Indemnity fund made to protect farmers
Iowa Sec. of Agriculture Bill Northey Friday issued a statement about claims made by ethanol producer VeraSun since its Oct. 31 filing for Chapter 11 bankruptcy.
“If you are a producer who delivered grain to an Iowa VeraSun plant and you believe you have a claim on a grain sale that has not been paid, please contact: Richard Wahl our Grain Warehouse Bureau Chief at 515-281-5987 or grainWarehouse@iowaagriculture.gov,” said Northey.
“We’re assuming there might be a few grain sellers that sold grain prior to the 20-day cutoff” from Oct. 11-31, Wahl said. Wahl said the indemnity fund covers any debts, including dishonored checks, prior to VeraSun’s Oct. 31 bankruptcy filing.
“They’re doing it more as a precautionary measure,” said Tess Capps, communications specialist with the Iowa Department of Agriculture and Land Stewardship.
According to the notice of grain dealer bankruptcy, all grain claims against the Iowa Grain Depositors and Sellers Indemnity Fund must be in writing and sent by U.S. mail or personally delivered by Feb. 28, 2009, to the respective VeraSun plant and the Iowa Department of Agriculture and Land Stewardship, Grain Warehouse Bureau, Wallace State Office Buildings, Des Moines, IA 50319, the administrator of the Iowa Grain Depositors and Sellers Indemnity Fund. Failure to make a timely claim still does not relieve VeraSun from paying valid claims.
The official notice regarding the Grain Indemnity Fund can be found at www.iowaagriculture.gov/press/VeraSun.pdf.
The Iowa Department of Agriculture and Land Stewardship’s Grain Warehouse Bureau is responsible for licensing and inspection of grain dealers, including ethanol plants, in order to protect farmers and others selling grain to these facilities. The bureau also is responsible for managing the Iowa Grain Indemnity Fund, which was created in 1986 to provide financial protection to farmers.
Earlier this fall Northey addressed the department’s effort to remind farmers of the losses that are covered by the fund and those that are not covered.
“This is an exciting time in agriculture, but it is also very unsettled,” Northey said. “Higher cost for inputs and increased prices for commodities have created new opportunities, but also raised the stakes. It’s vital that farmers are doing their part to manage risk and understand the protections that are out there, and those that aren’t.”
The Grain Warehouse Bureau within the Iowa Department of Agriculture and Land Stewardship is responsible for a licensing and inspection program designed to protect farmers and others selling grain to a grain dealer. The Bureau provides oversight of those with a grain dealers license and reviews their financial position, either annually or more frequently in cases where closer scrutiny is justified.
In addition, they examine licensee’s grain records and, in the case of a state licensed warehouse operator, their grain inventory. Records are examined to make sure there are accurate records a licensee’s grain obligations, that they are handling grain contracts properly and making payment for grain as required. Grain inventories are checked for quantity and quality to ensure that it is sufficient to cover the grain obligations on the licensee’s records, as required by law.
The bureau also is responsible for the Iowa Grain Indemnity Fund, which was created in 1986 to provide financial protection to farmers.
The indemnity fund covers farmers with grain on deposit in an Iowa licensed warehouse and grain sold to a state licensed grain dealer. In the case of a failure in a state license warehouse, the indemnity fund will pay farmers 90 percent of a loss on grain up to a maximum of $150,000 per claimant.
However, grain sold using a credit-sale contract is not covered. Credit-sale contracts allow farmers to sell and deliver grain to a grain dealer, but payment to the farmer is deferred. If a credit-sale contract is not issued, the grain must be paid for upon demand, or in absence of a demand, within 30 days of delivery.