Stay Informed

The Indiana Grain Indemnity Fund protects Indiana farmers when a licensed grain buyer fails financially. But as a couple of recent failures illustrate, it’s important for farmers to know what the fund can and cannot do.

“The fund is there almost as an insurance policy. It’s for farmers, it’s paid for by farmers, and it steps in when a grain elevator or warehouse is unable to fulfill its commitment,” said Andy Tauer, INFB director of public policy.

But, Tauer noted, not all situations are covered, and it’s important that farmers know that so they can protect themselves.

The program was established in 1995 by the Indiana General Assembly. The fund is administered by the Indiana Grain Indemnity Corporation (IGIC) board of directors, which consists of 10 voting members from agribusiness, banking and farm interests, including representation from INFB.

The program is voluntarily funded by farmers, who pay a producer premium equal to 0.2% of the price on all marketed grain that is sold in Indiana. These premiums are paid only during an active collection period, the most recent of which started in 2015 and ended in 2017. Any farmer who has not requested and received a premium refund after June 30, 2015, is considered a participant in the fund. New farmers are considered participants in the fund even if they have never paid premiums during a collection period.

“A farmer can opt out,” said Bruce Kettler, director of the Indiana State Department of Agriculture. “But those who do are not protected if there’s a failure.”

In the event of a licensed grain facility failure, 100% of stored grain and 80% of other grain transactions (such as deferred pricing or basis contracts) are covered.

Producers should know the law states that the fund will only pay for grain that has been delivered to the facility no more than 15 months before the date of failure, noted Kettler.

“In a perfect world, no elevator would go out of business,” Tauer said. “Farm Bureau is trying to make sure that the law is strong and sound and makes sense for all parties.”

Kettler encouraged farmers who have concerns about a grain facility to call the Indiana Grain Buyers and Warehouse Licensing Agency.

“If they have concerns – if they aren’t getting paid on time, if they get a bad check – they need to call the agency. If we were to hear a similar story more than once, it might give us a clue that there’s a potential problem,” he explained.

“We are working with ISDA and the licensing agency and other ag groups to see if we need to make additional changes in the law and make sure those protect our members,” Tauer said.