Iowa House Passes Grain Indemnity Bill

By Cami Koons

Bills updating the grain indemnity program and allowing the Iowa Department of Agriculture and Land Stewardship clean titles on livestock they take over, advanced Thursday from the Iowa House.

Lawmakers appear to have resolved differing opinions on grain indemnity limits and including credit-sales, which has been a roadblock for similar bills in the past, though the Senate will have to give final approval to the amended bill.

Rep. Norlin Mommsen, R-DeWitt, who managed the bill, said there were a lot of opinions on the policy, which left him feeling “caught between a rock and hard spot.”

“I believe, at the end of the day, we have a better product because of that cooperation between everybody,” Mommsen said. 

Although the House accepted some of the Senate’s version of the bill, Mommsen proposed an amendment to Senate File 608. 

Mommsen explained grain indemnity as being “like FDIC insurance on a savings account.” Since the 1980s, when it was created, the grain indemnity fund has helped farmers get paid for sold grain when their buyers go broke. 

Farmers pay a per bushel fee into the grain indemnity fund when the fund is below its lower boundary, and they stop paying once it reaches the upper boundary. The fund stayed above the minimum for nearly 30 years until 2023, when the bankruptcy of a soybean dealer triggered more than $3 million in indemnity claims from affected farmers and depleted the funds. 

Mommsen said the goal was to “upgrade” the rules around the fund to “better respond to today’s market conditions.”

One such upgrade included increasing the fund’s minimum from $3 million to $8 million, and the maximum from $8 million to $16 million to reflect the changes. These figures reflected the original version of the House bill, but were an increase from the $5 million and $12 million figures in the version that passed the Senate. 

Cash-sale contracts would be reimbursed at 90% under the bill, which is consistent with current law. The bill updates the fund to include some credit-sale contracts and Mommsen’s amendment provided definitions for two different types of credit sales. 

Per the amendment, a deferred-payment contract means the dealer and seller agreed on a price for grain but the payment will take place more than 30 days from the date of delivery. These contracts are not eligible for indemnity claims.

A deferred-pricing contract means the grain was delivered without an agreed-upon price. Farmers with these contracts can claim indemnity for 75% or up to $400,000 of their losses. 

Earlier versions of the bill in the House only covered 70% of these types of sales, and the version of the bill that passed the Senate did not differentiate between the different types of credit sales. 

Mommsen said it was important to differentiate because deferred payments are like “an unsecured loan.” 

Rep. J.D. Scholten, R-Sioux City, said it felt “pretty impactful” to have a bill in the House updating a fund that rose out of the farm crisis of the 1980s. 

“When we do have an agricultural recession we’re dealing with, when we’re dealing with tariffs that are causing uncertainty, farmers need to make sure they have the protection they (need),” Scholten said. “This may not be the perfect bill, but this is a good enough bill.”

IDALS announced in April the fund would stop collecting the fees in September since the current grain indemnity fund balance sits above $10 million, after collecting the fees since Sept. 2023. 

Mommsen said because the current balance is within the boundaries set by the bill, “there would be no need to reinstitute” assessment fees for the fund if the bill becomes law. 

The amended bill passed 81-3. 

IDALS Policy Bill 

The House sent Senate File 632, which updated regulations for the department of agriculture, to the governor’s desk.

The bill allows IDALS to have a clean title on livestock in the event the department must intervene to take care of the animals. 

This issue arose in October when the state took over care for more than a million poultry following the bankruptcy of Pure Prairie Poultry, Inc. The department was unable to sell the birds to a processor because of existing liens on the birds. As a result, the state had to cull the birds. 

Mommsen said the bill would also clean up terminology, remove the requirement of an oral examination for pesticide licenses, and allow the Iowa Board of Veterinary Medicine to revoke licenses and assess civil penalties of up to $10,000. 

The bill passed from the House unanimously.

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