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If the U.S. Department of Agriculture gets its way, the protections farmers have under Ohio’s Grain Warehouse Indemnity Fund could be going away.

USDA has issued a new ruling on its interpretation of the federal grain warehouse law. USDA has always held regulatory jurisdiction over grain storage functions of federally licensed warehouses. Now, it claims its jurisdiction also applies to the merchandizing operation of the warehouse. If this ruling holds, farmers who have grain stored or under merchandizing contract with federally licensed facilities in Ohio would not be eligible for payments out of the Ohio grain indemnity fund if the elevator became insolvent.

"Federal rules don’t protect Ohio farmers as well as the state rules do," said Larry Gearhardt, OFBF director of local affairs. Under federal law, elevators are only required to be bonded to $500,000. Ohio’s grain indemnity fund has more than $7 million available to reimburse farmers should an elevator go into default.

There are 235 commodity handling companies in Ohio operating at 482 locations. Twenty-six warehouses are federally licensed. However, there is the possibility that more elevators may seek to switch from state to federal regulation because they would be held to less strict standards and requirements. Gearhardt said there’s no evidence that such a movement is taking place in Ohio, but officials from the American Farm Bureau say it’s happening in other states. To prevent any mass exodus from state grain programs, USDA announced a temporary moratorium on issuing new federal licenses. That suspension will be in place until mid-January.

AFBF and other farm organizations petitioned USDA to overturn its ruling and recognize states’ authority. The agriculture department refused. In response, AFBF is seeking legislation that would guarantee state programs that apply to merchandising would take precedence over federal law. Gearhardt said any such legislation wouldn’t even be considered until after the new Congress convenes in 2003.

According to Gearhardt, "There’s certainly no need to abandon the elevators (farmers) now doing business with, but at the same time we might suggest that they become more aware of the Ohio grain indemnity program and factor that in when they decide where to market their grain. There’s no emergency now, but we want to prevent one in the future."

caption: Ohio farmers don’t want state grain laws dumped.