The board that oversees the Iowa Grain Depositors and Sellers Indemnity Fund (Grain Indemnity Fund) voted today, as required by Iowa law, to reinstate fees on grain sold to or deposited at Iowa-licensed grain dealers and warehouses.
The Grain Indemnity Board and the Iowa Department of Agriculture and Land Stewardship are following the process and fee schedule as required in Iowa Code 203D.
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 $16 million in claims have been paid to more than 1,500 grain producers.
The Fund has generated approximately $9 million in assessed fees, which were last collected in 1989. Interest income, combined with the Fund’s ability to recover losses from defunct grain dealers and warehouses, has provided additional revenue.
Due to 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 has fallen below $3 million.
The balance of the Grain Indemnity Fund after all approved claims have been paid is expected to be approximately $377,000. 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 July 1.
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 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 commenced assessment implementation steps with industry stakeholders and has begun education efforts with 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.