Tens of thousands of farmers who sell grain to Ohio elevators will be charged a tax starting July 1 that they have not paid in more than 18 years.
The tax, which will cost many farmers hundreds of dollars a year, will be used to build up a guarantee fund that reimburses farmers when a licensed elevator holding their grain becomes financially insolvent.
The fund now has $3.65 million, which would not be enough to cover farmers' losses if a large elevator became insolvent, according to the Ohio Department of Agriculture. The agency administers the Ohio Grain Indemnity Fund.
The department plans to charge a half-cent-a-bushel tax on grain sold to licensed elevators. The tax, which is expected to produce an average of $2.85 million a year, is forecast to end after the fund reaches $10 million.
Farmers had paid into the fund from July, 1983, to December, 1985. But 35 elevators have become financially insolvent since 1983, leading to hundreds of claims from farmers.
Some farmers deliver their whole crop to elevators at harvest time and pay to store it there until prices hit a point where they decide to sell. Typically, prices paid for grain are lower at harvest time than they are later in the year.
Other farmers have been caught by elevators' financial difficulties when they have delivered grain with the promise that the check would be mailed to them or could be picked up the next day.
The agriculture department's reimbursements to individual owners of grain at insolvent elevators has ranged from $17 to $463,095.
The tax will not be charged to farmers selling corn directly to livestock farms or to other unregulated buyers. Nor is there a state guarantee for them if their buyers do not pay. About 8 percent of corn grown in Ohio is sold directly to livestock farms and other such buyers, one expert said.
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