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Serving: IN

Grain licensing agency, indemnity fund not the same thing

Tom J. Bechman grain trucks driving through field
WILL GRAIN BE COVERED? Once grain leaves your farm and you store it at an elevator, several variables determine if it’s covered by the Indiana Grain Indemnity Fund.
Here is further explanation about the difference between these two entities in Indiana, so you can understand how your grain is protected.

Articles about Indiana’s Grain Indemnity Fund have spurred more questions from farmers. Bruce Kettler, director of the Indiana State Department of Agriculture, provides answers:

There is still confusion about the difference between the ISDA grain warehouse licensing agency and the grain indemnity fund. Some farmers think it’s all one entity. Can you explain the differences? The Indiana Grain Buyers and Warehouse Licensing Agency, referred to in Indiana statute as the “Agency,” is a regulatory unit of state government housed within the ISDA. The Agency operates under the statutes and rules of Indiana Code 26-3-7 and Title 824 of Indiana Administrative Code. Agency responsibilities include licensing and compliance of grain operations transacting business within the state of Indiana.

The Indiana Grain Indemnity Corp., referred to in Indiana statute as the “Corporation,” is a separate, independent entity that is solely responsible for the management of the Indiana Grain Indemnity Program and Indiana Grain Indemnity Fund. The Corporation operates under the statutes and rules of Indiana Code 26-4 and Title 825 of Indiana Administrative Code. The Corporation is administered by a 13-member board of directors devoted to Indiana’s grain industry. The Corporation board of directors consists of 10 voting members — made up of five grain producers, three grain merchandisers and two agriculture lenders — and three non-voting members: the attorney general, the treasurer of state, and director of the Agency. All board members live and work in Indiana.

The Agency and the Corporation work very closely together on grain-related matters. However, the Agency has no authority over the Corporation, and the Corporation has no authority over the Agency.

If someone has a valid grain license and displays it on the wall, what protection does it offer a farmer who does business there? A licensee is subject to on-site visits and routine reviews of records by Agency team members. In the event a licensee is declared an official failure by the Agency, producers who are participants in the Indiana Grain Indemnity Program may be eligible to receive compensation from the indemnity fund for grain that was delivered not more than 15 months before the determined date of failure.

If a third party buys an elevator with a valid license and becomes the new owner but still operates the facility, can they operate under the old license? A transfer of ownership through a purchase or any other means will require a new license with the new grain facility owner. It is defined in Indiana Code: Pursuant to Title 824 Indiana Administrative Code 2-4-2, a license issued by the Agency does not transfer. In the event a current licensee either:

  • sells to or merges with another licensee of the Agency; or
  • sells to or merges with a person who is not licensed by the Agency,

the person assuming ownership of a licensed entity and/or facility must submit a license application to the Agency requesting approval for a new or amended license. 

Based on the previous question, would a farmer’s grain in that facility be protected by the grain indemnity fund? Grain obligations with a grain buyer do not cease until the new licensee is properly licensed by the Agency and applicable succession documents have been executed, pursuant to Indiana Code 26-3-7-8.5 and Indiana Code 26-3-7.

For more on this topic, read Clearing up confusion about grain licensing in Indiana.

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