Wednesday, July 9, 2014





Family farmers are winners with updated indemnity laws


August 23. 2013 1:18PM
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COLUMBUS – Gov. John Kasich today signed into law S.B. 66 which affords Ohio’s farmers status as first in line for assets in the event of a grain elevator failure and boosts the size of the farmer-funded grain indemnity program.


The Ohio Farmers Union and other state ag organizations worked for two and a half years with the bill’s sponsor, State Sen. Cliff Hite (R-Findlay) on the legislation. Hite also serves as chairman of the Ohio Senate Agriculture Committee.


“Family farmers are the winners with the updates to the grain indemnity law,” said Roger Wise, president of OFU.


“Before grain indemnity, smaller operators could be driven entirely out of business in the event of a grain elevator bankruptcy. We’ve been covered since 1983, but some have questioned – and the state has had to go to court – over the question of who is first in line as a creditor when an elevator fails.”


“It’s clear now in Ohio law that regarding elevator failures, the farmers who did business with that elevator are first in line,” Wise added.


Additionally, the updated law increases the size of the farmer-funded grain indemnity fund which pays producers for losses in the event of an elevator failure. OFU sought to have the fund size increased due to several years of historically high prices for corn and soybeans.


The fund’s maximum balance will be increased from $10 million to $15 million. The minimum balance has been increased from $8 million to $10 million.


The fund’s balance is built through occasional one-half cent per bushel levies on corn and soybeans paid by farmers when they deliver grain to an elevator. The levy is triggered when the fund dips below its minimum balance and stops when the maximum balance is reached.


Wise said that elevator failures are not commonplace, but like any business there is the chance of financial mismanagement or fraud which could lead to bankruptcy. Before the indemnity law and fund, a single elevator failure could wipe out smaller farmers. The fund is a form of insurance for farmers.


Wise praised the Ohio Department of Agriculture’s administration of the fund and the associated regulatory and inspection activities related to Ohio’s grain handlers. An annual assessment against the fund pays for these ODA activities.


“The fact that the entire regulatory and financial aspects of grain indemnity are totally farmer-funded – and not a taxpayer burden – is a model that Ohio agriculture should be proud of. We’ve got a reasonable, fair system here that should be a model for other industries,” Wise said.


The new law will not take effect for 90 days. Since the fund is now around $8 million, the half-cent per bushel levy will need to begin to be collected. ODA must give at least 90 days’ notice before collections, so farmers won’t be paying the levy until 2014. Once the fund’s new $15 million cap is reached, collections will cease.


ODA said at a meeting in June that it will probably take around two years to build the fund to $15 million. Based on historical experience, it would then probably be several years before the levy will need to be collected again.


In the past five years there have been two elevator failures in Ohio according to ODA. The Archbold Elevator failure in 2011 was the largest ever payout for the grain indemnity fund when $2.5 million in net payments were made to farmers from the fund.





Governor signs law updatinggrain indemnity program


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