Iowa lawmakers consider expanding grain sale protection

By Jared Strong

New legislation that was advanced Wednesday by an Iowa Senate panel would increase the size of a farmer-protection fund and expand the types of grain sales that are covered by it.

Senate Study Bill 3174 would double the amount of money that is held in the state’s Grain Indemnity Fund, which reimburses farmers for their losses if they aren’t paid by grain buyers and which nearly went broke last year.

That fund typically has a balance of between $3 million and $8 million. The bill would increase the minimum to $8 million and the maximum to $16 million.

It is similar to a bill that received preliminary approval in the House last month but contains another provision that the House version doesn’t: protection for grain purchased with credit-sale contracts, in which payments to farmers are delayed.

The fund has long covered 90% of the losses suffered by farmers — up to $300,000 per sale — when grain buyers go bankrupt and don’t pay, but not in the case of credit-sale contracts.

It’s an extra provision that the Iowa Farm Bureau Federation has sought.

“Every (other) state that has a grain indemnity fund provides some form of protection for credit-sale contracts,” Matt Gronewald, of the Farm Bureau, told a Senate subcommittee on Wednesday.

The proposals to improve Iowa’s fund follow its near total depletion last year that resulted from three successive grain dealer failures in 2021 and 2022. When the fund’s balance went below $3 million, it triggered the reinstatement of a long-dormant, quarter-cent-per-bushel fee on grain sales that will remain in effect until the fund reaches $8 million.

Colin Tadlock, chief of staff for the state agriculture secretary, said the bill’s changes would be a “reasonable modernization” of the state fund but suggested a smaller operating balance increase. Based on research of the Iowa Department of Agriculture and Land Stewardship, an appropriate minimum and maximum would be $5 million and $12 million, he said.

Three senators unanimously recommended the bill for further consideration and amendment.

One of them, Sen. Jeff Edler, R-State Center, suggested the fund’s operation might need to be tweaked in other ways, including a higher fee paid into the fund for specialty grain that fetches a higher sale price.

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