Texas grain producers will vote Dec. 5-9 on the establishment of a grain indemnity fund program.
Texas Farm Bureau supports a statewide producer-funded commodity program to protect producers and ensure full payment is received for commodities.
The following information is intended to help answer questions about the Texas Grain Producer Indemnity Fund.
What is the purpose of the Texas Grain Producer Indemnity Board (TGPIB) and the indemnity fund program?
The Texas Grain Producer Indemnity Board is the enactment of legislation (HB 1840) passed in 2011 and amended by SB 1099 in 2015.
The TGPIB will establish an indemnity fund program that will mitigate 85 percent of all verified financial losses suffered by producers of corn, sorghum, soybeans and wheat when a financial failure prevents grain buyers from paying for purchased/contracted grain or delivering unsold grain.
Who are the board members?
The nine-member board is appointed by Texas Department of Agriculture (TDA) and includes a representative from the Corn Producers Association of Texas, Texas Agricultural Cooperative Council, Texas Farm Bureau, Texas Grain and Feed Association, Texas Grain Sorghum Producers Association, Texas Soybean Association and Texas Wheat Producers Association, as well as a member with expertise in production agriculture financing and a representative with the non-warehouse grain-buying industry.
What is it going to cost? What is the assessment rate?
The rules adopted by the TGPIB set an assessment of two-tenths percent of the gross sales price of the grain.
Once the fund reaches an amount determined by the TGPIB as sufficient to cover risks, a refund process will be initiated.
Who pays the assessment and how is it collected?
The “first point of sale” grain buyer will collect the assessment when producers sell their grain, and remit payment to the TGPIB.
What about the administrative cost to the buyer for collecting the assessment?
Grain buyers will be compensated through an administration fee set by the TGPIB for costs associated with collecting and remitting the assessment.
What if the grain buyer does not collect the assessment?
Producers who sell to grain buyers who do not collect the assessment and remit it to the TGPIB are not eligible for indemnification of financial loss.
It is the producer’s responsibility to know the assessment has been deducted through their settlement statements.
How much protection will my participation provide?
The TGPIB will establish an indemnity fund program mitigating 85 percent of the financial losses suffered by producers of corn, sorghum, soybeans and wheat when grain buyers fail to pay for grain.
How will the fund’s balance be determined?
The TGPIB annual budget will set the minimum fund balance necessary to cover all anticipated administrative and operating costs, as well as a reasonable estimate for indemnity claim payments.
Who controls the funds?
The fund is managed by the TGPIB as enabled by the Texas State Legislature.
This money will not be a part of the State Treasury and can only be used for the indemnity fund program.
How do I file a claim? What is the process?
The producer will submit/file a claim to the TGPIB along with documentation (settlement statements) proving delivery of the grain and the loss incurred.
The TGPIB will review the claims, and upon verification of the claim, the producer will receive 85 percent of the value of the gross sale of the grain.
All rights to any funds, which may be recovered in a settlement relative to the loss, up to the indemnity paid to a producer, will be transferred to the TGPIB as a requirement in the settlement of the claim.
Can I get a refund?
Annually, the TGPIB will review its budget for the next year and its current financial status and, based on that review, will determine whether or not to issue refund allotments based on prior years’ producer assessment submissions. In any event, if the TGPIB has determined the TGPIB financial account is not sufficient to pay refund allotments and mai