Protecting Indiana’s Grain Farmers: Indiana Grain Indemnity Fund
Market volatility and price fluctuations make risk a part of farming. That’s why the Indiana Grain Indemnity Fund was created 20 years ago. Since then, farmers have been financially protected from the economic failure of a licensed grain buyer.
On July 1, 2015, collection to replenish this fund resumes for the first time in 17 years. The information below addresses some common questions about the fund and how collections work.
What is the Indiana Grain Indemnity Fund?
The Indiana Grain Indemnity Fund – or IGIF – is administered by the Indiana Grain Indemnity Corporation and its board of directors. It is a risk management tool funded by farmers for farmers. Farmers pay into the fund with each sale to a licensed grain buyer. The fund is later used, as needed, to protect farmers from loss of investment.
Why do we need the grain indemnity fund?
The Indiana Grain Indemnity Fund was created in 1995 to protect farmers from major financial losses due to a licensed grain buyer failure. Just as farmers face risks from price volatility, so do grain buyers. That volatility is clearly evidenced in the last 15 years when grain price fluctuations have been extreme, in some cases more than doubling in a six-month time frame.
What does the fund cover?
Today, 100 percent of stored grain and 80 percent of other grain transactions are covered – but only when farmers are doing business with licensed grain buyers. A farmer’s financial loss is calculated using the market price of grain on the buyer’s last day of business, which may not be the same as the sale price. For more details, click here.
What crops are covered under the fund?
The Indiana Grain Indemnity Fund covers grain grown for seed use and:
- All corn, including popcorn, but excluding sweet corn and flint corn
- Oil seeds
- And other agricultural commodities (as approved)
Why are collections starting again?
When the Indiana Grain Indemnity Fund was created 20 years ago, corn prices were $3.38/bushel and soybean prices were $6.73/bushel. In 2012, those prices were $8.17/bushel for corn and $17.67/bushel for soybeans. While today’s prices are nowhere near those highs, the volatility and potential fluctuations remain. The fund currently contains about $14 million, but with the increased price volatility and consolidation of grain buyers, a single failure of a licensed grain buyer could deplete the fund. In 2015, the General Assembly passed legislation to increase the fund cap to $25 million to ensure a reliable safety net for farmers moving forward. In addition, this allows farmers who began farming in the last 17 years who have not paid into the fund to contribute to this safety net.
I started farming in the last 17 years. Am I covered now?
Yes, as long as you sold your grain to a licensed grain buyer in Indiana.
How do I know if my buyer is licensed?
Examples of licensed grain buyers include biodiesel and ethanol plants, soybean and corn processors, grain elevators, feed mills and even some livestock producers. Licenses are required to be posted in the place of business, and farmers can also check the list of licensed grain companies here or by calling 317-232-1360.
When will collections begin?
Farmer collections will begin July 1, 2015, and will continue until the fund reaches $25 million. If the fund does not reach $25 million before June 30, 2016, collections will continue for a second full calendar year.
What will I be paying?
A premium of two-tenths percent of the gross sale price of each producer payment will be automatically deducted by the licensed grain buyer at the point of sale. The deduction should be clearly indicated on the settlement sheet as “Indiana Grain Indemnity Fund” or “IGIF.”
Can I opt out of the fund?
Yes, farmers can opt out of participation in the fund and receive a refund of premiums paid, but they then forfeit all potential coverage in the event of a licensed grain buyer failure. It is important to know that opting out of coverage for one crop, like wheat, means a farmer is out of coverage for all covered crops at any licensed grain buyer.
If I opt out and receive refunds, can I opt back into coverage from the fund?
For re-entry into the Grain Indemnity Fund, click here and fill out the “Petition to Reenter the Grain Indemnity Fund” form. Petitions for re-entry will be considered only at the May annual meeting of the Indiana Grain Indemnity Corporation Board. Farmers opting back into the program also have to repay all previous producer premium refunds and interest on refunds received.
To learn more Indiana Grain Indemnity Fund, click here or call 317-232-1360.