Producers must prepare for unexpected losses

You always assume (hope) that it won’t happen to you, but I happen to be one of the producers unpaid by Canadian Exotic Grains of Eston, Sask.

I’m darn glad that the company was licensed and bonded by the Canadian Grain Commission and I’m hoping the bond is adequate to cover what’s owed to producers.

Our entire 2017 chickpea production was trucked to Canadian Exotic Grains. The deal was that they would size the chickpeas returning the 7 and 8 millimetre sizes for use as this year’s seed and buy the remainder. They finally had the seed cleaned, sized and ready for pickup just before seeding geared up.

When I asked about the timing of settlement on the retained chickpeas, I was informed that they were unable to pay and would be relying on their Canadian Grain Commission bond.

Fortunately, fewer than 90 days had elapsed since the chickpeas were delivered to Eston. That’s the time limit for coverage.

Unlike some other grain buyers that have run into financial trouble over the years, this company hasn’t tried to hide from its obligations and has been working in concert with the commission to sort out how much producers are owed.

Over the years, there have been many criticisms levelled at the bonding system. When a company’s obligations exceed its bond, producers can end up with only a percentage of what they’re owed. Different approaches to cover non-payment have been proposed, but never implemented.

However, I’m really glad to have some protection in this unfortunate situation. It has me thinking about other types of losses for which farms may not be covered.

Everyone is familiar with crop insurance and hail insurance and some have also examined the gross revenue insurance available through Global Ag Risk Solutions. But how many producers carry insurance on their stored grain?

This won’t cover you for grain spoilage, but it does cover losses such as theft, fire and tornadoes. Though relatively rare, these risks are real. I’ve never carried insurance on stored grain, but I’m going to. Insurance is also available for stored fertilizer.

After last fall’s big fires in southwestern Saskatchewan and southern Alberta, more producers have probably considered insurance on their fences. This can cover both materials and the cost of installation.

If you have free-standing hopper bottom bins, some insurance companies offer a lower insurance premium if you install commercial bin anchors. However, insurance doesn’t cover bins that topple over due to an inadequate foundation.

Here’s a question for you. You buy a piece of equipment at an auction sale and at the end of the day, you drive it home or hook it to your truck and pull it home even though you haven’t had a chance to add it to your insurance policy. If it’s destroyed on the way back to the farm, are you covered?

Everyone has a different risk tolerance, but it’s a good idea to understand what losses are possible and what protection is available because things can and do go wrong sometimes. Some big potential losses may not be covered if you haven’t done your homework.

About the author

Comments

explore

Stories from our other publications