Idaho Code § 28-9-322A

Current through the 2024 Regular Session

Section 28-9-322A - SECURITY INTERESTS IN CROPS FOR PROVISION OF AGRICULTURAL CHEMICALS

(a) As used in this section:

(1) "Agricultural chemical" means fertilizers and other chemicals applied to crops or land which is to be used for the raising of crops, including pesticides, soil amendments and plant regulators.

(2) "Fall agricultural chemical security interest" means a security interest in specific crops growing or to be grown granted by a grower to a supplier to secure the grower's obligation to repay value given by the supplier to enable the grower to purchase from the supplier (A) agricultural chemicals to apply to such crops or to land on which such crops will be grown, and (B) application of such agricultural chemicals if such application is performed by the supplier. To qualify as a fall agricultural chemical security interest, the security interest must also satisfy the following conditions:

(i) Before supplying the agricultural chemicals to the grower, the supplier and grower provide the lender with a notification statement and opportunity to respond in accordance with this section;

(ii) The security interest is perfected within twenty (20) days after the agricultural chemicals are delivered to the grower; and

(iii) The agricultural chemicals are actually applied to the grower's land or crops during the period September 1 through December 15.

(3) "Grower" shall mean a specified debtor of a lender.

(4) "Lender" shall mean the holder of an existing perfected security interest in crops of a grower.

(5) "Letter of response" shall mean a statement by a lender containing the information specified in subsection (j) of this section.

(6) "Notification statement" shall mean a statement by a supplier containing the information specified in subsection (h) of this section.

(7) "Supplier" shall mean a person who supplies agricultural chemicals to a grower.

(b) A supplier may obtain a fall agricultural chemical security interest as provided in this section. To the extent not otherwise expressly provided in this section, the provisions of this chapter apply to a fall agricultural chemical security interest. The amount secured by a fall agricultural security interest shall be the lesser of:

(i) the agreed charges for the agricultural chemicals and application costs provided pursuant to the notification statement; or

(ii) the amount of the anticipated charges as reflected in the notification statement.

(c) A fall agricultural chemical security interest attaches to the existing crops upon the land where the agricultural chemical is applied, or if crops are not planted at the time of the application, to the next production crop from that land. It does not attach to crops already harvested or which are harvested before December 15 from such land, or to crops to be grown on such land after the next production crop, or to crops grown on other land than that identified in the notification statement.

(d) A fall agricultural chemical security interest is perfected by filing a financing statement.

(e) A fall agricultural chemical security interest shall have priority over a conflicting security interest in the same crops and identifiable proceeds thereof except for a prior perfected fall agricultural chemical security interest. In the event of any commingling of crops or proceeds covered by a fall agricultural chemical security interest with other crops or proceeds, the burden of proving the applicability of the fall agricultural chemical security interest to any particular crops or proceeds is on the supplier asserting it.

(f) Nothing in this section is intended to limit the priority of agricultural liens established by the statutes creating such liens, and a perfected agricultural lien shall have priority over a conflicting security interest (including a fall agricultural chemical security interest) if the statute creating the agricultural lien provides such priority.

(g) A supplier may notify the lender that the supplier intends to supply agricultural chemicals to the grower and that the supplier requests the lender to issue a letter of response. In order to so notify the lender, the supplier shall provide a notification statement to the lender in an envelope marked CROP SECURITY INTEREST NOTIFICATION STATEMENT, sent by certified mail addressed to the lender at the address for such lender shown on such lender's most recently filed UCC-1F financing statement regarding that grower.

(h) A notification statement shall contain:

(1) The name, address and signature of the supplier providing the notification statement;

(2) The date the notification statement was prepared;

(3) The name and address of the lender;

(4) The name and address of the person to whom the lender's response to the supplier should be addressed;

(5) A description and anticipated date of the application of agricultural chemicals and the anticipated charges for the agricultural chemicals, including anticipated application costs;

(6) The name, address and signature of the grower to whom the supplier furnished or intends to furnish agricultural chemicals;

(7) A reasonable description of the real estate sufficient to identify the same where the agricultural chemicals are to be applied;

(8) The name and address of the owner (if other than the grower) of such real property;

(9) A description of the crops growing or to be grown on such real property as to which the supplier intends to supply agricultural chemicals and upon which the supplier claims or intends to obtain a security interest;

(10) The social security number or federal tax identification number of the grower to whom the supplier intends to provide agricultural chemicals; and

(11) The social security number or federal tax identification number of the supplier providing the notice.

(i) Within fifteen (15) days after actual receipt of a notification statement, the lender shall deposit in the U.S. mail, certified, a letter of response to the supplier. A copy of the lender's letter of response shall be sent to the grower.

(j) A letter of response shall contain the name, address and signature of the lender, and either

(1) A statement by the lender that there is an outstanding commitment for operating financing from the lender to the grower, and that the lender shall reserve the amount in the notification statement for the purpose of honoring drafts or other demands for payment by the supplier accompanied by invoices signed by the grower or other proof of delivery signed by the grower; or

(2) A statement by the lender that the lender shall subordinate the priority of its security interest in specified crops of the grower to the priority of the security interest in such crops obtained or to be obtained by the supplier, and specifying that the maximum amount of such subordination shall be the amount stated in the notification statement; or

(3) A statement by the lender that it declines to either reserve funds or subordinate its security interest.

(k) If the lender's letter of response states that the lender declines to either reserve funds or subordinate its security interest, the respective rights of the lender and the supplier are not affected by this section and the relative priority between the lender's security interest in crops, and any security interest obtained by the supplier in such crops, shall be determined according to the ordinary rules governing the priority of conflicting security interests in the same collateral, unless the supplier's security interest is a fall agricultural chemical security interest.

(l) If the lender does not mail its letter of response to the supplier within fifteen (15) days after receiving the notification statement, and the supplier has perfected a security interest in such crops or perfects such security interest within ten (10) days after the expiration of the fifteen (15) day period for the lender to respond, the supplier's perfected security interest in such crops shall take priority over the lender's perfected security interest in such crops, but only to the extent of the lesser of (1) the amount stated in the notification statement, or (2) the unpaid agreed charges for the agricultural chemicals identified in the notification statement and actually applied to, or for the benefit of, such crops.

(m) Any amounts repaid by any person on the grower's obligation for which the supplier has obtained an agricultural chemical security interest shall reduce the value of the agricultural chemical security interest on a dollar-for-dollar basis, and amounts may not be reborrowed or readvanced under the same notification statement. If the supplier receives proceeds of any collateral of the lender (other than proceeds of the crops covered by the fall agricultural security interest), such proceeds shall be turned over to the lender. In order to obtain the benefits of this section, any additional sales of agricultural chemicals not included in the original notification statement must be the subject of a new notification statement, to which the lender may issue a new letter of response.

(n) No one but the supplier shall be entitled to rely on a letter of response. Rights (if any) under a letter of response are not assignable, except in connection with an assignment by the supplier of the entire security interest to which such letter of response relates. By issuing a letter of response and performing thereunder, the lender does not become a partner, joint venturer or fiduciary of either the grower or the supplier.

(o)

(1) The secretary of state shall publish a form substantially as follows:

Name of supplier ..............................................

Address .......................................................

SSN/TIN .......................................................

Date notification statement was prepared ......................

Name of lender ................................................

Address .......................................................

Name of person to whom lender's response to supplier should be addressed .....................................................

Address .......................................................

Description and anticipated date of the application of agricultural chemicals ........................................

Anticipated charges for the agricultural chemicals ............

Anticipated charges for application, if not included in charges for chemicals .................................................

Name of grower ................................................

Address .......................................................

SSN/TIN .......................................................

Reasonable description of the real estate where the agricultural chemicals are to be applied ......................

................................................................

Name of owner of real property (if other than grower) ........

................................................................

Address .......................................................

Crops growing or to be grown on such real property as to which the supplier intends to supply agricultural chemicals and upon which supplier intends to obtain a security interest ..........

................................................................

Signature of supplier .........................................

Signature of grower ...........................................

(2) On the reverse side of the form described in subsection (1) of this section, the secretary of state shall provide a form for the lender's letter of response, substantially as follows:

Name of lender ................................................

Address .......................................................

Lender responds to notification statement as follows (choose one):

[] An outstanding commitment for operating financing exists for

this grower. Of that commitment, lender hereby reserves the amount specified in the notification statement for the purpose of honoring drafts or other demands for payment by supplier, accompanied by invoices signed by grower or other proof of delivery signed by grower.

[] Lender hereby subordinates the priority of its security

interest in (specify crops) .................... of grower to the priority of the security interest in such crops obtained or to be obtained by supplier, such subordination to be in the amount specified in the notification statement.

[] Lender declines to either reserve funds or subordinate its

security interest.

Signature of lender ...........................................

(3) Suppliers and lenders are required to use the form published by the secretary of state.

Idaho Code § 28-9-322A

[28-9-322A, added 2001, ch. 208, sec. 2, p. 742.]