By Andi Anderson
The proposed legislation in Iowa, Senate Study Bill 3174, aims to enhance farmer protection by increasing the size of the Grain Indemnity Fund. This fund provides reimbursement to farmers who face losses when grain buyers fail to pay. The bill suggests doubling the fund size, with a new minimum of $8 million and a maximum of $16 million, up from the previous range of $3 million to $8 million.
One notable addition in the bill is the extension of protection to grain sales made through credit-sale contracts, where payments to farmers are delayed. Previously, the fund covered losses in cases of bankruptcy by grain buyers but did not include credit-sale contracts. The proposed change aligns Iowa with other states that already provide protection for credit-sale contracts within their grain indemnity funds.
The need for these legislative adjustments arises from the depletion of Iowa's Grain Indemnity Fund in the previous year, triggered by multiple grain dealer failures. When the fund balance fell below $3 million, a quarter-cent-per-bushel fee on grain sales was reinstated to replenish the fund until it reaches $8 million.
The Iowa Farm Bureau Federation supports the bill and emphasized the importance of including protection for credit-sale contracts. Other states with similar funds already have provisions for such contracts.
Colin Tadlock, chief of staff for the state agriculture secretary, views the proposed changes as a "reasonable modernization" of the state fund. However, he suggested a smaller increase in the operating balance, proposing a minimum and maximum of $5 million and $12 million based on research conducted by the Iowa Department of Agriculture and Land Stewardship.
The bill, recommended for further consideration and amendment by three unanimous votes in a Senate subcommittee, could undergo additional adjustments during the legislative process. Senator Jeff Edler, R-State Center, also hinted at the possibility of tweaking the fund's operation, including potentially increasing fees for specialty grains with higher sale prices.
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Categories: Iowa, Government & Policy