HF 508 (LSB 2306HV (3) 91)

HOUSE FILE 508

BY  COMMITTEE ON AGRICULTURE

(SUCCESSOR TO HSB 131)

A BILL FOR

An Act providing for the marketing of grain by licensed warehouse operators and grain dealers, including by providing for indemnity fees and the indemnification of grain depositors and sellers for losses following the cessation of a license or bankruptcy.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 203.1, subsection 3, Code 2025, is amended to read as follows:
   3.  “Credit-sale contract” means a contract for the sale of grain pursuant to which the sale price is to be paid more than thirty days after the delivery of the grain to the buyer, or a contract which is titled as a credit-sale contract, including but not limited to those contracts commonly referred to as deferred-payment contracts, contract or a deferred-pricing contracts, and price-later contracts contract.
    Sec. 2.  Section 203.1, Code 2025, is amended by adding the following new subsections:
   NEW SUBSECTION.  4A.  “Deferred-payment contract” means a contract for the purchase of grain if all of the following apply:
   a.  The purchase price is agreed to by the licensed grain dealer and the seller by the date of the grain’s delivery as provided in section 203.8.
   b.  Under the terms of the contract, the licensed grain dealer’s payment of the purchase price to the seller may be made on a date later than the last date for scheduled payments made by the licensed grain dealer to sellers for delivered grain according to the licensed grain dealer’s standard business operation.
   NEW SUBSECTION.  4B.  “Deferred-pricing contract” means a contract for the purchase of grain if all of the following apply:
   a.  The purchase price is not agreed to by the licensed grain dealer and the seller by the date of the grain’s delivery as provided in section 203.8.
   b.  Under the terms of the contract, the licensed grain dealer’s payment of the purchase price to the seller may be made on a date later than the last date for scheduled payments made by the licensed grain dealer to sellers for delivered grain according to the licensed grain dealer’s standard business operation.
    Sec. 3.  Section 203.8, subsection 1, Code 2025, is amended to read as follows:
   1.  a.  A grain dealer licensed or required to be licensed pursuant to section 203.3 shall pay the purchase price to the seller for grain upon as follows: 
   (1)  Upon delivery or later upon demand by the seller, but. If the seller does not make a demand, the grain dealer shall pay the purchase price not later than thirty days after delivery by the seller unless in last date for scheduled payments made by the licensed grain dealer to sellers for delivered grain according to the grain dealer’s standard business operation. 
   (2)  In accordance with the terms of a credit-sale contract that satisfies the requirements of this chapter. The department shall adopt rules for payment by check and electronic funds transfer.
   b.  A grain dealer licensed or required to be licensed pursuant to section 203.3 shall not hold a check for the purchase of grain more than five days after the grain dealer issues a check to the seller. After that date, the grain dealer shall deliver the check in person or by mail to the seller’s last known address.  The department shall adopt rules pursuant to chapter 17A for a grain dealer’s payment by check and electronic funds transfer.
    Sec. 4.  Section 203.15, subsection 4, paragraph c, subparagraph (1), subparagraph division (b), Code 2025, is amended to read as follows:
   (b)  The grain dealer files a bond with the department in the amount of one two hundred fifty thousand dollars payable to the department.
    Sec. 5.  Section 203.15, subsection 6, Code 2025, is amended to read as follows:
   6.  A grain dealer who purchases grain by credit-sale contract shall obtain from the seller a signed acknowledgment stating that the seller has received notice that grain purchased by credit-sale contract is not protected by the grain depositors and sellers indemnity fund. The form for the acknowledgment shall be prescribed by the department, and the licensed grain dealer and the seller shall each be provided a copy.  A contract’s use of terms defined in section 203.1 shall not determine whether a contract is a credit-sale contract or a type of credit-sale contract.
    Sec. 6.  Section 203D.1, Code 2025, is amended by adding the following new subsections:
   NEW SUBSECTION.  2A.  “Deferred-payment contract” means the same as defined in section 203.1.
   NEW SUBSECTION.  2B.  “Deferred-pricing contract” means the same as defined in section 203.1.
   NEW SUBSECTION.  8A.  “Indemnity fees” or “fees” means a participation fee and per-bushel fee as provided in sections 203D.3 and 203D.3A.
    Sec. 7.  Section 203D.1, subsections 14 and 16, Code 2025, are amended to read as follows:
   14.  a.  “Purchased grain” means grain any of the following: 
   (1)  Grain entered in the company-owned paid position as evidenced on the grain dealer’s daily position record.
   (2)  Grain purchased under a deferred-pricing contract.
   b.  “Purchased grain” does not include grain that is subject to an exempt transaction based on documentation satisfactory to the department showing that the grain dealer did any of the following:
   (1)  Purchased the grain from the United States government or any of its subdivisions or agencies.
   (2)  Purchased the grain from a person licensed as a grain dealer in any jurisdiction.
   (3)  Purchased the grain under a credit-sale deferred-payment contract.
   (4)  Entered the grain in the company-owned paid position as a cancellation of a collateral warehouse receipt.
   (5)  Entered the grain in the company-owned paid position as an intra-company location transfer.
   16.  a.  “Seller” means a person who sells grain which, that the person has produced or caused to be produced, to a licensed grain dealer, but excludes a person who executes a credit-sale contract as a seller as provided in section 203.15. However, “seller” 
   b.  “Seller” does not include any of the following:
   a.  (1)  A person licensed as a grain dealer in any jurisdiction who sells grain to a licensed grain dealer.
   b.  (2)  A person who sells grain that is not produced in this state unless such grain is delivered to a licensed grain dealer at a location in this state as the first point of sale.
   (3)  A person who sells grain pursuant to a deferred-payment contract.
    Sec. 8.  Section 203D.3, subsection 4, Code 2025, is amended to read as follows:
   4.  The moneys collected under this section and deposited in the fund shall be used exclusively to indemnify depositors and sellers as provided in section 203D.6 and to pay the administrative costs of this chapter.
    Sec. 9.  Section 203D.3A, unnumbered paragraph 1, Code 2025, is amended to read as follows:
   The department shall collect indemnity fees, including participation fees and per-bushel fees as provided in this section, if established imposed by the board pursuant to section 203D.5, at rates determined by the board as provided in that section. A person required to pay a fee shall use licensee shall remit indemnity fees and forms and deliver the payment to the department as required by the department.
    Sec. 10.  Section 203D.3A, subsection 1, paragraph a, subparagraph (1), Code 2025, is amended to read as follows:
   (1)  In calculating the amount of the initial participation fee, an applicant for a new license shall be deemed a licensee paying the full annual amount of the participation fee owing on the licensee’s first anniversary date as provided in paragraph “b”. The department must be satisfied that the applicant is calculating the amount due in good faith and using the best information available.
   (a)  For a licensed grain dealer, the anniversary date is the last date to apply for the renewal of the grain dealer’s license before the license expires as provided in section 203.5.
   (b)  For a licensed warehouse operator, the anniversary date is the last date to apply for the renewal of the warehouse operator’s license before the license expires as provided in section 203C.37.
    Sec. 11.  Section 203D.3A, subsection 1, paragraph b, Code 2025, is amended to read as follows:
   b.  A licensee shall pay remit a participation fee in one installment as part of a license renewal application in the same manner provided in paragraph “a”. However, the licensee may elect to remit the participation fee on four successive installment dates, with each installment date occurring on in the month succeeding the last date of the fund’s assessment quarter as provided in section 203D.3, on December 15, March 15, June 15, and September 15. The licensee shall pay remit twenty-five percent of the total participation fee assessed on each installment date. However, nothing in this subsection prevents a licensee from paying the participation fee on an accelerated basis. A licensee shall pay the first installment on the last date of the fund’s assessment quarter immediately following the licensee’s anniversary date.
   (1)  For a licensed grain dealer, the anniversary date is the last date to apply for the renewal of the grain dealer’s license before the license expires as provided in section 203.5.
   (2)  For a licensed warehouse operator, the anniversary date is the last date to apply for the renewal of the warehouse operator’s license before the license expires as provided in section 203C.37.
    Sec. 12.  Section 203D.3A, subsection 2, Code 2025, is amended to read as follows:
   2.  a.  A licensed grain dealer shall remit a per-bushel fee shall be assessed on all purchased grain. 
   b.  The licensed grain dealer shall forward remit the per-bushel fee to the department on a quarterly basis in the manner and using the forms a form prescribed by the department.  The licensed grain dealer shall remit the per-bushel fee and form on four successive installment dates, with each installment date occurring in the month succeeding the last assessment quarter as provided in section 203D.3, on December 15, March 15, June 15, and September 15. 
   c.  A licensee licensed grain dealer is delinquent if the licensee grain dealer fails to submit remit the full quarterly per-bushel fee or quarterly forms and form when due or if, upon examination, an underpayment of the fee is found by the department. The licensed grain dealer is subject to a penalty of ten dollars for each day the licensed grain dealer is delinquent or an amount equal to the amount of the deficiency, whichever is less. However, a licensee licensed grain dealer who fails to submit remit the full quarterly per-bushel fee or quarterly forms form when due, is subject to a minimum payment of ten dollars. The department may establish and apply a margin of error in determining whether a licensed grain dealer is delinquent. The per-bushel fee shall be collected only once on each bushel of grain.
   c.  d.  The per-bushel fee shall not be collected more than once on each bushel of grain.  A licensed grain dealer may choose to pass on the cost of a per-bushel fee to the sellers by an itemized discount noted on the settlement sheet. However, if the per-bushel fee is not in effect, no a licensed grain dealer shall not make such a discount on the purchase of grain. A discount made nominally for the per-bushel fee while the per-bushel fee is not in effect is grounds for a license suspension or revocation under chapter 203.
    Sec. 13.  Section 203D.5, subsection 1, unnumbered paragraph 1, Code 2025, is amended to read as follows:
   The board shall annually review the debits of and credits to the grain depositors and sellers indemnity fund created in section 203D.3 and shall determine whether to impose the participation fee and per-bushel fee as provided in section 203D.3A, make adjustments to the indemnity fees effective on the previous September 1, or waive the indemnity fees as necessary to comply with this section. The board shall make the determination not later than May 1 of each year. The board shall impose the indemnity fees or adjust the indemnity fees effective on the previous September 1 in accordance with chapter 17A. The imposition or adjustment of the indemnity fees shall become effective as follows:
    Sec. 14.  Section 203D.5, subsections 4 and 5, Code 2025, are amended to read as follows:
   4.  If on the last date of the fund’s assessment year as provided in section 203D.3 the assets of the fund exceed eight sixteen million dollars, less any encumbered balances or pending or unsettled claims, all of the following apply:
   a.  The participation fee as provided in section 203D.3A shall be waived and shall not be assessable or owing for the following assessment year of the fund. However, the licensee shall continue to pay remit any owing participation fee that was in effect on the prior September 1.
   b.  The per-bushel fee as provided in section 203D.3A shall be waived and shall not be assessable or owing for the following assessment year.  The waiver shall also apply to purchased grain that is unpriced on the last date of the fund’s assessment year. However, the licensed grain dealer shall remit any per-bushel fee that is owing on that date.
   5.  The board shall reinstate the indemnity fees as provided in this section if the assets of the fund, less any unencumbered balances or pending or unsettled claims, are three eight million dollars or less.
    Sec. 15.  Section 203D.6, subsection 1, Code 2025, is amended to read as follows:
   1.  Persons who may file claims.  A depositor or seller may file a claim with the department for indemnification of a loss from the grain depositors and sellers indemnity fund. A claim shall be filed in the manner prescribed by rules adopted by the board department.
    Sec. 16.  Section 203D.6, subsection 4, paragraph d, Code 2025, is amended to read as follows:
   d.  That the claim derives from a covered transaction. For purposes of this paragraph, a claim derives from a covered transaction if the claimant is a any of the following:
   (1)  A depositor who delivered the grain to a licensed warehouse operator within six months of the incurrence date for a claim period as provided in subsection 2.
   (2)  A seller who transferred title to the grain to a licensed grain dealer, other than by credit-sale contract a deferred-payment contract, within six months of the incurrence date for a claim period as provided in subsection 2, or if the claimant is a depositor who delivered the grain to a licensed warehouse operator.
    Sec. 17.  Section 203D.6, subsections 5, 6, and 8, Code 2025, are amended to read as follows:
   5.  Value Dollar value of loss —— warehouse depositor claims.
   a.  The board shall determine the dollar value of a claim loss incurred by a depositor holding a warehouse receipt or a scale weight ticket for grain that the depositor delivered for storage to the licensed warehouse operator.
   b.  (1)  If the department has been appointed by the court as receiver of the grain assets of the warehouse operator, the dollar value of a loss shall be presumed to be as stated in the plan of disposition approved by the court. If the warehouse operator has filed a petition in bankruptcy, the dollar value of a loss shall be presumed to be based upon the fair market price, free-on-board from the site of the warehouse operator, being paid to producers for grain by the grain terminal operator nearest the warehouse operator on the date the petition was filed. If there is neither a department receivership nor a bankruptcy filing, the dollar value of a loss shall be presumed to be based upon the fair market price, free-on-board from the site of the warehouse operator, being paid to producers for grain by the grain terminal operator nearest the warehouse operator on the date of license revocation or cancellation incurrence date. If more than one incurrence date applies to a claim, the board may choose between the two. However, the board may accept an alternative valuation value of a claim loss upon a showing of just cause by the depositor or department.
   (2)  Notwithstanding subparagraph (1), all of the following apply:
   (a)  The dollar value of a loss for corn shall not exceed the dollar value for a loss of U.S. No. 2 yellow corn according to grain standards adopted by the federal grain inspection service of the United States department of agriculture.
   (b)  The dollar value of a loss for soybeans shall not exceed the dollar value of a loss for U.S. No. 2 yellow soybeans according to grain standards adopted by the federal grain inspection service of the United States department of agriculture.
   c.  All depositors filing claims under this section shall be bound by the dollar value loss determined by the board. The dollar value loss of the loss is the outstanding balance on the validated claim at time of payment from the fund.
   6.  Value Dollar value of loss —— grain dealer seller claims.
   a.  The dollar value of a claim loss incurred by a seller who has sold grain or delivered grain for sale or exchange and who is a creditor of the licensed grain dealer for all or part of the dollar value of a loss of the grain shall be based on the amount stated on the obligation on the date of the sale.
   b.  (1)  If the sold grain was unpriced, the dollar value of a claim loss shall be presumed to be based upon the fair market price, free-on-board from the site of the grain dealer, being paid to producers for grain by the grain terminal operator nearest the grain dealer on the incurrence date of the license revocation or cancellation or the filing of a petition in bankruptcy. If more than one incurrence date applies to a claim, the board may choose between the two. However, the board may accept an alternative valuation dollar value of a claim loss upon a showing of just cause by the seller or department.
   (2)  Notwithstanding subparagraph (1), all of the following apply:
   (a)  The dollar value of a loss for corn shall not exceed the dollar value for a loss of U.S. No. 2 yellow corn according to grain standards adopted by the federal grain inspection service of the United States department of agriculture.
   (b)  The dollar value of a loss for soybeans shall not exceed the dollar value of a loss for U.S. No. 2 yellow soybeans according to grain standards adopted by the federal grain inspection service of the United States department of agriculture.
   c.  All sellers filing claims under this section shall be bound by the dollar value of a loss determined by the board. The dollar value of the loss is the outstanding balance on the validated claim at the time of payment from the fund.
   8.  Payment of claims.
   a.  Upon a determination that the claim is eligible for payment indemnification, the board shall provide for payment of ninety percent of pay a claimant based on the dollar value of the loss, as determined by the board for a depositor’s claim under subsection 5, but not or for a seller’s claim under subsection 6. The board shall pay the claimant according to the following schedule: 
   (1)  For a depositor, the board shall pay ninety percent of the loss but not more than three hundred thousand dollars per claimant.
   (2)  (a)  For a seller, except for a seller who sold the grain under credit-sale contract, the board shall pay ninety percent of the loss but not more than three hundred thousand dollars.
   (b)  For a seller who sold the grain pursuant to a credit-sale contract, one of the following:
   (i)  If the grain was sold pursuant to a deferred-pricing contract, the board shall pay seventy percent of the loss but not more than two hundred ten thousand dollars.
   (ii)  If the grain was sold pursuant to a deferred-payment contract, the board shall not pay any percent or amount of the loss.
   b.  (1)  If at any time the board determines that there are insufficient funds moneys in the fund to make payment of indemnify all claims, the board may shall order that payment be deferred on specified claims be indemnified according to the following order:
   (a)  First to depositors and sellers equally as determined by the board, except for sellers who sold the grain pursuant to deferred-pricing contracts.
   (b)  Second to sellers who sold the grain pursuant to deferred-pricing contracts.
   (2)  The board may establish one or more claim indemnification periods based on the amount of moneys in the fund and the amount required to indemnify all eligible claims.

The department, upon the board’s instruction, shall hold those unindemnified claims for payment until the board determines that the fund again contains sufficient assets until the next payment period or payment periods as moneys in the fund are available.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   BACKGROUND —— GRAIN DEALERS AND WAREHOUSE OPERATORS. 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 bill also provides for sellers of grain to licensed grain dealers, and depositors storing grain with a licensed grain warehouse, by indemnifying losses resulting from the sale or deposit (Code chapter 203D).
   BACKGROUND —— LICENSURE REQUIREMENTS. The department of agriculture and land stewardship (DALS) licenses a grain dealer purchasing at least 1,000 bushels from producers of that grain (sellers) during any calendar month (Code section 203.1). DALS licenses a warehouse operator in the business of operating a warehouse for the storage of bushels on behalf of title holders (depositors) (Code section 203C.1). Alternatively, a warehouse operator may be regulated by the United States department of agriculture under the United States Warehouse Act (7 U.S.C. ch. 10). A state license application must be accompanied by a financial statement (Code sections 203.3 and 203C.6). A grain dealer must meet certain net worth requirements to be issued a class 1 license and purchase grain by credit-sale contract. Normally, a grain dealer’s financial statement must be accompanied by an unqualified opinion based upon an audit performed by a certified public accountant licensed in this state. However, DALS may accept a qualification in an opinion because of the audit procedures used. DALS may also accept a review by a certified public accountant in lieu of an unqualified opinion.
   BACKGROUND —— CREDIT-SALE CONTRACTS. A credit-sale contract (also referred to as deferred-payment contract, deferred-pricing contract, or price-later contract) involves a transaction for the sale of grain in which the grain’s producer is the seller and the licensed grain dealer is the buyer. The purchase price is to be paid to the seller by the licensed grain dealer more than 30 days after the seller’s delivery of the grain to the licensed grain dealer or a person designated by the licensed grain dealer (Code sections 203.1 and 203.8). Generally, there are two types of credit-sale contracts, a deferred-pricing contract and a deferred-payment contract. In both cases, the seller’s payment amount is delayed until after the sale (transfer of title) and delivery. Under a deferred-pricing contract, the payment amount is unknown at the time of sale and delivery, with the expectation that the seller will receive a higher price in the future. Under a deferred-payment contract, the purchase price has been determined upon, or within a short time after, the grain’s sale and delivery. By deferring payment, the seller elects to claim income from the sale in the subsequent tax year assuming a more beneficial tax rate will apply in that year (e.g., expecting a reduction in farm income). In order to purchase grain under a credit sale contract, a licensed grain dealer must comply with a number of requirements, including a number of financial conditions based on net worth or a deficiency bond or irrevocable letter of credit. The licensed grain dealer’s last financial statement must be accompanied by an unqualified opinion by a certified public accountant or alternatively the licensed grain dealer must file a bond with DALS in the amount of $100,000.
   BACKGROUND —— GRAIN DEPOSITORS AND SELLERS INDEMNITY FUND. A seller selling grain to a licensed grain dealer or a depositor depositing grain with a licensed warehouse operator may be reimbursed for a loss incurred by the failure of the licensee to honor a contractual obligation regarding the transaction (Code section 203D.6). A payment is made from the grain depositors and sellers indemnity fund (indemnity fund) upon a determination that the claim is eligible for indemnification by the Iowa grain indemnity fund board (indemnity board) acting in cooperation with DALS. To be timely, a claim must be filed within a claim period. The claim period begins on either of two incurrence dates and ends 120 days later. An incurrence date is either when the license of the grain dealer or warehouse operator’s license ceases (is revoked or voluntarily canceled) or the date a petition is filed in bankruptcy. 
   BACKGROUND —— FEES. In addition to license fees deposited into the general fund of the state (Code sections 203.6 and 203C.33), each licensee may be required to remit either one or two special fees (indemnity fees) deposited in the indemnity fund, referred to as a participation fee and per-bushel fee. The licensed grain dealer’s participation fee is calculated according to the following formula: the assessment rate of not more than $0.014 multiplied by all bushels of purchased grain during the grain dealer’s prior fiscal year with a minimum of $50 and no maximum limit. The licensed grain dealer’s per-bushel fee is calculated according to a similar formula: the assessment rate of not more than $0.25 multiplied by all bushels of purchased grain for the grain dealer’s assessment year with no minimum and a $500 maximum limit. The qualifying term “purchased grain” equals the total number of bushels purchased from sellers minus a number of exempt bushels purchased, including those purchased under credit-sale contract (Code section 203D.1). Purchased grain is reported to DALS as “paid company-owned” (Code section 203D.1). The licensed warehouse operator’s participation fee is based on the number of bushels of storage capacity of the warehouse (Code section 203D.5). An assessment year begins September 1 and ends August 31 (Code sections 203D.3 and 203D.5). The assessment year is further divided into four three-month assessment quarters. A grain dealer or warehouse operator may remit a participation fee annually (with an application for an initial license or the renewal of a license) or on a quarterly basis. A grain dealer must remit a per-bushel fee on a quarterly basis (Code section 203D.3A).
   BACKGROUND —— INDEMNITY BOARD REVIEW OF INDEMNITY FUND. The indemnity board must annually review the debits of and credits to the indemnity fund and by May 1 determine whether to impose the indemnity fees, make adjustments to the existing indemnity fees, or waive the existing indemnity fees as necessary to comply with two triggers. The balance in the indemnity fund triggers the indemnity fees waiver or reinstatement (Code section 203D.5). When the balance in the indemnity fund reaches $8 million, the indemnity fees are automatically waived. The indemnity fees are reinstated by the indemnity board if the balance in the fund is $3 million or less (Code section 203D.5). The triggered waiver or reinstatement is effective on the first day of the following assessment year (September 1). A licensee is required to remit the outstanding amount of the waived participation fee that is otherwise owing for the current assessment year. However, a licensed grain dealer is no longer obligated to remit the outstanding amount of the per-bushel fee otherwise owing for that period, unless the amount is delinquent (Code section 203D.5).
   BACKGROUND —— INDEMNITY FUND —— VALUE OF LOSS. Generally, a loss incurred by a depositor (holding a warehouse receipt or scale weight ticket) or seller who is a party to a sale may be determined using several methods of valuation. For a depositor, it may be a court order hearing a matter in receivership. Otherwise, the loss is based on the fair market price paid to producer sellers at a nearby terminal on an incurrence date. For a seller, it may be the sales price agreed to by the parties. If the grain has not yet been priced, the loss is again based on the fair market price paid at the terminal on one of those incurrence dates. In any case, from the determined loss is deducted any amount recovered by the depositor or seller through other legal or equitable remedies, including the liquidation of assets (Code section 203D.6).
   BACKGROUND —— INDEMNITY FUND —— PAYMENT OF CLAIMS. A claim must meet eligibility requirements, including 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 depositor, a covered transaction requires that the grain must have been delivered to a licensed warehouse operator. For a claimant who is a seller, a covered transaction requires that title be transferred within six months of the incurrence date. A covered transaction excludes sale by credit-sale contract. A seller or depositor is entitled to be reimbursed 90 percent of a loss but not more than $300,000.
   BILL’S PROVISIONS —— CREDIT-SALE CONTRACTS —— LICENSED GRAIN DEALER’S FINANCIAL CONDITIONS. The bill amends financial conditions required for a licensed grain dealer holding a class 1 license to purchase grain by credit-sale contract. Specifically, a licensed grain dealer who did not submit a financial statement accompanied by an unqualified opinion must file a bond with DALS for $250,000.
   BILL’S PROVISIONS —— INDEMNITY FEES —— PAYMENT SCHEDULE.  The bill provides that a grain dealer or warehouse operator may pay the participation fee in one installment as part of the license renewal or on four successive installment dates on December 15, March 15, June 15, and September 15. The bill provides that the grain dealer must pay the per-bushel fee on the same installment dates.
   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 FEES IMPOSED ON CREDIT-SALE CONTRACT TRANSACTIONS. The bill provides that grain sold by deferred-pricing contract is considered purchased grain and grain sold by deferred-payment contract is not. Therefore, a licensed grain dealer is only assessed an indemnity fee on the deferred-pricing contract grain.
   BILL’S PROVISIONS —— INDEMNITY FUND —— DOLLAR VALUE OF LOSS. The bill provides special valuation rules for losses involving corn or soybeans. The dollar value of a loss for corn cannot exceed the dollar value for a loss of U.S. No. 2 yellow corn according to grain standards adopted by the federal grain inspection service of the United States department of agriculture. The dollar value of a loss for soybeans cannot exceed the dollar value of a loss for U.S. No. 2 yellow soybeans according to grain standards adopted by that same agency. A dollar loss incurred under a deferred-pricing contract is presumed the same as any other loss in which the price for the grain has not been determined (e.g., determined by the fair market price at the nearest terminal on the incurrence date).
   BILL’S PROVISIONS —— INDEMNITY FUND —— PAYMENT OF CLAIMS.  The bill provides that the sale of grain by deferred-pricing contract is no longer excluded from the meaning of a covered transaction and a seller may therefore claim a dollar loss resulting from the grain dealer’s default. The bill provides for the payment to claimants based on an order of priority. The first priority is provided to a depositor or seller, other than a seller who sold grain by credit-sale contract. The payout remains the same: 90 percent of the loss but not more than $300,000. The second priority is provided to a seller who sold grain pursuant to a deferred-pricing contract. In that case, the payout is reduced to 70 percent of the loss but not more than $210,000. A deferred-payment contract remains ineligible for payment.
   BILL’S PROVISIONS —— INDEMNITY FUND —— ORDER OF PAYMENTS.  The board may determine when payments are to be made depending upon moneys in the indemnity fund. Payments are to be made on an equal basis between depositors and sellers with one exception. A seller whose grain was sold under a deferred-pricing contract is indemnified after depositors and other sellers.