|The reinstatement of fees on grain sold to or deposited at Iowa-licensed grain dealers and warehouses as part of the Iowa Grain Depositors and Sellers Indemnity Fund (Grain Indemnity Fund) starts on September 1.
“The Grain Indemnity Fund serves as a low-cost insurance policy for Iowa farmers. This program has proven incredibly successful at protecting Iowa farmers from catastrophic financial losses over the last three decades,” said Iowa Secretary of Agriculture Mike Naig. “Existing Iowa law now requires the fund to be replenished for the first time since 1989. We will continue to work diligently to ensure the financial soundness of the grain industry so that we can prevent failures and protect farmers’ investments.”
Created by the Iowa Legislature in 1986 during the Farm Crisis to provide financial protection to farmers, the Grain Indemnity Fund covers farmers with grain on deposit in Iowa-licensed warehouses and grain sold to state-licensed grain dealers. In the case of a failure of a state-licensed grain warehouse or grain dealer, the Fund will pay farmers 90 percent of a loss on grain up to a maximum of $300,000 per claimant. Over the history of the Grain Indemnity Fund, more than $19 million in claims have been paid to more than 1,600 grain producers. The Fund has generated approximately $9 million in assessed fees, which were last collected in 1989. Since that time, the Fund was able to recover claim losses from defunct grain dealers and warehouses that when combined with interest earned on the Fund, provided enough additional revenue to prevent the reinstatement of the assessed fees.
Because of claims made to the Grain Indemnity Fund following the failures of Pipeline Foods, LLC of Fridley, MN, Global Processing, Inc. of Kanawha and B&B Farm Store of Jesup within the last two years, the balance of the Fund, after all approved claims have been paid, is expected to be approximately $384,000. Current law requires that if the Fund falls below $3 million, the Grain Indemnity Fund Board must reinstate participation fees for grain dealers and warehouses as well as a ¼ cent per bushel assessment that can be passed on to producers beginning on September 1. As outlined in Iowa Code 203D, the assessment must remain in effect for at least one full year. Current law also requires these fees – which only apply to cash sales and not grain sold on credit sale contracts – to remain active until the Board votes to suspend the collection of fees or the Fund reaches a balance of $8 million.
The Iowa Department of Agriculture and Land Stewardship’s Grain Warehouse Bureau regulates and examines the financial solvency of grain dealers and grain warehouse operators to protect Iowa farmers. The Grain Warehouse Bureau is responsible for administering the Iowa Grain Depositors and Sellers Indemnity Fund. The Department has undertaken assessment implementation steps with industry stakeholders and has assisted with outreach efforts to farmers and grain producers. Members of the Iowa Grain Depositors and Sellers Indemnity Fund are appointed by the Governor and are subject to confirmation by the Iowa Senate.
More information, including handouts for both farmers and industry participants, can be found on the Iowa Department of Agriculture and Land Stewardship’s website.