Iowa lawmakers are trying again to push through legislation to expand and update the state’s grain indemnity fund. (Photo by Lance Cheung/USDA)
Iowa lawmakers advanced a bill from a House subcommittee Tuesday to expand and update the Iowa fund that covers farmers’ losses when a buyer goes bankrupt.
A similar bill from the Senate last year stalled in the House due to time and conflicting opinions about extending the grain indemnity fund to cover the losses of farmers with credit-sale contracts.
Rep. Norlin Mommsen, R-DeWitt, said the bill this year represents a compromise.
“Last year at this time, I was a ‘hell no’ on credit sales,” Mommsen said. “But like I said, I was asked to compromise.”
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Under House Study Bill 131, indemnity payments would reimburse farmers for 90% of cash sales and 70% of credit sales, up to $300,000. Mommsen said the discrepancy accounts for the additional risk of credit sales.
Deferred-payment contracts, which allow the price of grain on a sale to be determined after it has been delivered, are excluded from the indemnity fund under the bill. Mommsen said he views this type of payment as a “tax decision” and not a marketing decision by farmers, and therefore should not be covered by the fund.
Kevin Kuhle, on behalf of Iowa Farm Bureau Federation, said “farmers need this protection,” and the federation believes the fund should be “modernized.” Kuhle said the group is registered as undecided, as it would like to see deferred payment contracts and contracts that are priced later, to be covered by the fund “as is done in many other Midwestern states.”
Aaron Lehman, president of Iowa Farmers Union, said his group is similarly undecided, and would also like to the bill reflect some of the modernization to grain purchasing methods.
A majority of lobbyists who spoke on the bill at the subcommittee hearing were registered as undecided on the bill, no one registered against.
Similar to the bill from the previous year, the minimum balance for the fund would be raised from $3 million to $8 million, and the maximum doubled from $8 million to $16 million.
That means when the balance reaches the minimum, grain dealers are required to remit a per-bushel fee to the fund until it reaches the maximum.
“I believe that the fund will fill up like it did the first time, and people will not contribute to that fund for another 30 years,” Mommsen said, referencing the 30 years, prior to 2023, when the balance remained high enough that the fee was not instated.
According to the Iowa Grain Indemnity Fund Board, the fund’s balance was $7.9 million in December 2024.
Rep. Mike Sexton, chair of the Iowa House Agriculture Committee and a member of the subcommittee on the bill, said he looks forward to moving the bill “out of the House.”
Mommsen said he is working to adjust some of the language on the bill as it moves forward to clarify timelines between cash payments and deferred payments.
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