LINCOLN, Neb. (DTN) -- The state of Iowa will keep in place a one-quarter-cent-per-bushel indemnity fee on grain sales for at least one more year as it tries to rebuild the state's grain indemnity fund, the Iowa Department of Agriculture and Land Stewardship announced on Tuesday.
Assuming no new claims are made against the fund, the state said it will end the assessment on Aug. 31, 2025.
In 2023, the state reinstated fees for the first time in more than 30 years because of the fund dipping below $3 million after a series of grain warehouse failures in 2021 and 2022.
By law, the Iowa Grain Indemnity Fund Board was required to reinstate the participation fees for grain dealers and warehouses as well as the per-bushel assessment.
Under existing law, the assessment must remain in effect for at least one full year. It is required to stay active until the board votes to suspend the collection of fees or the fund reaches a balance of $8 million.
Prior to the start of the assessment in 2023, the fund balance was $311,929.98.
Assessment collection during the first three quarters that occurred in December 2023, March 2024, and June 2024, has produced a balance of $4.7 million, according to the state. The final quarter of assessment for this current year will be collected in September.
"Based upon fourth-quarter collection estimates, the fund balance is not expected to exceed $8 million at that time," the state said in the news release.
"Therefore, under law, the assessment must continue, and the grain indemnity fund board has authorized a second full year of assessment, which will now run through Aug. 31, 2025."
Iowa paid out several claims in 2021 and 2022 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.
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/….
The Iowa Legislature created the fund in 1986 during the farm crisis to provide financial protection to farmers. The fund covers farmers with grain on deposit in Iowa-licensed warehouses and grain sold on a cash basis 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 its creation, the grain indemnity fund has paid out more than $19 million in claims to more than 1,600 grain producers.
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on social platform X @DTNeeley
(c) Copyright 2024 DTN, LLC. All rights reserved.