Move made after concerns raised about financial losses incurred following the bankruptcy of some high profile companies
Selling canaryseed, which can be a risky business in Canada, is about to become a lot less risky for Canadian growers.
Effective Aug. 1, canaryseed will be designated as an “official grain” under the Canada Grain Act.
That means canaryseed growers will have access to the same services, programs and protections that are currently offered by the Canadian Grain Commission to producers of other official grains, such as wheat, barley, flax and canola.
Specifically, canaryseed growers will be protected against financial losses that occur when they deliver canaryseed to a company that’s in financial distress and is unable to pay for the grain that it’s already received.
The official grain status will mean several changes as of Aug. 1:
- All canaryseed deliveries will be assessed for grade and dockage at the point of delivery.
- All canaryseed producers will have the right to dispute grade and dockage through the CGC’s Subject to Inspector’s Grade and Dockage service.
- All canaryseed producers will be able to submit canaryseed samples to the CGC’s popular Harvest Sample Program, which offers no-fee quality assessments on all official grains grown in Canada.
The decision to include canaryseed in the Canada Grain Act was made after canaryseed producers raised concerns about financial losses they had incurred following the bankruptcy of some high profile grain companies, most notably Ilta Grain.
“After successive (licensed grain company) failures where canaryseed growers were left empty-handed, it was clear we needed to extend regulatory safeguards to the sector,” said Doug Chorney, CGC’s chief commissioner.
“We’re very pleased to be able to offer canaryseed growers the rights and services provided by the Canada Grain Act and help ensure they are fairly compensated for their deliveries.”
CGC spokesperson Remi Gosselin said in recent years, there have been instances of grain company failures where eligible producers were compensated for other grain deliveries but not necessarily for canaryseed deliveries.
“The proposal (to include canaryseed in the Canada Grain Act) was clearly and widely supported by producers, given that it would provide them with payment protection in the event of financial failures in the future.”
New grading tables for canaryseed will be published in July, shortly before canaryseed becomes an official grain, Gosselin added.
Canaryseed growers took it on the chin a few years ago when Ilta Grain — a high-profile grain company that was licensed by the CGC — went belly up.
Ilta’s bankruptcy costed unprotected canaryseed growers nearly $2.1 million.
At the time, Ilta was buying about 15 percent of the canaryseed sold by Canadian producers each year. Annual producer sales were valued in the range of $100 million.
Producers who sold “official grains” to Ilta received full compensation, thanks to protections offered through CGC’s producer payment protection program.
In total, 222 producers received full compensation estimated at nearly $11.2 million.
But canaryseed producers were left out in the cold.
Ilta’s failure — and the financial losses that it created for the canaryseed growers — was not the first time that canaryseed producers were left empty-handed.
But it was the last straw for many growers and shortly after the Ilta incident, canaryseed growers sought the protections given to official grains under the CGC.
In early 2020, growers attending the annual general meeting of the Saskatchewan Canary Seed Development Commission supported a motion seeking to have the crop included under the Canada Grain Act.
The Canadian Grain Commission held industry-wide consultations on the issue in 2019-20 and found overwhelming support for canaryseed’s inclusion under the act.
Gosselin said the costs of implementing the changes are expected to be minimal, given that nearly 99 percent of current producer sales already involve CGC-licensed grain handling companies.
“At present, as far as we know, there are 28 registered canaryseed buyers in Canada and the CGC has already licensed 25 of those companies, as they are already handling other regulated grains,” Gosselin said.
“We anticipate that licensed companies are going to be required to adjust their security posted to the CGC for canaryseed liabilities… but those cost are expected to be low….”
Unlicensed companies that deal in canaryseed will be licensed by the CGC as of Aug. 1 and will be required to post security in accordance with the commission’s producer payment protection programs.
Canaryseed is the largest volume grain that isn’t currently protected under the Canada Grain Act.
Canada accounts for nearly 65 percent of global production and about 80 percent of global exports.
Canada’s main competitors in the world canaryseed market include Argentina and Hungary.
Top buyers of Canadian seed include Mexico, Belgium, Brazil and Spain.
Domestically, Saskatchewan is the top producer and exporter.
Saskatchewan farmers grow nearly 275,000 acres of canaryseed each year, accounting for nearly 95 percent of Canadian production.