The Iowa Senate last week unanimously passed a bill modernizing the state’s Grain Indemnity Fund with a bipartisan vote of 49-0. 

“This bill raises the floor and ceiling of the fund to $5 million and $12 million and covers credit sale contract beginning Sept. 1, 2024,” said Sen. Kerry Gruenhagen, a Muscatine County farmer who was the floor manager for the bill (SF2401). 

Established in 1986, Iowa’s Grain Indemnity fund is a farmer-funded safety net that pays claims to farmers in the event of a grain elevator failure. 

Under current law, the one-quarter cent per bushel assessment is triggered when the fund falls below $3 million and remains in place until the fund reaches $8 million. The assessment, which was last collected in 1989, was reinstated last fall when the fund fell below the $3 million floor.

Noting significant changes in crop production, prices and marketing strategies since the 1980s, Farm Bureau members support modernizing the Grain Indemnity Fund to ensure it continues to be an effective and sustainable risk protection tool. Farm Bureau policy also states that grain sold under a credit sale contract, including price later and deferred payment contracts, should be assessed and covered by the Grain Indemnity Fund.  

“The Grain Indemnity Fund has proven to be incredibly successful over the last three decades,” said Iowa Secretary of Agriculture Mike Naig. “The fund serves as a low-cost risk management tool for Iowa farmers, and this modernization will ensure continued protection from catastrophic financial losses into the future.”

Of states with an indemnity fund, Iowa has the smallest fund size and is the only state whose fund doesn’t cover credit sale contracts. Around 40% of grain transactions are credit sales, which are financial planning and marketing tools critical for farmer profitability. 

The Senate-passed bill now goes to the Iowa House, where it must be passed before being sent to the governor to be signed into law. Farm Bureau will continue to encourage House members to support Iowa farmers by passing the bill before the Legislature adjourns this year.