Grain dealers have little sympathy for farmers who lost money when an Alberta-based grain buyer recently declared bankruptcy.
“Farmers have got to realize they are in business,” said Al Constantini, president of C. B. Constantini, a licensed grain company based in Vancouver.
“I don’t have sympathy for those farmers who sold grain for an extra two cents a bushel,” Constantini said.
“Where’s that two cents now?”
He said he has heard numerous horror stories from farmers who were never paid for grain that they loaded on their farm without knowing the name of the truck driver or the name of the company they sold to.
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If farmers aren’t going to deal with companies licensed with the Canadian Grain Commission, they need to do proper credit checks on the company before trusting it with thousands of dollars worth of grain, he said.
“They should understand who they’re doing business with.”
Terry Carpenter, a grain merchant with Bow Valley Trading and Export in Bassano, Alta., said only three to four percent of his customers ask if he’s bonded or licensed.
He is neither, but he’s willing to give farmers credit references, customer references, and trade industry references.
“The onus is on the seller to check out who he’s selling to. We’ve held their hands too long,” Carpenter said, referring to farmers who rely on government or the industry to bail them out if things go wrong.
The Canadian Grain Commission has been licensing grain companies since the Canada Grain Act was established in 1912. The commission requires licensed elevators and grain dealers to post security to cover what they owe farmers. Farmers who are not paid can make a claim against the security.
Becoming licensed and bonded is neither cheap nor easy.
Carpenter said he has tried for years to become licensed, but it would mean setting aside $150,000 for security because he has no elevator or buildings to offer for security.
Licensed companies must provide the commission with a liability statement every month to ensure they have enough security to cover their liabilities.
A financial institution provides a bond. The grain company would buy financial security from the bonding company.
Proposed new commission rules may make it easier for smaller companies like Carpenter’s to be licensed. He’s also investigating the possibility of buying insurance against the money he owes farmers that would be the equivalent of a bond.
“Up until now it hasn’t been possible. I can’t afford to get bonded,” Carpenter said.
Paul Graham, information officer with the Canadian Grain Commission, said the commission understands there are problems that keep smaller companies from becoming licensed. The commission is developing a licence for smaller companies.
“We’re trying to find a solution that flies with farmers and flies with the industry.”
Constantini estimates it costs his company $14,000 to $15,000 a year to maintain his grain commission licence.
It’s an expensive part of being in the grain business for the past 21 years, he said.
He has fought for years with the grain commission to either insist that everyone who buys grain is bonded or don’t require anyone to be bonded.
He competes with feedlots, feed mills and grain dealers who buy grain but aren’t required or don’t bother to become licensed.
“If I have to be licensed, so should everyone else. It would get rid of the All Grains of the world,” he said, referring to an unlicensed Alberta grain dealer who declared bankruptcy in February, owing money to more than 60 farmers and truck drivers.
Graham said the commission is not ignoring unlicensed dealers. When it becomes aware of a problem, it tries to convince the dealer to become licensed.
“We’re not turning a blind eye. We’re going after them as we become aware.”
He said he sympathizes with Constantini’s frustrations.
“It isn’t a level playing field,” Graham said.
