Governor Holcomb Signed HEA 1483. What Now?

Governor Eric Holcomb signed HEA 1483 on April 29, 2021. Because an emergency was declared for the act the bill took effect upon the Governor's signature. What do you need to do now?

Begin Pricing Out Older DP Contracts: If the deferred pricing agreement in connection with a grain purchase was entered into before July 1, 2021, you must complete all payment obligations to farmers under the agreement before January 1, 2024.  After January 1, 2024, the agency can issue a monthly fine for non-compliance of this section.  

Update Your Contract Templates IC 26-3-7-3 (12) sets forth contract language for the purchase of grain from producers, except a flat price contract or a seed production contract. The notice must be placed immediately above the place on the contract where the farmer must sign.

  • "NOTICE - SELLER IS CAUTIONED THAT CONTRACTING FOR THE SALE AND DELIVERY OF GRAIN INVOLVES RISKS.  THESE RISKS MAY INCLUDE FUTURE PAYMENTS BY YOU TO MAINTAIN THIS CONTRACT, A LOWER SALES PRICE, AND OTHER RISKS NOT SPECIFIED.  INDIANA STATE LAW REQUIRES THAT AFTER JULY 1, 2022, ALL DEFERRED PRICED AGREEMENTS MUST BE PRICED WITHIN THE CROP YEAR AS DEFINED BY IC 26-3-7-2(7).  THIS CONTRACT MUST BE PRICED BY ___(Insert Date)____.  COVERAGE UNDER THE INDIANA GRAIN INDEMNITY PROGRAM IS FOR GRAIN THAT HAS BEEN DELIVERED TO A FIRST PURCHASER LICENSEE WITHIN THE 15 MONTHS BEFORE THE DATE OF FAILURE AND IS LIMITED TO 100% OF A LOSS FOR STORED GRAIN AND 80% OF A LOSS FOR OTHER COVERED CONTRACTS.  BE SURE YOU UNDERSTAND THE NATURE OF THIS CONTRACT AND THE ASSOCIATED RISKS."
  • IC 26-3-7-3(13) sets forth additional requirements for seed production contracts "NOTICE - IF THE TERMS OF THIS CONTRACT STATE THAT THE CONTRACTOR RETAINS OWNERSHIP OF THE SEED AND ITS PRODUCTS, YOU MAY NOT BE ELIGIBILE FOR PARTICIPATION IN THE INDIANA GRAIN INDEMNITY PROGRAM.  TO BE ELIGIBLE TO PARTICIPATE IN THE INDIANA GRAIN INDEMNITY PROGRAM, FARMERS MUST OWN AND SELL GRAIN OR SEED.  BE SURE YOU UNDERSTAND THE NATURE OF THIS CONTRACT AND THE ASSOCIATED RISKS."

Start Educating Your Farmer Customers: After July 1, 2022, all deferred price grain must be priced within a USDA-defined crop year.  (Sept 1 - Aug 31 for corn and soybeans.) DP contracts cannot be transferred to a new contract beyond the crop year for the delivered grain.

Review Minimum Net Worth Requirements: The amount of bond, letter of credit, or cash deposit required may not exceed $350,000 per licensee and may not exceed a total of $1,250,000 per person. ("Person" means an individual, partnership, corporation, association, or other form of business enterprise.) NOTE: The director may require additional bonding that the director considers necessary.  Also, note that the maximum bonding requirement has been raised to $350,000. Under the previous statute, licensees that were compliant with state statute were only required to post a $250,000 bond. With this new bill, those same licensees are now required to have a $350,000 bond on file to be in compliance. Even though they were compliant before the bill, certain licensees will be required to increase their bonding amount regardless to the maximum cap of $350,000 based on the bond amount formulas outlined in Indiana Code 26-3-7-10.

Correct Net Worth Deficiencies: If the director or the director's designated representative finds a deficiency in minimum net worth before the licensee's next audit by the agency, the director will issue a notice of deficiency to the licensee stating that the licensee has thirty (30) days to correct the deficiency. If a licensee fails to correct a deficiency in minimum net worth within the thirty (30) day period, the director may issue a fine of not more than one thousand dollars ($1000). If a licensee fails to correct a deficiency in minimum net worth within sixty (60) days of receiving a fine, the director may issue a temporary suspension of not more than thirty (30) days. The director or the director's designated representative shall grant an opportunity for a hearing as soon as possible following a temporary suspension.

Other Important Items to Note

  • Agency has rulemaking authority to adopt fines for violations of IGBWLA law.
  • Agency can receive and consider financial audits of a licensee conducted by an independent audit or accounting firm
  • Agency can share information regarding the financial status of a licensee with the IGIC board.
  • Agency can engage a third-party firm to conduct a performance review of the agency's auditing practices and procedures at least once every 5 years. 
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