Most farmers who delivered grain to Global Grain Canada have it back in their bins, according to the Canadian Grain Commission.
The dry bean processing plant in Plum Coulee, Man., that recently lost its CGC licence has returned most of its inventory to eligible farmers who were in possession of primary elevator receipts.
“That, in effect, would reduce substantially the outstanding liabilities for producers,” said CGC spokesperson Remi Gosselin.
“We’re not as alarmed as we were initially.”
On Oct. 31, 2020, the CGC pulled the licences of Globeways Canada and its subsidiaries, Global Grain Canada and Canpulse Foods.
Globeways is the parent company that purchased inventory from its subsidiaries and sold it domestically and abroad. It got beans from Global Grain and lentils and soybeans from the Canpulse plant in Kindersley, Sask.
The licences were pulled after Global Grain filed its Sept. 30 liability report revealing that it owed farmers $6.91 million against an insurance policy of $1.25 million to secure those liabilities.
Since that time, the company has returned most of its grain inventory, substantially reducing its obligation to farmers.
“It’s our understanding that there is still outstanding liabilities to producers but we’re not looking at a situation like it was in mid-October where there was big outstanding liabilities,” said Gosselin.
The Canpulse plant never exceeded its posted security.
The CGC initially expressed concern when it discovered that Global Grain was returning grain because it wanted to ensure it was only going to eligible producers and that they were getting back the same quantity and quality that they delivered.
But it subsequently hashed out a plan with the company and is now satisfied with the process.
“If anything, we consider this to be a success story in that entitled producers were able to get their grain back,” said Gosselin.
“This is the first time that it has happened in recent memory.”
It remains to be seen if the farmers who are still owed money by the company will be fully compensated. The audit is expected to take a few months.
All three companies have been placed into receivership. A “pre-filing” report by the receiver BDO Canada sheds some light on how Globeways and its affiliated companies got into this bind.
The first signs of trouble were contained in financial statements for the three companies filed for the year ending June 30, 2019.
Those reports showed “poor financials with negative working capital, negative equity and negative net income,” according to a CGC document.
But it was the Sept. 30, 2020, liabilities report that caused the CGC to spring into action.
In a Oct. 22, 2020 letter to Globeways president Tanvir Zaidi, the CGC’s head of licensing Lorena Morales, said the commission was aware that pulse industry giant Hakan Foods financially supported Globeways.
“There is a concern that if Globeways Canada Inc. loses financial support from Hakan Foods, it will impact the ability for Global Grain Canada Ltd. to pay producers,” she said.
In that same letter, Morales instructed Zaidi to increase Global Grain’s security to $7 million by Oct. 26, 2020.
That did not happen. In fact, the insurer pulled its coverage for all three companies on Oct. 30, 2020.
In an email to Zaida, Intact Insurance noted that Global Grain had knowingly exceeded its liability coverage.
“During the month of September, Global Grain purchased $7 million worth of product from farmers knowing that the limit of liability with the CGC is only $1 million,” said Jay Rampersad, vice-president of trade credit with Intact Insurance.