REYNOLDSBURG, Ohio – Starting July 1, farmers will pay a half-cent per bushel assessment on grain deposits to replenish the Ohio Grain Indemnity Fund, which protects farmers when a licensed grain handling facility goes bankrupt.
This is the first time in 18 years the assessment has been collected.
“Hundreds of claims from farmers over two decades have reduced the fund balance to a dangerously low level,” Ohio Agriculture Director Fred Dailey said.
“At today’s market prices, it would take only one insolvent elevator to put the fund in the red and deny farmers protection from a financial catastrophe not of their own making.”
Worth it. It will cost farmers money, but it’s worth it, said grain farmer Myron Wehr of Columbiana County, Ohio.
It’s like paying for an insurance policy, he said, just like getting crop, car or house insurance.
“You never know when someone will go belly up,” he said. “That’s why the fund is down in the first place.”
The fund now stands at $3.65 million after paying out $8.21 million since 1983.
Over the years, the fund has covered 1,299 claims in 35 grain elevator bankruptcies.
Eighteen years. The first and only period the assessment was collected was from July 1983 through December 1985.
Ohio law authorizes the director of agriculture to re-institute fee collection when needed to maintain an adequate balance in the fund, which is formally known as the Agricultural Commodity Depositors Fund.
Grumbling. Grain merchandiser Lee Lipp doesn’t expect to hear much grumbling from farmers.
Last time the assessment was collected, Lipp said people weren’t too upset.
It isn’t a huge chunk of change, he said, but when times are tough, every penny affects farmers.
New legislation. Previously, the assessment was collected if the fund dropped below $4 million. However, recently passed legislation raised the cap to $10 million.
“With fewer facilities today handling more grain than ever, each insolvency affects more farmers,” Dailey said. “The higher cap is far more realistic in today’s economy. It will go much further to protect farmers’ assets.”
The fee will be collected through the end of the state fiscal year after the fund reaches $10 million, which could take about three and a half years based on average grain yields.
Storage details. Ohio has fewer than half the number of elevators but about the same storage capacity that existed when the fund began.
The state currently has storage capacity for approximately 358 million bushels at 467 licensed facilities.
Several companies have the capacity to store millions of bushels at a single site.
How it works. Grain elevators across Ohio typically store grain before it is sold and delivered to a terminal grain elevator to be sold again for processing.
It is routine for farmers to deliver harvested grain to an elevator, collect a delivery receipt, and await payment for their crops when the grain is sold.
A grain elevator becomes insolvent when it does not have funds or other assets to cover payments due to farmers who have deposited grain at the elevator.
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