The fund is administered by the nine-member board with Texas Department of Agriculture oversight. “The board assures that the fund operates strictly in accordance with the legislation,” Vaughan said. Financial safeguards also will be in place, including investment only in approved funds with full backing of the state or federal government. “A CPA audit will be conducted every year.”

The process of establishing the indemnity fund began in September 2010, with commodity groups meeting to discuss the vulnerability of grain farmersafter a series of grain buyer financial failures resulted in millions of dollars in losses to Texas grain producers.

“Rep. Larry Phillips of Sherman and Sen. Craig Estes of Wichita Falls introduced the legislation,” Vaughan says.  “It passed the House with only two dissenting votes, and passed the Senate unanimously.”

All grain commodity groups are on board, he says. “They realize it’s a good program.

“The indemnity fund does require some responsibility from producers, who must make certain that the assessment is collected and paid into the fund by the grain buyer. If the assessment is not collected and put into the fund, the farmer has no protection for sold grain. Farmers have to take care of business.”

Vaughan says the state has also strengthened laws for warehouses and elevators.

The assessment will range from 2/10 to 6/10 the value of grain when sold. “That assessment is set every year by the board to meet fund needs. We will set it as low as possible.”