Wednesday, February 23, 2011
Indemnity Fund Updates
The Commodity Indemnity fund was established in 1989 and the Seed Indemnity Fund in 2002. Both were established as a consequence of financial failures by warehouses, commodity and seed buyers. Producers are encouraged to participate in the program so they can be protected against a warehouse failure. Licensees withhold and remit assessments to the Idaho State Department of Agriculture, which administers the program. Producers can sell to an unlicensed business inside or outside the state and do not have to pay in to the fund, but they also are not covered by the fund in such cases.
The current Commodity Indemnity Fund (CIF) balance at the end of January was $8 million dollars. The maximum fund balance set by law is $10 to $12 million. Bonded and licensed warehouses and commodity dealers withhold .002 of gross sales price paid to producers and remit the assessments to the CIF on a quarterly basis. There is also an assessment of a penny per cwt. on commodity withdrawn from storage, due at the time of withdrawal. A committee comprised of 6 producers and 3 industry representatives advises the Director of ISDA concerning the fund.
The Seed Indemnity Fund (SIF) balance was $4 million at the end of January 2011. The maximum fund balance set by law is $10 to $12 million. Bonded and licensed seed buyers withhold .005 of gross sales price paid to producers and remit to the SIF on a quarterly basis. Seed withdrawn from storage is subject to a penny per cwt. assessment due at time of withdrawal. A committee comprised of 7 producers and 2 industry representatives advises the Director of ISDA concerning the fund.
Producers are protected up to two years after sale or transfer of crop against nonpayment for up to 90% of the value of their crop if they sell or store with a licensed buyer. According to Dave Odgen, Warehouse Control program Section Manger, “It is a really inexpensive protection in a very volatile economy.” Producers can verify if a buyer is licensed by checking at http://www.agri.state.id.us/Categories/Warehouse/indexWarehouse.php
or by calling ISDA’s Warehouse Control at 208-332-8612.