Legislative update: Grain Indemnity Fund advances

With delegates off to NFU convention in California, work continued for MFU at the Minnesota capitol with progress on meat processing, expanding the beginning farmer tax credit, establishing a grain indemnity fund, replenishing the RFA and other priority issues.

Legislative committees have been convening for marathon sessions—including some late into the night—as the legislature approaches its first committee deadline on March 10. By this date, all policy bills need to be approved by the relevant committees in at least one House. By second deadline on March 24, policy bills need to approved by committees in the opposite chamber and by the third deadline on April 4, lawmakers need to act on appropriations bills. Finally, lawmakers have a deadline to approve a new state budget by the legislature’s constitutional adjournment on May 22, leaving less than 11 weeks left in session.

On Monday, the Senate Agriculture Committee took a bipartisan vote to advance Senator Rob Kupec’s (DFL-Moorhead) bill to establish a grain indemnity fund (SF2218)—something MFU has worked on since the Porter elevator went under in 2015 and that the governor included in his budget request again this year. Under Sen. Kupec’s proposal, producers who sell grain to an elevator that goes under would be eligible to receive a payment from an indemnity fund. Payments would start at 100 percent for grain on open storage for less than 180 days and then scale down based on how long grain is left at an elevator.

The long-term funding mechanism for the fund would be assessments on sold grain, collected at elevators across the state. Premiums of an estimated $7 on every $10,000 of marketed grain (no more than $20 on every $10,000 under the bill) would click on if the fund dips below $9 million and click off once it reaches $15 million. That said, the Senate proposal would seed the fund with the full $15 million ensuring that the fund is solvent from day one and that there will only be an assessment if there is a failure. Importantly, his bill also includes:

  • An opt-out provision for farmers who want their money back in exchange for no protection from the fund.
  • Elimination of most bond requirements for elevators that cost the industry up to $2.5 million per year.
  • Authority for the Attorney General to pursue repayment to the fund as a party to bankruptcies and adds new penalties for elevators who don’t comply with the law.

Before the Senate vote on Monday, they heard powerful and difficult stories from farmers who joined the committee to talk about what it was like facing nonpayment from an elevator following bankruptcy. Brian Herbst, a farmer from Kasson who lost $350,000 in the Pipeline bankruptcy, told the committee about the ‘only bright spot’ being that his sons will understand what it’s like to farm through hardship as he did coming out of the 1980s farm crisis. Another farmer, Marty Phillips from Good Thunder, talked about getting hit with both the Pipeline and Global Foods bankruptcies.

The grain indemnity bill now heads to the State Government Committee in the Senate. In the House, Rep. Ethan Cha (DFL-Woodbury) introduced a parallel proposal cosponsored by House Ag Chair Samantha Vang (DFL-Brooklyn Center), Ranking Minority Lead Paul Anderson (R-Starbuck) and a bipartisan list of coauthors. We expect a hearing as soon as next week.

Another bill MFU is working hard to advance through the committee process is the reauthorization and expansion of the Beginning Farmer Tax Credit carried by Senate Ag Committee Chair Aric Putnam (DFL-St. Cloud) and House Ag Chair Vang. The Senate bill (SF1879) was heard, amended, and referred via a unanimous voice vote to the Senate Tax Committee last week and the House followed suit on their bill (HF2277) on Tuesday.

In addition to eliminating the sunset on this nation-leading program, the bill would:

  • Extend the credit for sale of agriculture assets to family members to assist with generational farm transition.
  • Increase the credit for sale of agriculture assets from 5 to 8 percent and up to $50,0000, adding additional incentive to transition ownership of farmland and to keep pace with increasing land values.
  • Increase the credit for sale of agricultural assets to Black, Indigenous, and farmers of color from 5 to 12 percent and up to $50,000.

Right to repair hits roadblocks

While we have been making good progress on priority issues, there are also bumps in the road. Last week, the Senate Commerce Committee amended the Right to Repair legislation (SF1598) to exempt agriculture equipment and other off-road vehicles. Sen. Kupec carried the legislation and spoke passionately about the need for this law to level the playing field for farmers and independent repair technicians. Despite that, pressure from industry groups and the Farm Bureau led to agriculture being removed from the legislation in the Senate.

If you support Right to Repair, it’s still a good time for your to make your voice heard by contacting members of the Senate Commerce Committee. That’s because the House version (HF1337) remains strong and intact. Both bills are likely to be compared in a conference committee and hearing from farmers will make a difference to the committee.

Meat processing work advances

MFU is working hard to build on the state’s efforts to build a more resilient local and regional meat processing system. Last week, the House Agriculture Committee heard bills to establish a meat processing navigator position at MDA (HF1302) and to establish meat processor training grants (HF1303). These initiatives, carried by Rep. Nathan Nelson (R-Hinckley) would make it easier for prospective processors to effectively navigate the state’s regulatory environment.

Two additional bills that MFU helped shape were introduced in addition to these proposals. First, Sen. Mary Kunesh (DFL-New Brighton) and Rep. Samantha Sencer-Mura (DFL-Minneapolis) introduced bills (SF2681/SF2562) that would provide funding for employee training, recruitment and retention at small meat processors. Building on a proposal brought forward by Gov. Tim Walz last session, this proposal would provide grants to development organizations and other non-profits to provide up to $10,000 grants to employees at small processing plants. Grants could go toward tuition at the technical training programs, relocation grants, translatio, and other support services that will help small processors attract and retain new employees.

Second, Rep. Ethan Cha and Sen. Rob Kupec introduced bills (SF2620/HF2563) to put an additional $3 million into the AGRI Value Added program for meat processing to ensure that the state has the funding to get new projects off the ground.

Bonding bill passes House

Finally, the House passed a long awaited $1.87 billion bonding package to pay for infrastructure projects across the state. The bill, which passed with broad bipartisan support in the House, now heads to the Senate where it’s future is less certain.

Of course, this is only a snapshot of MFU’s legislative work at the capitol—we’ve also offered testimony on broadband funding, local food assistance, animal disease preparedness, Rural Finance Authority funding and a host of other issues. As always, if you have questions, concerns, or thoughts about MFU’s legislative work, reach out at (320) 232-3047 (C) or stu@mfu.org.