Farmers’ frustration is building over contracted Nexera canola that Louis Dreyfus Canada has refused to accept for delivery since November.
But the company says it has plans to take all the contracted canola before the end of this crop year so that farmers don’t have bin space problems at harvest.
“Essentially, we’re going to take care of all the Nexera deliveries during this crop year, until about the middle of August,” said Brian Conn, the merchandising manager for Louis Dreyfus Commodities.
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“We’re going to be able to catch up, we believe, pretty quickly over the next 60 to 90 days to get ourselves current with the growers and get cleaned up here for the balance of the crop year.”
The Nexera contracts offered farmers a $40 premium to futures prices and delivery dates through the winter. But when the crop came in, farmers found they couldn’t deliver more than a tiny fraction of the crop.
In letters to growers, the company admitted it was not honouring the delivery provisions of the contract but asked producers to hang on while buyers could be found to take the Nexera.
“Your patience and understanding is greatly appreciated,” said one letter.
Louis Dreyfus began paying farmers a storage fee for having to hold the crop for longer than they planned, a fee that a number of farmers said is fair. But most farmers are angry that they did not have access to the cash for their crop when they needed it over the winter.
“It isn’t a good situation,” said Ituna, Sask., farmer and Saskatchewan Canola Growers Association board member Tyler Markusson, who contracted about 800 tonnes with Louis Dreyfus.
“I wish I had moved mine out in the winter when I had the time to do it. Now I’m going to be busy farming.”
Dale Gryba, marketing chair of the Manitoba Canola Growers Association, said he knows farmers who are furious with Louis Dreyfus.
“It’s terrible. They signed a contract. Money that should have come in this fall didn’t,” said Gryba, who farms near Gilbert Plains, Man.
“You’ll never deal with them again, unless you live twice.”
Markusson said farmers he’s spoken to aren’t leery about contracting to grow Nexera again, but now have little trust in Louis Dreyfus.
Conn said the problems developed because of the new market that Nexera has created. Users of the innovative cooking oil are coming on-line, but more slowly than expected.
“When you put these plans in place, certainly a lot of the stuff is 12 to 18 months in the future,” said Conn.
“It doesn’t mean that the program is poor. It doesn’t mean that the interest in Nexera isn’t there. But the timing for the demand can certainly have an impact on when you can take delivery in, and that’s really what we’ve been facing over the past number of months.”
Conn said Louis Dreyfus also had trouble getting its Yorkton canola crush working as fast as planned, so a number of factors strangled its ability to move contracted Nexera.
But he thinks these troubles are a feature of introducing a new product and won’t back away from dealing with Nexera in the future.
“We’re still a big believer in the program and will continue to be,” said Conn. “It’s just when you start to do conversions of this size and magnitude, you have to walk sometimes before you can run.”
