A recently enacted piece of legislation in Indiana, Senate Enrolled Act 461, brings significant clarity and enhanced protection for farmers engaged in grain transactions. This new law, effective from July, addresses critical aspects of grain selling procedures, particularly concerning deferred pricing agreements and safeguards in the event of a grain elevator's financial instability. It aims to streamline the existing framework, ensuring transparency and providing a robust claims process for agricultural producers.
While the everyday process of selling grain to an elevator remains largely unchanged, the underlying legal mechanisms have been refined. The Indiana Grain Buyers and Warehouse Licensing Agency (IGBWLA) continues its vital role in overseeing the financial standing of grain purchasers. However, the new act specifically addresses ambiguities that previously existed when a grain buyer faces financial difficulties. Clark Smith, the Director of IGBWLA, has provided insights into how this legislation impacts farmers.
One key area of focus is deferred pricing (DP) agreements. Under the updated regulations, farmers are still legally obliged to sell any grain held under DP at a licensed facility within the designated crop year. This refers to the period during which the grain is delivered to the elevator. The crop year definitions vary by commodity:
- Barley and barley seed: June 1 to May 31
- Canola and canola seed: July 1 to June 30
- Corn and corn seed: September 1 to August 31
- Lentils and lentil seed: July 1 to June 30
- Oats and oat seed: June 1 to May 31
- Popcorn and popcorn seed: September 1 to August 31
- Rye and rye seed: June 1 to May 31
- Sorghum and sorghum seed: September 1 to August 31
- Soybeans and soybean seed: September 1 to August 31
- Sunflowers and sunflower seed: September 1 to August 31
- Wheat and wheat seed: June 1 to May 31
- All other field crops and seeds: September 1 to August 31
The requirement to price grain within its crop year is crucial for maintaining financial transparency and preventing mismanagement by buyers. Prolonged deferred pricing arrangements could lead to confusion regarding debts and make it easier for financial irregularities to occur. It's also important for farmers to understand that, generally, when grain is delivered on DP, ownership is transferred to the buyer upon signing the contract. To retain ownership, farmers should opt for storage and request a receipt.
The legislation also clarifies the process of license revocation. If a grain facility's license is revoked due to reasons such as bankruptcy or violation of Indiana code, it must cease all grain-related business operations immediately. All documentation and records must be turned over to the IGBWLA, and affected farmers will be notified to begin the claims process, culminating in a public hearing. Subsequently, claims are reviewed by the Indiana Grain Indemnity Corporation (IGIC) for potential payouts from the Indiana Grain Indemnity Fund.
Under the new guidelines, farmers seeking full compensation from the indemnity fund in case of elevator failure must provide proof of storage fees. Without such proof, payouts from the fund may be limited to 80% of the claim. The IGBWLA, as a state agency, is responsible for licensing, audits, and handling new license requests, while the IGIC, a board comprising industry professionals and farmers, is tasked with vetting and approving indemnity claims. Notably, SEA 461 further differentiates these two entities by removing the IGBWLA director from the IGIC chairperson role, enhancing the board's independence in decision-making regarding claims.
