Perhaps your local grain elevator going bankrupt and leaving you with unpaid claims is about as likely as a tornado striking your farm. So why should you worry about understanding the fine print on grain contracts, which indicates how long your grain in storage will be covered by the Indiana Grain Indemnity Fund?

Here’s the “why.” Over a dozen tornadoes have hit Indiana so far this year. If your farm is the one hit, suddenly it’s a very real problem. Likewise, if your elevator is the one that files bankruptcy, understanding when the grain indemnity fund pays and when it doesn’t pay is critical.

The latest grain elevator failure in Indiana, Salamonie Mills, near Huntington, is still being sorted out. The aftermath makes it clear that knowing how long grain is protected is important.

“If grain was placed in storage more than 15 months earlier than the date of failure, it’s not protected by the Indiana Grain Indemnity Fund,” says Bruce Kettler, director of the Indiana State Department of Agriculture, which oversees the Indiana Grain Buyers and Warehouse Licensing Agency. The Indiana Grain Indemnity Fund is governed by a separate board, but it’s governed by laws outlined in state statutes.

“The stipulation that only grain placed on storage within 15 months of the failure date is protected hasn’t changed, and it’s spelled out on every contract which you sign,” Kettler says. “You need to be aware of it and manage accordingly as you decide which grain to sell.

“What has changed are regulations relating to the practice of deferred pricing. New language based on laws passed in 2021 now clearly states that grain buyers can’t enter into a deferred-price contract which extends beyond the crop year.”

Here are keys to the updated law:

New deferred-price grain. For new deferred-price contracts for grain harvested in 2022 and beyond, the time period cannot exceed the crop year. Indiana law defines the crop year as Sept. 1 to Aug. 31 for corn and soybeans, and June 1 to May 31 for wheat.

Existing deferred-price grain. If you already have grain on deferred pricing that was delivered before July 1, 2021, the elevator (licensee) must complete payment obligations to producers by Jan. 1, 2024.

Advice for growers. Always have grain contracts in writing, including deferred-pricing contracts. Keep a copy in writing and keep all grain tickets showing delivery of grain to an elevator. Read all the fine print in any contract.

Good to know. Understand how grain on deferred pricing or in storage is protected by the Indiana Grain Indemnity Fund. For example, grain on regular storage is 100% protected within specified delivery dates. However, deferred-pricing contracts are only 80% guaranteed for protection.