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Agriculture Today


Grain producers to vote on statewide indemnity fund


Grain producers to vote on statewide indemnity fund
U.S. Rep. Henry Cuellar (left) visits with Texas Farm Bureau District 12 Director Russell Boening prior to the Oct. 18 Wilson County Farm Bureau Convention. See wilsoncountynews.com for video of Boening explaining the upcoming Texas Grain Producers Indemnity referendum to begin Nov. 19.


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Wilson County News
October 31, 2012
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FLORESVILLE -- Anyone involved in the agriculture industry knows the risks involved in production, especially with the 2012 drought that has dominated the Corn Belt region of the United States. Farmers contend with Mother Nature and wait for months to get paid for their grain or livestock products. But what happens when the grain elevator the farmers sent their grain to goes bankrupt and the farmers get nothing for their product? Producers faced with this scenario will have an opportunity to protect their financial interests through the establishment of a grain indemnity fund.

Texas Farm Bureau District 12 Director Russell Boening spoke of the upcoming referendum to be held Monday, Nov. 19, through Friday, Dec. 7. He gave attendees of the Oct. 18 Wilson County Farm Bureau convention insight into the matter.

Texas Farm Bureau representative Charles Huddleston is one of nine people who comprise the Texas Grain Producers Indemnity Board, enacted by the passage of Texas HB 1840 in 2011. Other members include representatives of the Corn Producers Association of Texas, the Texas Agricultural Cooperative Council, the Non-Warehouse Grain Buying Industry, the Texas Grain Sorghum Producers, and the Texas Soybean, the Texas Grain and Feed, and the Texas Wheat Producers associations.

The indemnity program was initiated two years ago by a Texas Farm Bureau resolution after producers in Northeast Texas delivered their grain to elevators. The elevator operators sold the grain and filed for bankruptcy. Approximately 125 producers were never paid, due to the bankruptcy proceedings, Boening said.

The program is totally producer-funded for corn, wheat, sorghum, and soybean farmers, Boening said. Eligible voters are those who have planted one of these four crops in the past three years.

According to the Texas Grain Producers Indemnity Board website, “This includes owners of farms on which grain is produced or an owner’s tenant or sharecropper engaged in the business of producing grain or causing grain to be produced for commercial purposes.”

Why the need?

The fund is needed, due to the price of production involved and the current bond requirements for warehouses.

According to the Indemnity Board website, the assessment rate to be voted on by producers is “within a range of 0.2 percent to 0.6 percent of the final sales price of grain.”

“The current bond requirements for state-licensed warehouses is 10 cents per bushel of storage capacity with a maximum bond requirement of $500,000. ... The $500,000 bond, at today’s prices especially, does not provide adequate protection in the event of a financial failure.” Also, bonds do not cover unpaid for, sold, or contracted grain.

The board, in the event a farmer delivers grain to an elevator and is not paid by the grain buyer due to financial failure, may award up to 90 percent of the financial losses.

Only those who participate and remit assessment are eligible for indemnification of financial losses.

Since a refund clause is included within the program, producers may not be issued a refund, if the Texas Grain Producers Indemnity Board (TGPIB) has determined the “financial account is not sufficient to pay refund allotments and maintain a minimum fund balance.”

The Texas Grain Producer Indemnity Fund will not be a part of the Texas General Fund.

For more on the voting process, see “Grain Producers Indemnity voting.”


Grain Producers Indemnity voting

The Texas Grain Producers Indemnity Board will hold a referendum on the statewide establishment of a grain indemnity fund. The referendum will be held from Monday, Nov. 19, until Friday, Dec. 7, 2012.

Eligible voters in the referendum will vote to establish an assessment rate within a range of 0.2 percent to 0.6 percent of the final sales price of grain.

The referendum will be held by mail ballot. Ballots will be available at all Texas A&M AgriLife Extension Service county offices during regular business hours.

If you are unable to access an AgriLife office, a ballot may be requested from the Texas Department of Agriculture by calling 1-800-835-5832.

For a ballot to be valid, it must be mailed to the Texas Department of Agriculture, P.O. Box 12847, Austin, TX, 78711, with a postmark date of no later than Dec. 7, 2012.

If the referendum passes with a two-thirds vote, the grain indemnity fund assessments will be put into place Feb. 1, 2013.

For more information regarding the referendum, contact the Texas Department of Agriculture, P.O. Box 12847, Austin, TX 78711 or call 512-463-3285.

For more information, visit www.TexasGrainIndemnity.org.

 

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October 31, 2012 10:24am
 
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