As if farmers needed another complication arising from this year’s harvest. Already, the late season with its untimely rain, snow and frost has downgraded crops and cost farmers in some regions considerable amounts of money.
That lower quality means more farmers will be searching for markets to sell their feed quality grain.
If you’re a livestock producer, that’s good news because the greater volumes of feed grain will probably drive down prices.
But if you’re looking to sell your low quality wheat, barley or other crop for feed this winter, and haven’t dealt in the feed market lately, you might want to take a quick refresher course before diving in head first.
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The Canadian Grain Commission, which requires all grain dealers and elevator operators to post bonds (unless specifically exempt), which protect farmers in the event of defaulted payments on delivered grains.
However, it does not license feed mills or other feed grain buyers.
It’s been suggested that the grain commission offer some sort of producer payment protection plan for feed grain, but just how affordable or cumbersome it would be can only be evaluated after final details are in place.
However, it’s difficult to see how such a plan would work. Licensing every feed mill could add another 250 businesses to the commission’s mandate if it cast a wide net.
Feed markets are traditionally less regulated than markets for higher quality grain, and it would be important to survey farmers and buyers first to test whether added regulations would be welcomed.
True, the added payment protections could come in useful if needed, but would it offset the added costs and red tape over the long term?
Regardless, added payment protections for feed market sales are not on the immediate horizon, and producers will have to continue to rely on their tried and true commonsense measures to protect themselves:
- Sell only to reputable buyers.
- Ask buyers for references and thoroughly check them.
- Insist on being paid upon delivery. Some feed mills like to keep payments in an orderly monthly system, but that pushes all the risk back onto farmers. Understanding buyers should make allowances for that.
As well, some private insurers offer accounts receivable insurance at a cost of about $500 for every $100,000 of grain delivered. This might also be an option for some.
Meanwhile, the grain commission continues to wrestle with its plan to revamp the existing licensing system that applies to high quality grain.
The bond system has become overly expensive and ties up an estimated $1 billion of grain industry capital, which likely creates costs that are passed back to farmers in some fashion. There is little disagreement in the grain industry that change is needed.
However, the commission has been unable to work out an affordable insurance model as a replacement. It was slated to do away with the bonding system at the start of this crop year, but with the lack of a suitable substitute, change is at least another year away.
An idea floated by Keystone Agricultural Producers has merit: using a grower checkoff to build a fund that would backstop a producer protection program. A similar arrangement has worked in Ontario.
The federal government could easily back the fund in the early years until it has built up enough of a reserve.
It would be a program administered and owned by growers and who better to ensure the rights of farmers than farmers themselves?
