Assessment takes effect October 1

For immediate release: July 20, 2015 Media contact: Jennifer Holton, 517-284-5724

Last year, Michigan experienced the largest grain dealer failure in recent history when the Lapeer Grain Company wasn’t able to meet its financial obligations to farmers. The Farm Produce Insurance Authority stepped in and paid $3.5 million to farmers helping cover losses incurred due to the failure of the Lapeer Grain Company.

The FPIA reimburses a participating producer for losses suffered when a grain dealer declares bankruptcy or is otherwise unable to pay its claimants for grain delivered and sold, but not paid for. Since it was established in 2003, the Authority has paid $4.4 million in claims to more than 200 producers and has recovered $600,000 from bankruptcy and probate proceedings. The FPIA covers corn, soybeans, dry beans, small grains, and cereal commodities.

The continued success of the FPIA relies on open communication between producers and the Michigan Department of Agriculture and Rural Development on all irregularities and non-payments. Once notified, an MDARD investigation is triggered to look into the issue helping farmers who may not have received payment for the product they’ve delivered. The FPIA is chaired by the MDARD Director and consists of a 10-member (eight voting) board representing farmers, industry, and banking interests.

Due to the Lapeer Grain bankruptcy, the FPIA fund balance dropped below the $3 million required fund balance necessitating reinstatement of the assessment. On June 23, 2015, the Authority approved reinstatement of the program assessment of two-tenths of one percent (0.002) from the net proceeds of all farm produce sold, effective on October 1, 2015.

The reinstated assessment will be assessed in combination with the existing administrative premium assessment of fifteen-thousandths of one percent (0.00015) for a total of 0.00215. The program and administrative assessments are to be calculated as a percentage of the net proceeds from all farm produce sold. For example, on $100,000 of farm produce sold, the total assessment would be $215.

The administrative premium assessment of 0.00015 is a continuous assessment that began on January 1, 2013 to reimburse MDARD for Producer Security Administration costs. The reinstated program assessment of 0.002 will be collected until the FPIA certifies the fund contains more than $5 million at the end of the preceding fiscal year, excluding the proceeds of administrative premiums assessed. 

If you have any questions or would like more information about the FPIA, please call (517) 284-5642 or visit www.michigan.gov/graindealers.

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