Two grain dealers gave up their Canadian Grain Commission licences in mid-February, but under different circumstances.
One company had its licence lifted by the commission due to concerns over its liabilities to producers, while the other decided not to renew its licence because of a difficult financial and market environment.
West-Can Agra Ltd., a special crops trader based in Plum Coulee, Man., had its licence revoked Feb. 11.
That means any producers doing business with the company after that date will not be eligible for any benefits under the grain commission’s security program.
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CGC spokesperson Remi Gosselin said West-Can had posted security of $300,000 with the commission. He declined to say why the licence was lifted but suggested the decision was related to the firm’s financial situation.
“A final audit will be conducted as soon as possible to determine if the security is sufficient to cover all producer liabilities,” he said Feb. 17.
West-Can president Lloyd Thiessen declined to comment on the situation, including whether or not the company is still in business.
Gosselin said farmers who delivered product to the company in the 90 days before Feb. 11 have 30 days to contact the CGC to make a claim, adding it will likely take two months to determine any repayments.
He added that with the slowdown in the general economy, there is an increased risk of farmers not obtaining full payment for their deliveries.
“We would urge producers to secure full payment immediately upon delivery,” he said.
The other company, Dashmesh Trading Ltd., a Surrey, B.C., milling firm that ships specialized products to the Indian subcontinent, decided not to renew its licence as of Feb. 10, although that decision may not be final.
Manager Muneet Kapoor said the decision was based on several factors, including recent losses suffered by the company, sluggish export markets and the cost of renewing the licence.
He estimated the total cost of renewal, including bank charges and CGC fees, to be $4,000 to $4,500.
The company lost $150,000 when a shipment of 40 containers of oats to Pakistan in November 2007 was rejected by the buyer when market prices plummeted.
The product sat in port for a month. Dashmesh eventually sold some to other buyers in Pakistan at half the original price, paid hefty demurrage and storage charges, and had to ship 10 containers to Colombia at a significant freight cost.
“We are not a huge company that can digest that kind of loss and keep a smile on our face,” said Kapoor.
That, combined with slow markets, prompted the company to cease its trading activity.
“We haven’t used our licence in eight or nine months,” he said. “I don’t see the point of spending $4,000 today if I’m not going to use it for another six months.”
However, Kapoor said Feb. 17 the company has had second thoughts and was to meet with CGC officials to review the situation.
