What is the Illinois Grain Code?
The Illinois Grain Code is the state law governing grain transactions.
The Illinois Department of Agriculture administers the Grain Code. The agency is responsible for inspecting and licensing all grain dealers and most warehouses in Illinois. Department officials take inventory of grain in storage, review its condition and analyze records to ensure facilities are fiscally sound and comply with the law.
The Agriculture Department also disburses monies from the Illinois Grain Insurance Fund to people or businesses with eligible claims.
What role does the Illinois Grain Insurance Fund play?
The Illinois Grain Insurance Fund was established in 1983 to protect depositors against losses associated with failed grain dealers and warehouses. The fund receives money from assessments paid by Illinois grain dealers, warehousemen, grain sellers, and lenders. All licensed grain dealers must contribute to the fund. All state-licensed warehouses also must contribute. Warehouses licensed by the federal government are not required to participate, but most do.
When an insolvency occurs, the Illinois Department of Agriculture protects the interests of grain producers and depositors. Money obtained from the liquidation of grain assets is used to pay off the failed facility's obligations. If the sale of assets from failed licensers does not raise sufficient funds to cover the facility's debt, money from the Grain Insurance Fund is used to pay valid claims. Only patrons of facilities participating in the Grain Insurance Fund are eligible to receive payments from the fund. How Much Protection Does the Grain Insurance Fund Provide? There are two types of claims:
Grain Warehouse Claim: Claimants who have proof of ownership of grain stored in a grain warehouse covered by the Illinois Grain Insurance Fund or a collateral interest as shown on a negotiable warehouse receipt. These can include producers, lenders, or other grain businesses.
Grain Dealer Claim: Claimants who have proof of sale of grain for which they have not been paid to a failed grain dealer covered by the Illinois Grain Insurance Fund. These claimants must be a producer-"the owner, tenant, or operator of land, who has an interest in and receives all or part of the proceeds from the sale of the grain produced on the land."
The maximum recovery available from the Illinois Grain Insurance Fund is $1,000,000 per claimant. Subject to this limitation, the following coverage applies:
Warehouse Claims are covered for 100% of the value of the grain storage obligation, or collateral interest, at the time of failure. There is no time limit on the age of the storage obligation, but a claim must be filed promptly within time limits set by the Illinois Grain Code. Warehouse receipts surrendered by a lender, within 21 days of the failure of the warehouseman, are covered 100%.
Grain Dealer Claims for grain sold from storage or priced at delivery to a grain dealer licensed by the State of Illinois are covered as follows:
- For the first 21 days after delivery to the grain dealer - 100% coverage.
- From the 22nd through the 160th day after delivery to the grain dealer - 85% coverage subject to a maximum of $250,000.
- After 160 days, no coverage is provided.
Grain Dealer Claims for grain sold and delivered to a grain dealer on a price later contract are covered as follows:
- For the first 21 days after the date of delivery to the grain dealer, if the grain was priced before the date of failure, or was sold from storage - 100% coverage.
- For all other price later grain from the 22nd day after the date of pricing has passed, or up to 365 days after the date of delivery to the dealer has passed, whichever comes first - 85% coverage, subject to a maximum of $250,000.
- After 160 days from the date of pricing, or after 365 days from the date grain was sold via price later contract, whichever comes first, no coverage is provided.
What should grain depositors do to ensure they will be protected in the event of an insolvency?
Prior to selling grain, be certain the grain dealer has a valid grain dealer's license.
Prior to delivering grain for storage, be certain the warehouse has a valid state or federal warehouse license and contributes to the Grain Insurance Fund. Some federally licensed warehouses do not participate in the fund.
Prior to unloading grain, make sure a representative sample has been taken. Depositors also have the right to have the grade determined before unloading.
Be aware of storage and service charges that may apply.
Verify that grain delivered is properly weighed and recorded on a scale ticket.
Save all documentation, such as scale tickets, settlement sheets, warehouse receipts and contracts, as evidence in case the facility fails. All documents should be pre-numbered and bear the name of the licensee.
Understand the type of transaction that is taking place, how the price will be set and when payment will be made. Clarify whether the title has been transferred to the dealer or the depositor is only storing grain and has retained the title. The Grain Code defines a price-later contract as one in which the title passes to the buyer upon delivery, but the sale price of the grain is established sometime after the delivery date.
Know the extent of protection afforded by the Illinois Grain Insurance Fund and when protection expires.
What responsibilities do licensed grain dealers and warehouses have under the Grain Code?
The Illinois Grain Code requires licensed grain dealers and warehouses to:
Store any grain tendered to them in the course of business as long as space permits, and the grain is in suitable storage condition and is a kind customarily stored.
Provide competent personnel and equipment to weigh and grade all grain coming in and going out of storage.
Maintain sufficient grain of like quality to meet outstanding storage obligations.
Issue a pre-numbered scale ticket for each load of grain delivered. The scale ticket must include the name of the licensed grain dealer and warehouse and the amount of bushels delivered.
Make payment for grain purchased within a reasonable period of time after the seller requests payment.
Maintain grain, rights in grain and proceeds from the sale of grain totaling at least 90 percent of obligations for commodities purchased through price-later contracts.
Illinois Grain Insurance Corporation Financial Accountability for the Investment of Public Funds
- All IGIF funds are currently invested in and a part of the State of Illinois "Illinois Funds, Money Market Fund"
- IGIF Cash Balance Illinois Funds for Month Ending February 2020: $8,579,556.04
- IGIF Investment Income From Illinois Funds for the Month of February 2020: $11,270.75
- IGIF Investment Average Illinois Funds Yield for the Month of February 2020: 1.658%
For more information, contact:
Illinois Department of Agriculture
Bureau of Warehouses
P.O. Box 19281 State Fairgrounds
Springfield, IL 62794-9281
Within Illinois, call toll free 1-800-654-0882 or 217-782-2895,
Email inquiries to: email@example.com