The demise of several important players in the special crops industry
has prompted an internal review of the industry’s trade association.
Earlier this year Canada’s special crops sector lost three key
companies to bankruptcy and receivership – Agritrans Logistics Ltd.,
Cancom Grain Company Inc. and Naber Seed and Grain Co. Ltd.
“I guess our bubble burst after a 10-year streak of major growth in the
industry,” said Canadian Special Crops Association executive director
Francois Catellier.
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A task force is being established to recommend how the association’s
trade and arbitration rules and fee structure can be changed to help
its members.
Catellier said the trade rules have been around for 16 years and are
updated on an annual basis so this isn’t an unusual step for the
industry to take, but it’s a necessary one.
“We want to try to see, during these times of transition, whether
there’s things the association can do better than what we’ve been doing
in the past.”
The rules were put in place to handle disputes that arise from trading
special crops like peas, lentils, canaryseed and safflower.
“In the past what they had to do was to get lawyers involved and to go
through the judicial system, which was very costly,” said Catellier.
These days, a 35-page book sets out the trade rules under which the
industry operates.
“Instead of having a 35-page contract, you’ve got a one-page contract
that’s backed by the trade rules.”
If the parties can’t resolve a dispute, they take it to a three-person
arbitration board that has the power to make decisions and awards.
Out of the thousands of trades conducted in Canada, an average of only
four a year end up going through arbitration.
Catellier said the eight-member task force, made up of producers,
processors, merchandisers, grain exporters, brokers, terminal operators
and international customers, is to have its first meeting on Nov. 7.
The task force will explore a change to the rules that will better
protect members against the payment defaults that inevitably occur when
a company slips into receivership or goes bankrupt.
Not everybody thinks that is necessary. Alan Morrow, president of
Morrow Grain Company Ltd., a Winnipeg brokerage firm, said it might not
be worth revisiting the rules for that reason alone.
“I’m not sure if you can legislate or put rules into play that can
protect you from these sorts of things,” said Morrow.
“As responsible members of the industry, if you’re in a (relationship)
with a company that’s in receivership, you really have to eat it on one
side and honour your commitments on the other.”
In addition to having a look at the rules, the task force will also
review the fees the association charges its members.
Everybody pays the standard $500 membership fee, but processors and
exporters also have to pay an additional 7.5 cents for every tonne of
grain they process or ship.
“There is some feeling that the broker members of the association are
getting a lot out of the association for very little,” said Catellier,
adding that all of the association’s members will be given opportunity
to express their thoughts.
He hopes to prepare a draft report on proposed rule and fee changes by
the time the association meets for its annual convention in Cancun,
Mexico, in March.
Catellier said convention attendance had been rising at a rate of 12
percent a year until last year’s annual meeting in Halifax, which
attracted 245 delegates, down from 325 in Vancouver the year before. He
said the falling attendance reflects what has been happening in the
industry as a whole.
“The industry was going through significant growth and everybody was
upbeat. We had relatively few arbitrations and things were going great.
But you get a couple of years like we’ve had last crop year and this
crop year, and that kind of puts the brakes to everything and all of
sudden things aren’t quite as exciting any more.”
