By SUSAN BLOWER

Indiana Correspondent

INDIANAPOLIS, Ind. — When Indiana farmers sell their grain after July 1, they will pay 0.2 percent of their sale bill to build up the state grain indemnity fund – if Gov. Mike Pence signs a new bill approved in the state legislature.

H.B. 1549 would increase the grain indemnity fund to $25 million to cover potential losses by grain producers if a grain buyer, such as an elevator or ethanol plant, is unable to pay for the grain. Upon passing the Indiana House unanimously, the bill passed last week out of the Senate, 45-5.

“In a time of increased price volatility, with consolidation and new buyers like ethanol plants, it is important to ensure farmers are protected from loss,” said Herb Ringel, president of the Indiana Corn Growers Assoc. and a farmer from Wabash.

Currently, the indemnity fund contains $14 million, but new estimates are that a single failure of a large grain buyer could deplete the fund.

“The risk of failure is not necessarily more severe now, but the potential impact on producers has grown because of the (increased) value of the grain, the size of companies and larger farms,” state Rep. Don Lehe (R-Brookston), author of H.B. 1549, explained last week.

The most recent disbursement of the fund was in 2008, in the failure of Nutritional Research Assoc., Inc., a division of Whitley Feeds. The fund has paid producers approximately $4.2 million total involving 11 failures since 1996, according to the Indiana State Department of Agriculture (ISDA), which administers the fund.

Farmers have not paid into the indemnity fund since 1998. Once the cap of $25 million has been reached, they will again stop paying into it. That could take 1-2 years, according to some estimates, said Patrick Pfingsten, public affairs manager with Indiana Soybean Alliance (ISA) and the Corn Marketing Council.

“Like any insurance, you hope you never use it. It falls in that category,” Lehe said.

Current estimates are a farmer will pay 1-2 cents per bushel – $1.17 per acre for soybeans or $1.27 per acre for corn, Pfingsten said. Producers of all grains will participate in the payment, but they can opt out.

“The (farmer’s payment) is voluntary, but virtually everybody complies. It’s cheap insurance to guarantee the value of the crop,” Lehe said. “If you opt out, you’re not covered if there’s a bankruptcy. It’s a huge incentive.”

The bill also raises licensing fees for grain buyers and warehouses. The purpose is to modernize the fee structure and strengthen oversight.

“This is very positive for farmers in our state,” said Dave Lowe, president of the ISA and a farmer from Dunkirk, Ind. “This legislation modernizes our licensing and indemnity law protecting farmers and continues to show Indiana as a leader in agriculture.”

The bill is a result of months of hard work among Hoosier ag leaders. “This was a joint effort between commodity organizations, ISDA and the Agribusiness Council. They brought to my attention the need to change the existing law,” said Lehe, chair of the House Ag and Rural Development Committee.

“After months of meetings, all the agreements, debate and compromises had been made ahead of time by the stakeholders. This makes it a lot easier to get legislation passed.”