The Corn Producers Association of Texas supports Texas Rep. Larry Phillips’ H.B. 1840 to establish a grain indemnity fund in Texas.
The Fund will protect the financial interests of Texas grain producers in the event an elevator or other first purchaser of grain is not able to meet its financial obligation to the producer. It is essentially a method for producers to self-insure the financial risks associated with selling grain.
“I’m glad to see Rep. Phillips file this bill to create a Texas grain indemnity fund,” Bruce Wetzel, CPAT secretary/treasurer and producer near Sherman, Texas, said. “In light of recent grain warehouse failures, it’s vital there be a form of financial protection for producers when these purchasers can’t honor their financial obligations to producers.”
Currently, Texas producers only have the Texas Grain Warehouse Act to protect them. CPAT commends Texas Commissioner for Agriculture Todd Staples and members of the Texas Department of Agriculture Grain Warehouse Task Force for reviewing the Grain Warehouse Act, which is currently the only line of protection for producers. Texas Sen. Craig Estes and Texas Rep. Jim Landtroop recently filed the amendments to the Act recommended by the TDA Grain Warehouse Task Force in the state senate and house respectively, which CPAT also supports.
However, even with these new changes to the Act, it is designed to only protect the stored grain producers have in a facility. A producer has no protection when contracted grain is delivered to a facility or if grain is sold and not paid for in a timely manner, whether this is delivered to a licensed warehouse or any other grain buyer. A state grain indemnity fund would pick up the losses not covered by the rules in the Act.
Unfortunately, many producers in Texas have learned the hard way that the Grain Warehouse Act does not fully protect them, and are suffering large economic losses as a result.
“After my personal experience with an elevator failure, I know it’s imperative that we establish a fund to protect producers from the financial losses I was forced to face,” Wetzel said.
These losses affect not only the producer, but also lenders and businesses. The economic impact of a failed elevator or other grain purchaser ripples across communities and even across the state.
“A state grain indemnity fund goes beyond the scope of the Grain Warehouse Taskforce,” Wetzel said. “Texas is far behind other major grain-producing states in creating a producer-funded insurance program. If passed, this bill will be producer-funded and protect producers across the state from purchaser failures.”
When the bill is passed, Texas producers will have the opportunity to vote to set the Fund into place. The Fund would be regulated by a seven-person producer board, appointed by state commodity groups, in conjunction with the Texas commissioner for agriculture.
For further information about the details of the proposed Texas grain indemnity fund, please visit www.TexasCorn.orgor call the CPAT office at 800.647.CORNbegin_of_the_skype_highlightingend_of_the_skype_highlighting. Additional information is also available from the Texas Farm Bureau.