Canaryseed growers ponder CGC protection

Canaryseed growers will soon vote on whether they want to be covered under the Canadian Grain Commission’s licensing program but it will be too late for those owed money by Ilta Grain.

The Canaryseed Development Commission of Saskatchewan is expected to prepare a resolution for its annual general meeting in Saskatoon on Jan. 13.

If growers attending the meeting vote in favour of the resolution, the directors of the canaryseed commission will decide whether they will approach the CGC about canaryseed becoming a regulated crop.

However, that will do nothing for growers who are owed money for canaryseed they delivered to Ilta Grain, a pulse and special crops processor under creditor protection.

“That’s sort of like closing the barn door after the horse has escaped,” said Kevin Hursh, executive director of the canaryseed commission.

“But there will be more horse escapes in the future if we don’t close the barn door.”

He said Ilta was a significant buyer of canaryseed, accounting for about 15 percent of the $100 million in annual grower sales of the crop.

Hursh has spoken to three growers who are owed money by Ilta. One is owed about $50,000, another $150,000 and the third one more than $200,000. There are many others.

“That’s a lot of money that’s not coming,” he said.

This won’t be the first time canaryseed growers were left in the lurch. A lot of them lost money in 2002 when Naber Specialty Grains Ltd. and Cancom Grain Company went out of business.

That prompted the CGC to launch consultations with the grain industry in 2005 to see if there was an appetite for making canaryseed a covered crop.

There wasn’t.

Growers were worried that becoming a covered crop would lead to more canaryseed acres and lower prices. They were also concerned that the CGC would require some type of official grading system.

CGC spokesperson Remi Gosselin said the commission would be willing to revisit the issue in light of the Ilta Grain situation.

“The Canadian Grain Commission thinks that it might be worthwhile to consult the grain sector again to see if perspectives and needs have changed,” he said.

The last consultation lasted 120 days. Gosselin doesn’t know what the timeline would be for a second round.

Hursh said he doesn’t have much sympathy for those who lost money when Naber Specialty Grains went bankrupt because there were plenty of warning signs, including a previous bankruptcy.

But Ilta Grain was a major player with substantial assets. Nobody suspected the company was in financial difficulty.

Court documents show the company recorded net losses of $4.2 million in 2017 and $7.7 million in 2018. It blames its financial woes on reduced purchases from India, China and Saudi Arabia.

Hursh suspects most pulse and specialty crop processors have been bleeding red ink the past couple of years with overcapacity in the industry due to reduced pea and lentil acres.

“Now everybody is nervous about everybody they deal with,” he said.

The idea of canaryseed becoming a covered crop was raised at the canaryseed commission’s 2015 annual general meeting following a presentation by then chief CGC commissioner Elwin Hermanson.

Hursh said the issue was never put to a vote due to grower apathy.

“Nobody seemed to think it was a big deal. I guess it’s never a big deal until it happens to you,” he said.

He hopes grower sentiment may change in the wake of the Ilta incident.

Hesitant growers correctly point out that farmers don’t always receive full payment on regulated crops. For instance, farmers received 15 cents on the dollar for crops delivered to Naber Specialty Grains.

There has also been plenty of talk over the years of switching out of the licence and bonding system to some form of insurance.

But overall, Hursh thinks farmers would be better off under the CGC’s protection than without it.

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