Minnesota is poised to put millions of dollars into a fund to protect farmers from a financial collapse at a grain elevator, but a group representing those elevators remains opposed to the changes.
The changes could include fewer financial reporting requirements that Minnesota started requiring just a few years ago after some high-profile financial disasters at co-op elevators.
“You're concerned about paying producers, which is fine, don't get me wrong. They're more concerned with paying producers in the event of a failure, but nobody seems to care about trying to prevent future failures from happening,” said Laura Lemke, executive director of the Minnesota Grain and Feed Association,
A grain indemnity fund is currently included in bills to fund the Minnesota Department of Agriculture. The House version of the bill, passed Thursday, April 20, includes $5 million to establish the fund. The Senate version includes $14 million.
Minnesota Ag Commissioner Thom Peterson said a conference committee should meet this week and should be able to reach agreement on the grain fund and other funding differences in about a week or so.
The proposed rules would require that there be at least $9 million in the fund. If it drops below that, elevators will have to collect a fee of 0.2% on grain sales to feed into the fund.
While farmers generally aren’t fans of more fees, “it might not ever start if we have the higher number and we don't have any failures,” Petersen said.
Lemke says the changes include weakening financial reporting requirements added by the Legislature in 2019 that should stay in place.
Petersen said he would like to see some reporting requirements remain but said some of the requirements were too much for some small elevators.
Minnesota is the exception to the rule in the Midwest on grain indemnity funds, with most other states already having them in place.
Minnesota has only required that grain dealers post a bond to be licensed. Petersen said when an elevator fails and farmers are owed money, the average payout from the bonds is only 11 cents on the dollar. "Our binding structure is just not enough of support for our farmers," he said.
Whether grain bonding remains in the bill will be up to the conference committee.
Source: agweek.com
Photo Credit: GettyImages-wwing
Categories: Minnesota, General