The Canadian Grain Commission should be fully responsible for losses incurred by producers who sold grain and mustard seed to two companies that later went bankrupt, a consultant recommending major changes to the grain commission has concluded.
The commission is responsible, the consultant report states, because it led producers to believe the companies were secure.
“CGC invocations to farmers to use only licensed companies were so ardent, fulsome and unrestrained that it would be difficult for the average farmer or Canadian citizen to conclude that the CGC was offering less than 100 percent protection, the most persuasive argument in our estimation,” said a report from Compas consulting tabled in Parliament Sept. 18.
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It led to a recommendation that the grain commission lose its immunity from lawsuits for damages if it does not make certain that licensed grain traders are capable of covering their debts.
“We do not believe that any regulatory body ought to receive legislated immunity from court action in the event that it fails to perform its heavily advertised functions.”
The recommendation will be studied by a parliamentary committee.
Producers lost tens of thousands of dollars after they delivered to two companies, Naber Seed and Grain Company of Melfort, Sask., and Venture Seeds Ltd. of Brunkild, Man., only to watch them go bankrupt. Producers then discovered they would be paid only a portion of the value of their delivered crops.
As producers threatened lawsuits against the grain commission because the commission did not ensure the companies had enough security, commission staff cited the commission’s legislated exemption from lawsuits for the proper exercise of their duties.
In recommending that the commission be responsible for the full liability plus interest, court costs and a penalty “for causing needless distress,” Compas said the commission admonition to producers to exercise due diligence in assessing the financial strength of their licensed dealer was not enough.
“Our view is that government agencies have no less obligation than businesses or ordinary citizens to carry out their responsibilities to customers adversely affected by failures to live up to promises as these promises would be understood by the average Canadian,” said the report.
If accepted by the government after parliamentary hearings, this recommendation could end up costing the commission and Canadian taxpayers hundreds of thousands of dollars.
The consultant also suggested a clearinghouse system to review transactions between producers and companies.
