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Michigan Producer Insurance Fund Reaches Five Million Dollar MarkLANSING - Michigan Department of Agriculture (MDA) Director Don Koivisto announced today that the Michigan Farm Produce Insurance Fund has reached $5 million, which means producers will no longer have to pay an assessment to ensure protection against elevator bankruptcy for grain settled after Dec. 31, 2007. The Farm Produce Insurance Fund (PA 198 of 2003), established in 2003 as part of the Farm Produce Insurance Act, pays farmers should a farm produce dealer go out of business. Premiums are paid by an assessment of .2 percent of the net value of all commodities (e.g., corn, soybeans, dry beans, small grains, and cereal) sold to licensed grain dealers, which fund the program.
"The high rate of farmer participation and the rate in which the insurance fund reached the $5 million dollar plateau is a direct reflection of the strength and economic viability of Michigan's agriculture industry," said Koivisto. "I am pleased the insurance fund has proven to be a strong safety net for our farmers. It shows we are doing the right things here in Michigan to support our state’s second largest industry." If a farm produce dealer goes out of business, farmers who have paid into the Farm Produce Insurance Fund are entitled to 100 percent payment on farm produce stored under warehouse receipt, grain bank, or open storage in Michigan licensed warehouses; or 90 percent payment on all other financial losses from farm produce delivered to the buyer.
In early 2007, for example, O’Dell Grain in Homer went out of business, owing $642,422 to growers. O’Dell’s estate only paid growers $255,586 of the money they were owed. Through the Farm Produce Insurance Fund, growers received $347,856, or 90 percent of their claims, which is the maximum allowable under the statute. In March 2005, the fund paid out nearly $400,000 to 29 farmers, which represent 90 percent of the money they lost when MST Investments, Inc. of Pinconning went bankrupt. It took three years after MST Investments closed their doors for farmers to receive $204,000 from the bankruptcy court. The Michigan Farm Produce Insurance Authority is a nine-member board, representing farmers and grain, feed, and banking interests; and has the responsibility of establishing, administering, and promoting the fund.
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