Are elevators failing the grade?

EDMONTON — Farmers need a more transparent and fair way to grade their canola rather than leaving it up to the elevators, says an Alberta farmer.

“Everything is against you. We buy a fair bit of grain from line companies and then we sell it to them,” Brent Heidecker said during the Alberta Canola Producers Commission annual meeting held during FarmTech 2013 in Edmonton Jan. 30.

“We need a more balanced terms of sale.”

Heidecker’s resolution asking the commission to help develop a more fair grading and selling system was passed at the meeting.

He said he has sent plenty of canola samples to the Canadian Grain Commission to be regraded, and they often come back with improved grades in his favour.

“They are dramatically in our favour,” said Heidecker, who farms near Coronation, Alta.

“These aren’t evil people, but there has become a sense of entitlement.”

He said the most common grade improvements are seen in canola because the elevators and the grain commission use different sieve sizes.

Elevators use sieves with larger holes and slots that allow small and shriveled canola to be called dockage.

“Is small shrunken up canola canola or dockage?” Heidecker said.

Daryl Beswitherick, the grain commission’s program manager of quality assurance standards, said canola is the most common grain or oilseed that farmers send in for regrading.

Ninety-two of the 116 samples sent to the commission so far this crop year are canola, compared to 122 of 168 samples in 2011-12 and 30 of 86 samples in 2010-11.

Beswitherick said most elevators use a 6.5 round hole top sieve and a .038 or.040 slotted sieve underneath for measuring dockage in canola. (Sieve sizes are measured in parts of an inch.)

The grain commission uses the smallest .028 size, and does an additional hand pick to assure only weed seeds are counted as dockage.

“A lot of the primary elevators use a larger sieve,” Beswitherick said.

The Canada Grains Act defines dockage as something other than the crop. Small or shriveled canola would not be considered dockage in canola under the act, but it is often considered dockage at the elevator.

“No one is policing what elevators do.”

Beswitherick said the grain commission is seeing a lot of small, shrunken canola this year because of last summer’s hot weather.

“It’s not dockage, it’s marginal canola, but it’s still classified as canola,” he said.

Farmers who are unhappy with the dockage at an elevator have the right to send a sample to the grain commission for regrading. The sample must be agreed to by the elevator and the farmer as a representative sample. The elevator must pay the farmer based on the dockage and grade assessed by the grain commission.

Heidecker said the collective power of the Alberta Canola Producers Commission and other national and provincial canola organizations will help convince grain companies to use fairer grading standards and write fairer and more balanced contracts.

He said one-sided rules for deferred delivery contracts are another problem.

A contract may require farmers to deliver their grain during a specified month, but the elevators may not take delivery until months later, with no penalty or payment made to the farmer.

Heidecker said all contracts should have storage clauses requiring grain companies to pay farmers storage if they don’t take grain during the specified month.

Wade Sobkowich, executive director of the Western Grain Elevators Association, said there is only one pot of money, and farmers will receive less for their grain if they are paid for storage or given less dockage.

“If they pay farmers for on-farm storage, then money has to be taken away from somewhere else,” said Sobkowich.

“When premiums are paid for one thing, other prices are reduced.”

Incoming canola commission chair Colin Felstad said he doesn’t know how big of a problem canola grading is for farmers.

“We have had concern at this meeting raised. We’re here to represent producers so we will certainly look into it. The crux of the issues is producers knowing what their rights are and the regulations,” he said.

“There’s been some concern about contracts expressed by producers before. Quite a few producers view them as one sided or to the advantage of buyers.”

Rick White, general manager of the Canadian Canola Growers Association, said the organization has heard a fair bit about deferred delivery contracts.

He suggested farmers negotiate penalty clauses into the contracts before they sign them.

“What we want to do is know farmers understand their rights and should be looking at the contracts more closely and should be negotiating changes to them. That is their right. They don’t have to sign the document somebody slides across the table,” he said.

The national association began surveying farmers about two years ago to see if they had concerns with grading at elevators but received little response.

“It wasn’t any kind of big issue that we could tell, but that was a couple years ago,” White said.

“Usually any concerns were around deferred delivery contracts and grain companies not accepting it within the agreed time frame that the farmer had committed to.”

He said a request to send a sample to the grain commission shouldn’t harm future relationships with elevators.

“If a farmer is being reasonable, he shouldn’t be penalized. You can always be friendly but firm. That shouldn’t hurt any relationship if approached properly. It doesn’t have to be adversarial.”

White said having a third party official at all elevators doing unbiased grading and dockage would likely create a more expensive system.

“I don’t see the need for additional services at the elevator.”

Graham Gilchrist, the assistant farmers’ advocate in Alberta, said his office deals with disputes between farmers and grain companies.

Companies write contracts that favour their interests, and farmers need to know they are not written in stone and are can be negotiated, he added

“The producer needs to sit down with the buyer and work out a contract that is in their best interest.”

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