SASKATOON – There should be no room for doubt or confusion about the relationship between farmers and grain dealers once the new Canada Grain Act becomes law, says the head of the Canadian Grain Commission.
Milt Wakefield said legislation now before Parliament is designed to set out clear and explicit rules covering all financial dealings between a farmer and a grain merchant.
Most amendments contained in Bill C-51 are based on practices that have evolved over the years and have been generally accepted by the grain industry, he said.
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“What we’re trying to do is put it in black and white, to say ‘here’s what you have to do’, ” said the chief commissioner, adding he expects the new act to be proclaimed before the end of the calendar year.
The changes were prompted by the bankruptcy in the 1980s of two companies that had posted insufficient security with the commission (Econ Consulting and Memco). The courts ruled the commission had to compensate farmers out of general revenue.
Farmers’ responsibility
The amendments state that it is the responsibility of each farmer to determine if he or she is dealing with a properly licensed grain company. A farmer dealing with an unlicensed company will be unable to make any claims for financial compensation in the event of a bankruptcy or default.
Farmers who leave grain unpriced for more than 90 days will be ineligible for compensation. In addition, farmers must notify the grain commission within 30 days of a company’s failure to pay, or a default.
The grain commission’s liability, in the event a licensed company fails, will be limited to the amount of security posted by the company. Coverage will remain at 100 percent, although the commission will have the authority to reduce that with the approval of cabinet.
Wakefield said the proposed amendments will prevent any repetition of the controversial Klemmer Seeds case. In 1993 the commission decided to compensate farmers who lost money when Klemmer Seeds of Rosetown went bankrupt. While it was an unlicensed facility, it had the status of an “authorized user”, which the commission felt may have confused some farmers.
The chief commissioner said the experience with Klemmer indicated the commission had to move quickly to end uncertainty over who is responsible in such events.
“It wouldn’t have happened if these rules had been in place, because it makes it very clear that there is only a certain number of receipts that are eligible, and it makes it clear that if a farmer chooses to deal with an unlicensed person he can’t claim later that he didn’t know,” said Wakefield.
While the onus will be on farmers to make sure they’re dealing with a licensed company, the commission will help by publishing in newspapers a list of licensed dealers and setting up a toll-free phone line to give farmers information.
Other amendments in Bill C-51 include:
- Granting the commission the authority to act against companies which illegally use Canada Grain Act grade names.
- Requiring licensed grain dealers to use Canada Grain Act names in all dealings with farmers.
- Requiring prospective licensees to provide specified financial data to prove financial viability.
The amendments also remove the requirement that only public carriers (railways or trucking firms) can transport grain across provincial borders, a little-known regulation that has not been enforced.
Wakefield said it makes no sense to prohibit farmers from hauling their own grain. The change will also apply to grain being hauled across the Canada/U.S. border.
