The Indiana Grain Indemnity Program
Securing Your Investment
Protecting Your Future
Farmer's Protection Fund
Grain Buyer Information
The Indiana Grain Indemnity Program
The Indiana Grain Indemnity Program was established by the 1995 General Assembly to protect farmers in the event of a grain buyer's financial failure. The fund established under the program provides payments to those farmers that are economically damaged by the financial failure of a grain buyer.
In the event that a grain buyer fails, producers that have not requested or received a premium refund can receive 100% payment on storage losses which occur at a licensed warehouse, or 80% payment on all other financial losses from grain delivered to the buyer. The producer's financial loss for unpriced grain is calculated using the market value of such grain on the buyer's last day of business, which may not be the same as the sale price, less certain charges, times either 80% or 100%.
For example, if the producer has delivered 1000 bushels of dry, #2 yellow corn to the buyer and entered into a deferred pricing agreement, the market value as of the last day of business is established at $2.55 per bushel and there is a $.05 cents per bushel deferred pricing charge, the calculation would be:
$2.55 X 1000 bushels = $2,550 - $50 (1000 bu. X $.05 deferred pricing charge) = $2,500 X .80 (the percentage of protection for all non-storage obligations) = $2,000 - $5.10 (premium payable to the fund $2,550 X .002) = $1,994.90.
The producer would receive $1,994.90 from the fund for the financial loss suffered.
How the Fund was Built:
The program was funded by assessing a two-tenths percent (.002) premium from the gross sale price of each producer payment. Producer premiums were collected by the grain buyer and remitted to the program quarterly.
Premium collections ceased, as provided by law, on July 1, 1998, when the fund exceeded ten million dollars. The fund is administered by the board of the Indiana Grain Indemnity Corporation and the money in the fund is invested by the State Treasurer.
Who is a Grain Buyer?
Under the Program, a grain buyer is defined as a person or entity who is in the business of buying grain from a producer. The only exception is for those who buy less than 50,000 bushels of grain annually for their own use as seed or feed.
What Grain Buyers Need to Know:
All grain buyers licensed with the Indiana Grain Buyers and Warehouse Licensing Agency are registered with the Indiana Grain Indemnity Program.
Managing the Program
Under the Program, grains include those grown for seed use and all:
- corn (including popcorn, but excluding sweet corn and flint corn)
- oil seeds
- other agricultural commodities as approved
When the fund dips below ten million dollars, premium assessments will be reinstated. Upon reinstatement, grain buyers will be required to:
- Collect a two-tenths percent (.002) premium from the gross sale price of each producer payment
- Document and maintain records of the premium paid by the producer
The grain buyer submits premiums paid by producers four times a year. The provided remittance forms illustrate how the premiums should be calculated. The premiums collected by the buyers will be submitted to the Indiana Grain Indemnity Program as follows:
||- For July, August, and September premiums|
||- For October, November, and December premiums|
||- For January, February, and March premiums|
||- For April, May, and June premiums|
The Indiana Grain Buyers and Warehouse Licensing Agency will perform all audit and inspection functions for the program. Audits consist of verification of the calculation, collection, and remittance of the appropriate premiums.
The Indiana Grain Indemnity Corporation's board consists of 13 members (ten voting) who represent farmers and grain, feed, and banking interests. The Grain Indemnity Program is administered by the board.
If you have questions or would like more information call (317) 232-1356.
Indiana Grain Indemnity Corporation
One North Capitol Avenue
Indianapolis, Indiana 46204