It’s a rare day when you hear an agriculture official talk about a “win-lose” situation, but that is what’s happening in some circles of the pulse industry these days.
Saskatchewan Pulse Growers executive director Garth Patterson said green lentil prices have plummeted since producers signed contracts in the winter of 2003. That led some processors to blatantly disregard the legal documents.
“The company may have made a mistake so they weren’t really motivated to honour it.”
In the past, the opposite scenario has occurred with buyers being left high and dry when producers couldn’t deliver what they had promised.
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Patterson has received more calls than usual complaining about unfulfilled promises, so he decided to write a column in the latest PulsePoint magazine urging both parties to honour contracts they sign.
“This lack of trust contributes to the volatility of our industry,” he warned buyers and growers.
Brad Dunnington is a contract processor who has first-hand experience with broken commitments.
“It seems to be getting worse,” said Dunnington, who cleans lentils and chickpeas for Agricore United at his plant near Swift Current, Sask.
“Times are tough and people are trying to pinch pennies and they’re not thinking of the future.”
He said five percent of growers walk away from deals they make over the phone.
By the time the contract is faxed or mailed to them, they have found a buyer offering a few cents a pound more, prompting them to renege on their verbal commitments.
Dunnington said it’s a business decision for short-term gain that has long-lasting ramifications.
“People that mess around like that, you just remember them and you either don’t buy anything from them again or else you give them a lower price all the time.”
Patterson said that is a two-way street, with some processors being blacklisted by growers as well.
“For every finger pointing one way you can always find one pointing the other way.”
He said the contract problem is particularly acute in the pulse industry because processors rely on the documents to mitigate the risk of forward sales.
“(They) don’t have the opportunity to hedge on the futures exchange.”
Patterson is confident the industry can rebuild its integrity through education and communication, making people aware that backing out of contracts damages the overall reputation and competitiveness of the pulse industry.
But the grower group is also working with the Canadian Special Crops Association on a more tangible solution that will ensure more “win-win” situations.
“I think you may see the day where there’s a standard contract that’s endorsed by both the industry and growers that will be available on a website.”
In the meantime, both parties to a dispute will have to rely on mediation or go to court to resolve their differences.
Patterson said court is “an expensive and time-consuming proposition.”
Dunnington agreed it is costly but said the legal arena may well be the only place to resolve this lingering issue once and for all.
“Some people are going to have to go to court and get slapped good, but nobody wants to make that move,” he said.
