Grain fund bill had support but ran out of time
(Photo by Scott Olson/Getty Images)
There is consensus among state lawmakers to update a fund that protects farmers when corn and soybean buyers go bankrupt, but a bill related to that goal failed this year because others took priority, according to a lawmaker who managed it.
“We ran a little bit short of time,” said Rep. Dave Deyoe, R-Nevada, who managed the bill in the Iowa House.
Senate File 2401 gained unanimous approval in the Senate in early April, less than three weeks before the legislative session adjourned. The bill would have roughly doubled the typical operating balance of the state’s Grain Indemnity Fund with a minimum of $8 million and a maximum of $16 million.
The current minimum and maximum is $3 million and $8 million. When the balance falls below the minimum, the state collects a quarter-cent-per-bushel fee on initial grain sales until the fund reaches the maximum.
The fund covers 90% of farmers’ losses — up to $300,000 per sale — when they aren’t paid by grain buyers, often when the buyers go bankrupt.
It gained the attention of lawmakers last year when a string of bankruptcies threatened to deplete its reserves, which led to a reinstatement of the per-bushel fee for the first time in more than 30 years.
There was disagreement last year among lawmakers about whether to alter the fee collection. Some supported a measure to siphon money from a long-standing assessment on corn sales that is used to promote the industry, but that bill was broadly opposed by agricultural groups.
Deyoe said the dispute delayed the discussion of a new bill: “There was some reluctance early on to take it up this year because of what had happened last year. And then, we were kind of surprised at the last minute when they basically ran the bill through the Senate and sent it over to us.”
The bill also had a provision to extend the fund’s coverage to credit-sale contracts, when farmers sell their grain but aren’t paid for it soon after. Those transactions are generally viewed as riskier for farmers, and some House lawmakers were concerned about extending coverage to them, Deyoe said.
The Iowa Farm Bureau Federation supported the provision: “Every (other) state that has a grain indemnity fund provides some form of protection for credit-sale contracts,” Matt Gronewald, state policy advisor for the group, said in February.
The Iowa Department of Agriculture and Land Stewardship, which helps manage the fund, supported the overall bill.
“We anticipate there will be ongoing discussions with industry stakeholders and legislators leading up to next session about what, if any, changes should be addressed,” said Don McDowell, a spokesperson for the department.
The legislative delay is not expected to affect the fund’s coverage for farmers. The fund began to replenish last year, and it had a balance of about $3.5 million in mid April, said James Kennedy, chief of IDALS’s grain warehouse bureau.
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