Grain producers voting on indemnity fund

In 2009, local grain producers lost millions when Dorchester Grain Co. went bankrupt following an investigation into missing grain. The Texas Grain Indemnity Fund, on which producers have until Dec. 7 to vote, is designed to serve as financial protection against such future loses.

“This fund would serve as a risk protection for Texas grain farmers to ensure that should they encounter the same situation, a portion of their losses would be repaid,” said Grayson County Farm Bureau President Ben Wible.

For the estimated 140 producers who were victims of Dorchester Grain’s collapse, their lose was big. The Texas Department of Agriculture said there was a shortage of 640,000 bushels of grain worth almost $5 million. When case was settled in 2011 the owner paid $400,000 in restitution to be divided among the producers.

“They just got a real small percent on the dollar of what their grain was worth,” said Grayson County Extension Agent Chuck Jones.

The event spurred a movement among local producers who lobbied the Texas Legislature to create the Texas Grain Indemnity Fund. On Sept. 1, 2011, a bill went into effect creating the fund and governing board, but producers must still vote to approve the fund.

Jones said the system works similarly to insurance that will cover grain — corn, sorghum, wheat and soybeans — from harvest to the time it’s sold. Producers will pay between 0.2 percent and 0.6 percent of the final sale price of their grain to the fund, which will cover up to 90 percent of the grain’s value. The exact percentage will be set annually by the Fund Board.

“The producers, who really live year-by-year because of how much they borrow for a lot of their operations, (through the fund) they have money available to them in case there’s a bankruptcy or corruption,” Jones said.

The fund must receive a favorable vote from two-thirds of producers to go into effect. To be eligible to vote, producers must have sold grain in the 36 months preceding Dec. 7. According to the fund’s website,, “eligible grain producers are persons including the owner of a farm on which grain (corn, sorghum, wheat and/or soybeans) is produced or the owner’s tenant or sharecropper engaged in the business of producing grain or causing grain to be produced for commercial purposes.”

Producers can get a ballot at their local Texas AgriLife Extension Office or at the Grayson County Farm Service Agency Office. Ballots must be postmarked by Dec. 7.

Jones said, so far there has been a lot of interest among local producers in the fund. “As eager as they are to get their hands on the ballot, I think they’re in favor of it,” he said.

The ballots will be counted on Dec. 17 and the fund will begin on Feb. 1 if approved by producers.