How long is long enough to settle on a price for your grain?
Right now, grain delivered into an elevator can be left unpriced for 90 days.
During the past year, the Canadian Grain Commission has been asking various players in the grain industry whether that rule is still appropriate.
Some say the limit should be extended, while others say there’s no need to regulate what is essentially a private business decision.
Grain commission policy manager Tom Askin said the agency is studying those comments and will soon decide on its next step.
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“Based on the discussions we’ve had to date, there is no clear consensus on the issue,” he said.
On one side, there’s the argument that the 90-day rule is needed to keep the system fluid and prevent elevator space from getting tied up by unpriced grain. Unpriced grain also provides risk for grain handlers, which shows up as a liability in the companies’ books.
Marketing freedom
On the other side, the rule is said to restrict farmers’ freedom to decide how to market their crop and interfere with a normal seller/buyer relationship.
Chuck Fossay, chair of Keystone Agricultural Producers’ grain committee, said his organization wouldn’t object to the end of the 90-day rule.
“We felt that a farmers’ choice to store, price or sell grain should be an arrangement between the producer and the buyer, and not be subject to CGC regulation.”
However, if the 90-day pricing rule is eliminated, farmers must be made aware that their financial protection under the grain commission’s bonding system also runs out after 90 days.
For example, said Fossay, producers could be required to sign a document when they deliver grain, indicating they know about the duration of the bonding protection.
Ernie Doerksen, general manager of the Canadian Canola Growers Association, said the 90-day pricing rule may inhibit grain companies from offering their own competitive programs for storing and pricing grain.
“Not having it there, the companies might offer their own innovative marketing programs to accommodate farmers’ needs for pricing the product and not be handcuffed by a regulation.”
He added that producers sometimes get caught by leaving grain unpriced for 90 days and then are forced to take a lower price than they would like. Those farmers could benefit if they were free to negotiate some other arrangement with buyers.
The Canadian Wheat Board wants the 90-day pricing rule left intact.
The board said the rule strikes a balance between giving farmers flexibility in marketing their crop and ensuring that the handling and transportation system operates
efficiently.
“It protects farmers’ rights and also gives us the best logistical structure,” said wheat board spokesperson Justin Kohlman.
Saskatchewan Pulse Growers wants the 90-rule reduced to 30 days, with extensions allowed by mutual consent.
