Prairie Public Broadcasting

Indemnity fund at cap BISMARCK, ND (NDPR) - A fund designed to help farmers who have credit-sale contracts with elevators that go bankrupt has reached its $6-million cap.

And that means, effective June 30th, farmers with those contracts will no longer have to pay-in.

A credit sale contract is a written grain sales contract that provides for payment 30 days or more after the delivery or release of the grain for sale. This fund was established after the insolvency of an elevator in Wimbledon -- and it may provide a grower up to 80-percent of the value of the grain sale contract.

North Dakota Public Service Commissioner Tony Clark says this should be welcome news for farmers and elevators.

"Most of them probably saw this as a necessary evil, given the amount of liability out there in the grain business," said Clark. "Having it suspended will put a little more money in farmers' pockets, and will end some paperwork for the grain buyers."

The assessment was .2% of the amount of the credit sale contract.

The Legislature originally set the cap at $10 million -- but reduced it to $6 million.

"The reality is -- if an extremely large grain buyer in the state went under, we couldn't have a fund that would even be big enough to cover it," said Clark. "Most of the elevators we've had financial difficulties with have tended to be smaller elevators, and that fund would more than cover those problems."

Last year, an elevator in Rhame -- operated by Minnesota Grain -- became insolvent. Clark says the credit sale indemnity fund paid four producers a total of $110,000.

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