Saskatchewan Wheat Pool did not go bankrupt last week, so farmers storing grain with the company did not find out what happens to grain caught in the middle of a financial meltdown.
But this situation should have alerted farmers to the possible dangers they face when delivering grain, said Keystone Agricultural Producers president Weldon Newton.
And it should spur them to learn how the Canadian Grain Commission’s bonding system works.
“Fortunately, we didn’t have to find out how well the system works,” said Newton.
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The Canadian Grain Commission ensures that licensed grain companies post bonds to cover the grain delivered to their facilities. These bonds are supposed to cover farmers if the grain company goes broke.
But many farmers are unsure about the rules. During the recent crisis at Sask Pool, many farmers grew worried about what would happen to their grain if they left it in SWP facilities. Some, who had not priced the grain they had delivered, rushed to price it despite a falling market, to ensure payment.
Others with crops in condominium storage had trucks haul their crops out of SWP elevators, fearing they would lose their grain if the company went bankrupt.
Will Hill, Sask Pool’s senior vice-president responsible for its grain group, said “very little” grain actually fled its facilities.
But he said many farmers called the company asking about the safety of their grain.
He credits the bonding system with calming those fears.
“We encouraged them to talk to the grain commission and the wheat board as well to clarify the situation,” said Hill.
“A lot of grain didn’t come out of the elevators, so I guess they were fairly satisfied with them.”
Grain commission spokesperson Paul Graham said his organization fielded many calls about the status of grain in SWP
facilities.
But those calls have ended since the company announced it has reached a deal with its creditors.
Jason Skinner, the manager of the North West Terminal, an independent elevator in Unity, Sask., said his staff witnessed the results of farmer anxieties about SWP. Many farmers called the terminal wondering about the situation and some drove to the SWP elevator across the highway from the North West Terminal to pick up their grain and move it from the former to the latter.
Skinner said farmers aren’t doing that anymore since the pool announced its deal. He said most of the grain that was moved was in condominium storage.
Graham said farmers need to know the rules about bonding so they will be sure they are protected. Bonds protect grain deliveries for 90 days after the grain delivery date, but not beyond that. And they do not cover condominium storage, which is considered an extension of on-farm storage.
Hill said Sask Pool is happy to have the refinancing crisis ended.
“Business does not like uncertainty,” he said.
“It’s good to have the issue behind us and we’re looking forward to business as usual.”
Newton said this recent situation, in which one of the giants of prairie agriculture almost collapsed, is a signal to farmers to take grain security seriously.
“That’s the message we’ve gotten in the last two or three years,” said Newton.
“It’s not just the little guys. The big guys can get in trouble too.”
