Reset needed for the grain indemnity program

The closure of the Cline Grain elevator in April 2016 impacted several Hoosier farmers in west central Indiana. Many issues surrounding Indiana’s grain indemnity fund were brought to the forefront as a result.

The fund is essentially a farmer-funded insurance program that reimburses farmers for losses in the event a grain elevator fails.

Since the Cline Grain failure first occurred in 2016, Farm Bureau staff has diligently worked to collect all of the facts about the claims of farmers and how the nuances of the grain buyers law impacts those claims. The facts have been used to inform the INFB board of directors and to work with legislators to help shape the best solution.Hancock County Farm Bureau visits with Speaker Bosma

“We talked to farmers and learned several things about what they did not know about the fund,” said Justin Schneider, INFB’s director of state government relations. Most concerning is the lack of awareness of key provisions regarding fund coverage:

  • The coverage is only in effect for 12 months after delivery.
  • Collection of one premium refund from the fund makes a farmer ineligible for protection unless the refund is paid back.
  • Refunds received by farmers in the 1990s excluded them from claim payment even if they paid into the fund during the most recent collection period.

Other discovered issues include uncertainty regarding:

  • Whether farmers contracting with Indiana elevators (but delivering out of state) are covered.
  • Which farmers should be paying into the fund.
  • If notices regarding refunds and coverage were given over the years and how they should be given in the future.
  • Twelve-month coverage may not be adequate to cover grain contracting and pricing practices that are the normal course of business.

INFB is working with Sens. Phil Boots (R-Crawfordsville) and Jean Leising (R-Oldenburg) and Reps. Don Lehe (R-Brookston) and Jim Baird (R-Greencastle) to address the wide range of issues, specifically increasing the notice given to farmers and the clarity of the entire process.

Three bills have been introduced this session: SB 476, authored by Boots; HB 1237, authored by Lehe; and HB 1365, authored by Baird. INFB has worked with legislators and other stakeholder groups during the committee process to iron out philosophical differences about which claims should be honored as well as the differences between the three bills.

“It appears that future coverage under the Indiana Grain Indemnity Fund will be 15 months, and more notice of the terms of coverage will be provided at the time grain sales are contracted,” Schneider said. “We anticipate the final bills will clarify that the fund will cover all grain sold to an Indiana licensed grain buyer.”

Schneider also is confident that the list of those who have opted out of coverage will be reset as of July 1, 2015. This is seen as an important step because so much has changed in the 20 years since the last collection period. It is likely that additional payments will be made as a result of the Cline Grain failure to make up for lack of notice.

Maintaining the integrity of the grain indemnity program has been INFB’s goal from the beginning, Schneider added.