Grain Indemnity Fund Coverage | Iowa Department of Agriculture and Land Stewardship

Grain Indemnity Fund Coverage in the State of Iowa

Coverage

The Grain Depositors and Sellers Indemnity Fund (Fund) helps to protect farmers in the event of a failure of a state licensed grain dealer or state licensed warehouse. The fund may provide coverage for both depositors who have grain stored in a warehouse licensed by IDALS and sellers who sell grain to a grain dealer licensed by IDALS. Generally, in the case of a failure of a state-licensed grain warehouse or grain dealer, the Fund may indemnify an eligible loss up to 90 percent to a maximum amount of $400,000 per claimant.

Sold grain

For ordinary cash sales, the Fund may indemnify a loss up to 90 percent to a maximum amount of $400,000.
However, credit-sale contracts, including deferred-payment contract and deferred-price contracts, are not protected to the same levels as ordinary cash sales.

Deferred-pricing contracts are offered reduced coverage of 75 percent indemnification of a loss by the Fund.
Deferred-payment contracts do not have any loss indemnification by the Fund.

Title to the grain must have been transferred to the licensed grain dealer within six months of the incurrence date (see below).

Exceptions on sold grain

Indemnification is limited to those persons who qualify as a “seller”. A “seller” does not include another grain dealer. A “seller” also does not include a producer who sells grain through a deferred-payment contract. Coverage on grain sold to a grain dealer is limited to sales that took place within six months of the incurrence date (see below).

No coverage on contracts for future delivery

There is no coverage for price differentials between current market price and contracts for future delivery of grain. Receivership and indemnity coverage is provided only for delivered grain.

Stored grain

For deposits of grain to a licensed warehouse operator, the Fund may indemnify a loss up to 90 percent to a maximum amount of $400,000. For stored grain there is no distinction made between grain on warehouse receipts and grain in “open storage” or “unsettled”. Grain that is priced at the time of delivery is not stored; it is considered sold grain, and the coverage is provided as identified above.

Exception on stored grain

No coverage is provided to grain stored in a warehouse licensed by USDA. These warehouse operators are bonded as required by the terms of their federal warehouse operator licenses. Contact USDA at 816-926-6474 for information on federal licenses.

Incurrence date

A claim to the Fund may not be made prior to an incurrence date. An incurrence date is either (1) the revocation, termination or cancellation of a warehouse operator or grain dealer license issued by IDALS or (2) the filing of a bankruptcy petition by the license holder.

Claims Period

A person making a claim under the Fund must file the claims within 120 days after the incurrence date.

IDALS Receiverships

If a warehouse operator licensed by IDALS fails, a court may appoint IDALS to act as a limited receiver for the grain in the warehouse. The grain is sold by IDALS, and the funds are maintained in a receivership account. During a 120-day filing period, depositors may file claims with IDALS for the funds in the receivership account. Following the 120-day claim period, the grain proceeds in the receivership account are distributed to depositors who have filed eligible claims. Depositors may file claims jointly with the receivership and the Fund (see “Claim forms” section below).

Claim forms

Claim forms are available from IDALS by calling 515-281-5324 or online. In situations where there is a receivership by IDALS for the grain in storage, the Indemnity Fund claim form acts as a dual claim with both the Indemnity Fund and the Receivership. There are payment options shown on the Indemnity Fund claim form which are explained with the instructions included with the claim form.

Includes lenders who are holding properly negotiated collateral warehouse receipts issued by an IDALS licensed warehouse operator.
IDALS means the Iowa Department of Agriculture and Land Stewardship
“Seller" means a person who sells grain which the person has produced or caused to be produced to a licensed grain dealer but excludes a person who executes a deferred payment contract as a seller. However, "seller" does not include a person licensed as a grain dealer in any jurisdiction who sells grain to a licensed grain dealer.
Credit-sale contracts include, but are not limited to deferred payment, deferred pricing, basis, and minimum price type contracts. Check the top of the contract for the words “Credit-Sale Contract” and check above the signature line for notice of applicable grain indemnity fund coverage.