(Des Moines) A bill to update Iowa’s grain indemnity fund with increased capacity and to include farmers with credit-sale contracts passed the Iowa House Agriculture Committee Tuesday.
Committee members approved an amendment to House Study Bill 131 to clarify definitions of deferred-payment contracts and credit-sale contracts, the inclusion of which have been the dividing issue on the bill, and the reason it stalled in the Legislature last year.
Rep. Norlin Mommsen, R-DeWitt, said Tuesday, and in the subcommittee hearing Feb. 11, the bill was a compromise from his previous opinion that credit-sale contracts should be excluded. Deferred-payment contracts, which allow the price of grain on a sale to be determined after it has been delivered, are excluded from the fund.
The bill would increase the indemnity fund minimum from $3 million to $8 million and the maximum from $8 million to $16 million to help cover farmers’ losses when their buyers go broke.
Mommsen, who has led the bill, said the basics of the existing grain indemnity fund are solid, but need to be updated to reflect the current ag industry.
For example, he said the price of corn when the original grain indemnity fund started in 1986 was around $2 a bushel.
“I sold corn the other day for $5,” Mommsen said. “So that shows the need to kind of upgrade stuff.”
The amendment would also increase the bond amount required to be a grain dealer from $100,000 to $250,000, which Mommsen said, was just bringing the bill up to “today’s dollars.”
The bill moves next to the House floor.
