days from the date public notice is made. If the department determines that redelivery is not an option, the filing period of claims against the escrow account also shall be sixty (60) days. The department may grant an extension when deemed necessary. (8) After the claim filing deadline, the department shall reconsider the viability of allowing redelivery, based on claims filed, inventory of grain on hand and if claimants desire redelivery. If the department determines that redelivery is still an option, the department shall establish a redelivery schedule, notify all claimants of this schedule and how quality differences will be handled. Notification may be verbal. (9) Load-out charges and warehouse charges shall be paid before the grain is loaded out or deducted from the quantity of grain loaded out. The department shall determine the quantity of grain deducted based on the unit claim value. (10) If the department determines that redelivery is not an option, the grain shall be sold at the best price available, as determined by the department. The sale of the grain shall not be delayed by the claims filing period. Proceeds from the sale of the grain shall be deposited into an interest bearing escrow account to be distributed only upon further order of the director or circuit court. The department shall document bid procedures used, bids received and the reason the bid was awarded if any price other than the highest gross price is accepted. This report shall be available for review by any claimant or other interested party. (11) The grade on all grain loaded out or sold shall be based on official grades based on submitted samples or official samples as drawn from the grain loaded out unless the grain is sold or redelivered on an as-is, where-is basis, with no quality discounts to apply. (12) The gross unit claim value may be based on any of the following methods, listed in order of preference. Different methods may be used to value different commodities. Rationale used should be documented and available for review if any of the methods of lower preference are used: (A) The board price of the warehouse. If this price varies by more than one percent (1%) from the local paying price, the local paying price shall be used; (B) The local paying price as determined by the department; (C) The average bid price for grain reported by the “Daily Market Summary” for the area in which the warehouse is located; (D) The value per unit of the storage as determined by experts in the industry as defined by the department; and (E) The gross value per unit received for the grain sold less any market basis differential. (13) Following the determination of the unit claim value, the total gross claim value and net claim value shall be determined. Warehouse charges shall be computed through the pricing date. Prepaid charges paid by the storage claimant shall not be added to the total gross claim value. (14) Upon written order of the director or circuit court, proceeds from the sale of a commodity plus accumulated interest shall be distributed on a pro rata basis to storage customers with a storage claim for that commodity. The amount distributed shall be deducted from the total net claim value. The excess of proceeds from the sale of an individual commodity shall be set aside for distribution by future order of the director or circuit court. Uses of this excess include payment of grain dealer claims for the same commodity, payment of grain dealer claims for other commodities, payment of storage claims within other commodities, payment of lien holders and payment to the warehouse. (15) The cost of liquidating the grain may be deducted from the proceeds from the sale of the grain. These costs may be paid by the department immediately upon incurring them without waiting for an order approving the payment of storage claims. These costs shall be prorated per commodity. If liquidation costs of any one (1) commodity exceed the proceeds from that commodity, the remaining liquidation costs shall be paid by the department and may be charged to the warehouse. (16) The department shall document procedures used for valuing claims and the costs of liquidating grain. A report summarizing this information shall be available for review by any claimant or other interested party. (17) After the distribution of proceeds from the sale of grain, any remaining unpaid claim shall be a claim against the security filed by the warehouse with the department. Accumulated interest on the proceeds from the sale of grain distributed shall not be considered a reduction in the net claim value. All remaining claim amounts, regardless of commodity, shall be an equal claim against the security. If total remaining claims exceed the total security plus any accumulated interest or penalty, the total proceeds shall be distributed on a pro rata basis, by order of the department or circuit court, to all individual claims per commodity. AUTHORITY: section 411.070, RSMo Supp. 1998.* Original rule filed April 19, 1989, effective June 29, 1989. Amended: Filed Oct. 25, 1999, effective June 30, 2000. *Original authority: 411.070, RSMo 1941, amended 1955, 1965, 1977, 1980, 1986, 1993, 1995, 1997.