Rural Matters

Grain Indemnity Jeopardy

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Updated 12:51 p.m. CT March12, 2023

The 2023 legislative session continues along an unpredictable path. We call out several items to watch:

  • Grain Indemnity Funds 
  • Auditor Limitations and State Budget 
  • Eminent Domain

Updates as of 04/11:

Auditor Limitations and State Budget

State Auditor, Rob Sand, will no longer be able to sue other statewide offices, executive branches, departments, commissions, or boards. Senate File 478 limits the power of the state auditor from holding adjacent offices accountable for the distribution and use of $12.2 billion of state funds, according to the Legislative Services Agency.

Iowa state senators have passed a proposed $8.486 billion state budget with no individual dollar amounts assigned. Typically, the Senate will draft a budget for the fiscal year (July 1, 2023, for this year), and send it to the House for legislators, journalists, and the public to weigh in on the distribution of dollars. 

Last week, Iowa Senate GOP lawmakers drafted a budget with a crucial element missing: the dollar amounts. The House has prepared their own budget of $8.579 billion (with assigned areas of spending), to send the budget back to the Senate where the budget will be looked at with more scrutiny. There seems to be a battle brewing between House and Senate — with the House actually increasing the budget and adding details to the house budget. This promises to be an area of much discussion and at this time, very little desire for the House and Senate to work together. 

Recently, the Iowa Supreme Court published a ruling that criticized Iowa legislators for their last-minute antics and poorly thought-out bills. This will embolden future legal actions pursued regarding questionable and rushed legislative action. 


Grain Indemnity Fund

Established in the 1980s during the farm crisis, the state created the Grain Indemnity Fund. Designed to protect farmers from bankrupt grain dealers and warehouses, the fund was created to pay farmers up to $250,000 on noncredit grain sales. The fund is positioned to run out of money due to the recent bankruptcy of soybean dealer, Global Processing Inc. 

According to the Iowa Department of Agriculture and Land Stewardship (IDALS), the fund does not have enough money to cover the recent claims from the Global Processing Inc. shutdown. The Fund’s Board rejected nearly $1.5 million of grain loss claims. The rejection represents about 41% of the losses famers sought to get back from the soybean dealer last year. 

Under Iowa code the fund must be maintained with a $3 million minimum. The recent losses will require that the fund is replenished with ¼ cent per bushel collected from farmers on their noncredit grain sales. Legislators can rewrite the rules completely that surround this fund — overhauling the means of how this fund is funded. 

The indemnity fund has been declining since 2012. The recent Global Processing Inc. closure was the third of this nature in the last two years. With higher grain prices and larger farms, there may be a need to reevaluate the indemnity fund and how it is funded. 

There’s current legislation that’s received support from the House and the Senate to delay the collection of fees to September and continue the ¼ cent collection until the fund is replenished. 

Another proposed solution: Senate File 556 has received support from the Senate Ways and Means subcommittee, but opposition from Iowa Corn Growers and the Iowa Soybean Association as well as other ag groups, is a complete overhaul of where the money comes from to support the fund. This bill proposes assigning 25% of checkoff dollars to fund the indemnity fund. 

Eminent Domain

House File 565, a bill that would restrict the use of eminent domain for pipelines, failed to pass the second funnel week. Sen. Mike Bousselot, who was assigned to chair a three-member subcommittee, refused to schedule the subcommittee meeting stating it wouldn’t be able to meet the second funnel deadline. Critics would point to other rushed legislation that managed to pass in a matter of hours this session. 

Prior to Bousselot’s position as a state senator, he was employed at Summit Ag Group, the parent company of Summit Carbon Solutions — one of the three big pipelines slated for Iowa. 

Although this is a major setback for farmer-owners, lawmakers still have opportunities this session to attach amendments to bills to curb the use of eminent domain. 

During the Landus Innovation Connector events, attendees were polled regarding their opinion on the eminent domain issue. Over 70% of those polled supported the property rights of landowners. To not allow CO2 pipelines the use of eminent domain for their private project unless a threshold of 90% voluntary easements were obtained. We are continuing to contact legislators and asking them to address this important issue before the Iowa legislative session ends this spring. 

Working together on rural matters.