Regulating the marketing of grain, by providing for fees paid by grain dealers and warehouse operators into the grain depositors and sellers indemnity fund, and the payment of claims to reimburse sellers and depositors for losses covered by the fund, and including effective date provisions

BACKGROUND —— GRAIN DEPOSITORS AND SELLERS INDEMNITY FUND. This bill amends provisions regulating marketers of grain, referred to as grain dealers purchasing grain (Code chapter 203), and grain warehouse operators storing grain under bailment (Code chapter 203C). The department of agriculture and land stewardship (DALS) issues a license to each type of marketer (licensee) doing business in this state, including inspections and audits.6). Payments are made from the grain depositors and sellers indemnity fund (indemnity fund) upon a determination that the claim is eligible for payment by the Iowa grain indemnity fund board (indemnity board) acting in cooperation with DALS. BACKGROUND —— FEES.33), each licensee pays either one or two special fees (indemnity fees) to support the indemnity fund, referred to as a participation fee and per-bushel fee. A licensed grain dealer pays both fees based on the number of bushels of grain purchased during the grain dealer’s last fiscal year (coinciding with the grain dealer’s license period).2).25 cents per bushel on all purchased grain. A licensed warehouse operator pays only a participation fee, based on bulk warehouse capacity.014 cents per bushel of bulk grain storage capacity, or $500, whichever is less, with a minimum of $50.3).5). The triggered waiver or reinstatement is effective on the first day of the following assessment year (September 1). If a waiver is triggered before then, a licensee is subject to pay the outstanding amount of the participation fee that is otherwise owing for the current assessment year.5). BACKGROUND —— CREDIT-SALE CONTRACTS.1). The delayed price arrangement may be made on the basis of an expectation of higher price or tax liability. In such a transaction, the seller becomes the grain dealer’s creditor.17. BACKGROUND —— PAYMENT OF CLAIMS.6). The claim must derive from a covered transaction, meaning that it is timely filed, there is evidence of a loss incurred by a claimant, and the claim derives from a covered transaction. For a claimant who is a seller, a covered transaction requires that title be transferred with six months of the incurrence date. A covered transaction excludes sale by credit-sale contract. The value of a loss incurred by a seller is based on the sales price. If the sold grain was unpriced, the value of a claim is presumed to be based upon the price paid on the incurrence date at the nearest terminal. A seller or depositor is entitled to be reimbursed percent of a loss but not more than $300,000. BILL’S PROVISIONS —— INDEMNITY FEES TRIGGERS. The bill adjusts both triggers waiving or reinstating the two indemnity fees. The bill increases from $8 million to $16 million the balance in the indemnity fund required to trigger a waiver and increases from $3 million to $8 million the balance in the indemnity fund required to trigger a reinstatement. BILL’S PROVISIONS —— INDEMNITY FUND (FEES AND REIMBURSEMENT BASED ON CREDIT-SALE CONTRACT TRANSACTIONS). The bill provides that grain purchased by credit-sale contract is no longer excluded from the definition of purchased grain. Therefore, a grain dealer must pay the participation fee and per-bushel fee and a warehouse operator must pay the participation fee. It also provides that the sale of grain by credit-sale contract is no longer excluded from the meaning of a covered transaction. A seller may therefore claim a loss resulting from this type of transaction. In the case of a claim filed for a loss resulting from a credit-sale contract for which no price was established by the incurrence date, the unpriced valuation would be determined in the manner described for unpriced grain. The bill does not modify special regulations that apply to a licensee’s use of a credit-sale contract. EMERGENCY RULEMAKING. The bill authorizes DALS to adopt emergency rules in order to implement its provisions. ASSESSMENT OF FEES. A grain dealer who is a party to a credit-sale contract owing an indemnity fee assessed on grain purchased by credit-sale contract is imposed on July of the fourth assessment quarter. EFFECTIVE DATE. The bill takes effect July 1, 2024, except for the provision authorizing DALS to adopt emergency rules which takes effect upon enactment.