OAG 94-31

May 2, 1994

Donna Greenwell Dutton

General Counsel, Department of Agriculture

7th Floor, 500 Mero Street

Frankfort, Kentucky 40601

Dear Ms. Dutton:

In your letter to this office dated April 14, 1994, you state as follows:

This is to request an attorney general's opinion pertaining to the Kentucky Grain Insurance Fund, KRS 251.600-251.740.

The Grain Insurance Fund was established in order to compensate grain producers in the event there is a financial failure of a grain dealer or grain warehousemen. The Fund is financed by the producers of grain who pay a one-half cent (1/2c) per bushel assessment on all marketed grain. A producer can receive a refund if he is dissatisfied with the assessment by demanding a refund in writing. Any producer who suffers a financial loss due to a failure of a grain dealer or warehouseman can make a claim for compensation to the Kentucky Grain Board, who determines the validity and the amount of the claim.

Recently, the Kentucky Grain Board was presented with several "claims" that they are uncertain on whether or not payment should be made. The key question is whether or not these persons are "claimants" and "producers" as defined in KRS 251.610 in order to be entitled for compensation pursuant to KRS 251.670.

Generally, claimants before the Grain Board are producers of grain who take grain produced on their land to a grain facility, sell the grain to the grain facility, and receive proceeds therefrom. In this instance, persons purchased grain from the grain facility, stored the grain at the facility, and used the grain on an as needed basis. These persons did not produce the grain on their land. Therefore, it is uncertain whether or not they are a "producer" as defined in KRS 251.610. If there persons are found to be producers, then the question becomes whether or not these persons are "claimants" as defined in KRS 251.610. These persons most likely hold some form of written evidence of ownership, such as a scale ticket, and therefore, would be qualified under KRS 251.610(2)(b).

The final question is whether or not these persons would be eligible to participate in the grain insurance fund program if the assessment had not been collected on the purchase of grain. Since these persons purchase grain instead of producing grain, they most likely did not pay into the Fund and the grain facility most likely did not take the one-half cent (1/2c) assessment on this grain.

KRS 251.610(18) defines "producer" as follows:

'Producer' or 'grain producer' means the owner, tenant or operator of land in Kentucky who has an interest in and receives all or any part of the proceeds from the sale of the grain produced on land in Kentucky, except that a producer who establishes by clear and convincing evidence that he has paid an assessment authorized by KRS 251.640 shall not be required to establish that the grain was produced in Kentucky.

To answer your question, we start with the premise that a court has the duty to construe statutes literally if it is reasonably possible to do so. ITT Commercial Finance Corp. v. Madisonville Recapping Co., Inc., Ky. App., 793 S.W.2d 849 (1990). In construing a statute the court should look to its letter and spirit, viewing it as a whole, and should also look to the circumstances under which it was enacted. City of Owensboro v. Noffsinger, Ky., 280 S.W.2d 517 (1955).

The obvious intent of the legislature was that the claimant first be an "owner, tenant or operator of land in Kentucky." In order to be a "claimant" the person must first be a "producer." KRS 251.610(2). He cannot be a producer unless he fits the definition as quoted above. If he is not the owner, tenant or operator of the land but is merely a purchaser, he is not a "producer" and therefore cannot be a "claimant." This individual is not entitled to compensation pursuant to KRS 251.670. These persons are not eligible to participate in the grain insurance program established by KRS 251.640 because they are not "producers" as statutorily defined.




Joseph R. Johnson

Assistant Attorney General