Iowa Grain Indemnity Fees Start Sept. 1

LINCOLN, Neb. (DTN) -- Iowa will delay the reimplementation of indemnity fees charged on grain sales until Sept. 1 after Iowa Gov. Kim Reynolds signed into law a bill that includes a provision to delay fees that were originally set to begin on July 1.

The state announced on April 28 it would reinstate fees for the first time in 34 years as a result of the state's indemnity fund balance dipping below $3 million after a series of recent grain warehouse failures.

Reynolds signed House File 666 on Thursday, which contained the provision to delay implementation. Both the Iowa House and Iowa Senate passed the bill unanimously.

The state will assess a one-quarter-cent-per-bushel charge. The fee is expected to remain in place for at least a full year until the state restores the fund balance to $8 million.

The fees apply only to cash sales, according to the Iowa Department of Agriculture and Land Stewardship, and not to grain sold on credit-sale contracts.

Iowa has paid out several claims in the past two years following the failures of Pipeline Foods LLC of Fridley, Minnesota; Global Processing Inc. of Kanawha, Iowa; and the B&B Farm Store failure in Jesup, Iowa.

Those failures led to the fund balance dropping to around $377,000.

Pipeline Foods announced it was filing for Chapter 11 bankruptcy protection in 2021, leaving farmers with millions of dollars in unpaid grain.

Global Processing filed bankruptcy in October 2022 after its grain dealers licenses were revoked in Iowa and Nebraska. The company did not have enough money to cover its grain purchases.

And in August 2022, farmers lost about $1.3 million when Jesup, Iowa-based B&B Farm Store was forced into foreclosure, https://www.dtnpf.com/….

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 pays farmers 90% of a loss on grain up to a maximum of $300,000 per claimant.

Since the creation of the fund, more than $16 million in claims have been paid to more than 1,500 grain producers.

The fund has generated about $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.

More than $19 million in claims have been approved to more than 1,500 grain producers since the fund was created.

Todd Neeley can be reached at todd.neeley@dtn.com

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