It’s unlikely that farmers who delivered grain to Puratone will ever receive payment, which is why Keystone Agricultural Producers want to ensure that Canadian farmers are always paid for their products in the future, says Doug Chorney, KAP president.
“Unfortunately, I don’t see farmers recovering any of their losses from the Puratone (case),” Chorney said in the middle of January during a break at Ag Days in Brandon. “That’s really a tremendous setback and I know of one producer (that never received payment for delivered grain) who has sold his farm.”
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Last year, in August and September, dozens of Manitoba farmers delivered feedgrain to Puratone, a hog production company that operates barns across the province and feed mills in Niverville, Winkler and Arborg. Following a summer of record feed prices, Puratone entered creditor protection in the middle of September. Puratone, it turned out, was not bonded, so a number of producers who delivered grain to the company did not receive payment, suffering losses ranging from $30,000 to $300,000.
When Maple Leaf Foods announced its intent to purchase Puratone in early November, a few of the affected farmers were hoping that Maple Leaf would cover their losses. Maple Leaf, though, purchased the assets of Puratone and under Canadian law isn’t responsible for Puratone’s debts.
In the aftermath of the farmer losses, KAP plans to lobby for appropriate changes to payment security mechanisms.
“Right now the number one priority (for KAP) is producer payment security,” Chorney said. “With the debacle of Puratone last year and … cattle being sold and not being paid for in 2010, we need to look at a producer payment security program beyond what the CGC (Canadian Grain Commission) current mandate is.”
Agriculture minister Gerry Ritz, who attended Ag Days to make a funding announcement for Manitoba food processors, said the federal government is considering changes that would protect farmers who sell grain to feed mills.
“There is work being undertaken at the grain commission that backstops buyers. Traditionally, it’s never handled feed mills but we’re having a look at whether it’s something that should be done and could it be done.”
In October, the federal government passed amendments to the Canada Grain Act, which are expected to take effect Aug. 1, 2013. One amendment will alter how the commission administers producer protection. Instead of posting bond for security, grain dealers and elevators will shift to a insurance based producer payment model.
“This is an opportune time to bring together all the other commodities that are lost in the current bonding system,” Chorney noted. “If we’re going to be designing an insurance based program for licensed grain exporters, maybe we can expand that to special crops and livestock producers as well.”
KAP members will discuss producer payment security, and a host of other issues, at its annual meeting in Winnipeg from Wednesday to Friday.
