Bills › 90th General Assembly
Providing for financing of certain agricultural commodity programs, by reducing and eliminating fees imposed on licensed grain dealers and warehouse operators, replacing those moneys with moneys collected from a percentage of state assessments imposed on the sale of corn, increasing moneys deposited into the grain depositors and sellers indemnity fund, increasing indemnification amounts, and making appropriations
Sponsored by the Senate Ways and Means Committee
Topics:AgricultureState budgetTaxes
Same legislation: SSB 1205
Where it is now
- Done: IntroducedMarch 13, 2023
- Done: SubcommitteeMarch 13, 2023
- Done: Senate committeeMarch 23, 2023
- Stopped: Passes the SenateDied when the General Assembly ended
- Next: House committee
- Next: Passes the House
- Next: To the Governor
- Next: Signed into law
Died when the session ended The 2024 session adjourned on April 19, 2024, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?
What’s in it
AI summary Instead of grain dealers and warehouse operators paying specific fees to support an indemnity fund, this bill uses money collected from corn assessments to fund it. The changes increase the amount of money allowed in the fund and raise the maximum payout for people who lose money due to a dealer or warehouse's failure to meet a contract. Additionally, the bill renames the corn promotion fund to the corn marketing fund and expands what counts as corn market development.1
Read the official explanation
BACKGROUND —— GRAIN DEPOSITORS AND SELLERS INDEMNITY FUND. This bill amends provisions regulating grain dealers purchasing grain (Code chapter 203), and grain warehouse operators storing grain under bailment (Code chapter 203C). A grain dealer or warehouse operator must do business in this state under a license issued by the department of agriculture and land stewardship (DALS).33).6). Upon a determination that the claim is eligible for payment, the Iowa grain indemnity fund board (indemnity board) provides for payment of percent of the loss, but not more than $300,000. The indemnity board may defer a claim if there are insufficient assets in the fund to fully cover a loss.5). For grain dealers, the amount of the participation fee is based on purchased grain during the grain dealer’s last fiscal year, and for warehouse operators, the amount of the participation fee is based on warehouse storage capacity.014 of cent per bushel of either purchased or stored grain with a minimum required amount of $50.25 per bushel.6). The indemnity fund is managed on a state fiscal year basis (July to June 30). By May of each year, the indemnity board may impose, reinstate, adjust, or waive the fees. However, if on the last date of the fund’s fiscal year, the moneys in the indemnity fund exceed a ceiling of $8 million, the two fees are waived.5). BACKGROUND —— CORN CHECKOFFS. An excise tax or “assessment” is imposed on the first purchaser of a number of commodities as a pass-through (commonly referred to as a “checkoff”). The purpose of the assessment is to finance activities which involve improving market development which includes aspects related to the commodity’s production and market share, such as research and education. Depending upon the commodity, the assessment is implemented and administered under either a state or federal statute or both. An assessment takes effect, is continued, or is terminated on the basis of a majority vote of producers voting in a referendum conducted by the United States department of agriculture in the case of a federal assessment or DALS in the case of a state assessment. The checkoff moneys imposed due to the state or federal assessment are collected and expended pursuant to a promotional order under the direction of a governing body of elected producers (referred to as a board, committee, or council).13).27). For each commodity subject to a state assessment, including corn, the collected checkoff moneys are deposited into a separate state-controlled fund established in the state treasury (state fund) and transferred by the department of administrative services (DAS) to an account in a qualified financial institution eligible to hold public funds (Code chapter 12C) and established by the governing body of the commodity organization; in this case the Iowa corn promotion board. BILL’S PROVISIONS.5). The bill replaces that funding source with checkoff moneys collected from state assessments imposed on corn.1).26). The account under the control of the Iowa corn promotion board is named “the corn checkoff account”.28).34). The bill increases the limits of the indemnity fund to a ceiling of $20 million, and a floor of $10 million. On May 1, the indemnity board must determine to suspend or reinstate the state assessment.3B). In either case, DALS must notify DAS of the suspension or reinstatement.6).
Senate subcommittee
Named January 9, 2024. It hasn’t reported yet.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
AI summary Senate File 556 renames the Corn Promotion Fund and requires 25.0% of its deposits to be transferred to the Grain Indemnity Fund. The Grain Indemnity Fund is estimated to receive an annual transfer of $6.3 million from the Corn Marketing Fund for fiscal year 2024 until fiscal year 2027, when the fund is expected to reach its $20.0 million maximum.3
Read the fiscal note
Description
Senate File 556 does the following:
- Renames the Corn Promotion Fund as the Corn Marketing Fund, and requires 25.0% of the money deposited into the Corn Marketing Fund to be transferred to the Grain Indemnity Fund.
- Deems the money deposited into the Corn Marketing Fund and transferred to the Corn Checkoff Account and the Grain Indemnity Fund to be public funds.
- Repeals the fees collected from licensed grain dealers and warehouse operators that are deposited into the Grain Indemnity Fund.
- Changes the limits on the Grain Indemnity Fund to a ceiling of $20.0 million and a floor of $10.0 million and increases the payout limit for claims to $600,000.
- Requires the Grain Indemnity Fund Board beginning May 1, 2024, to review the Grain Indemnity Fund annually to determine whether the 25.0% transfer should be suspended or reinstated.
Background
The Grain Indemnity Fund was established in 1986 to aid persons who incur financial losses from selling or storing grain in a warehouse licensed with the Iowa Department of Agriculture and Land Stewardship (IDALS). The Grain Indemnity Fund Board oversees the Fund and determines if claims are valid, adjusts the per-bushel fee paid, and approves the administration costs related to the Grain Indemnity Fund. Iowa Code section 203D.5 requires all grain dealers and warehouse operators to participate in the Grain Indemnity Fund by paying fees that are deposited into the Fund. Fees deposited in the Fund have been suspended since 1988 but are required to be reinstated if the Fund falls below a balance of $3.0 million. As of March 31, 2023, the cash balance of the Grain Indemnity Fund was $2.4 million. Under current law, if a claim is eligible for payment, the Board provides for payment of 90.0% of the loss, but not more than $300,000.
Agricultural checkoff programs are funded completely by producers and industry stakeholders of a certain commodity. The goal of each program is to increase market demand for a specific commodity, and by increasing demand, increase prices for producers of that commodity. Common activities undertaken by checkoff programs to increase commodity demand include generic commodity advertising, market research, product development, and consumer education.
Iowa Code chapter 185C establishes the Iowa Corn Promotion Board. The Board currently collects an assessment of $0.01 per bushel of corn sold and the assessment is refundable. This assessment is set by the Board, and any increase in the assessment collected must be voted on by producers through a special referendum. The current maximum assessment is $0.03 per bushel. The five-year average for deposits to the Corn Promotion Fund is approximately $25.0 million per year.
Assumptions
- Annual checkoff deposits will match the five-year average of deposits.
- 25.0% of the assessments that are deposited in the Corn Marketing Fund will be transferred to the Grain Indemnity Fund.
Fiscal Impact
The Grain Indemnity Fund will receive an annual transfer of $6.3 million from the Corn Marketing Fund for FY 2024 until FY 2027 when the Fund is estimated to reach the $20.0 million statutory maximum. However, there may be an unknown number of claims that reduce the balance of the Fund, which would increase the time it would take for the Fund to reach its statutory maximum.
Sources
- Department of Agriculture and Land Stewardship
- Legislative Services Agency
- Grain Indemnity Fund, Checkoffs · April 5, 2023
Iowa Code it changes
Creates§203D.3B
Amends§185C.1§185C.11§185C.21§185C.24§185C.26§185C.28§185C.29§185C.30§185C.33§185C.34§203.1§203.4§203.5§203.6§203C.1§203C.12§203C.33§203C.37§203D.1§203D.2§203D.3§203D.4§203D.6
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90th General Assembly