(Photo: Iowa Soybean Association)
Recent developments sparks interest in fund’s future
January 12, 2023 | Jeff Hutton
The state’s Grain Indemnity Fund is a topic for some producers in Iowa following a handful of grain warehouse bankruptcies and/or license revocations over the past several months.
The fund, established in 1986, was designed to offer some protection coverage for farmers who have stored grain in a warehouse licensed by the Iowa Department of Agriculture and Land Stewardship (IDALS) and those farmers who sell grain to a licensed dealer.
According to IDALS, those who have grain stored in an IDALS-licensed warehouse and those who sell grain to a licensed dealer is covered by the fund. In a loss situation, the fund pays the claimant for 90 percent of the claimant’s loss up to a maximum of $300,000.
Michael Dolch, Iowa Soybean Association (ISA) Director of Public Affairs, says the fund was established so that “farmers would have some level of protection to fall back on … I like to describe it as a low-cost insurance policy.”
But since the fund was established, there has not been a lot of education around its existence, Dolch says, and there is concern about the fund’s current overall financial health.
A recent Iowa State University study noted that the fund is capitalized through participation fees and per-bushel fees at the discretion of the IDALS’ Grain Indemnity Fund Board. These fees are normally suspended when the fund reaches $8 million. The board, however, must reinstate these fees when the assets of the fund are $3 million or less.
Once the fund dips below the floor – it would trigger an ¼-cent per bushel assessment on farmers.
Currently, the fund sits at just more than $3.458 million – that’s near the bottom of the fund floor of $3 million (the fund ceiling is $8 million).
And given the recent failures of some grain warehouses, is the fund adequate? Does the $300,000 cap on claims fall too short? Should it be higher?
Dolch says it’s a conversation that could be raised amongst Iowa legislators during the 2023 legislative session.
“It’s definitely a conversation to be had,” he says.
ISA, Dolch adds, does not have a formal position on the fund itself, other than in large part, “farmer-members are in favor of the indemnity fund.”
Dolch says ISA, as well as other agricultural organizations in the state, are engaged with officials asking questions about defaults and license revocations and how that could impact Iowa farmers.
“Could this turn into some sort of legislative remedy?” he asks. “It’s about protecting farmers.”
While legislative action may be a possible next step, what farmers and other stakeholders should know that checkoff dollars are not part of the equation or the solution.
Dolch says to this day many believe the fund is connected to corn and soybean checkoff dollars, but that’s not true.
“There is absolutely no connection between checkoff dollars and the indemnity fund,” he says.
Dolch says ISA farmer-members can reach out to ISA or directly with IDALS, since they are the ones who administer the fund.
“We can provide either the answer or provide an introduction to who can answer the question,” Dolch says.
More information about the fund or questions about potential claims can be found by calling IDALS at (515) 281-5324 or by going to their website.