When Anders Bruun talked to his agricultural law class about the bankruptcy of Consolidated Growers and Processors Inc., he called it a case of “seller beware.”
Farmers need to make sure they know how they will be paid when they sign a contract to sell grain to a company, said Bruun, who teaches at the University of Manitoba.
In the past 15 years, there have been only a handful of grain buyers that failed to pay farmers before going bankrupt, noted Bruun.
“Generally, farmers have been quite lucky that way, as a whole.”
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The bankruptcies have shared one common element, said Bruun.
“They seem to be doing things in too unique a way relative to their competitors,” he said.
While the industry needs novelty and innovation, farmers need to know it comes with higher risks.
“People need to have their eyes wide open when they’re dealing with something a little different or unique.”
In most of the other bankruptcy cases, farmers had some protection from bonds grain buyers must post with the Canadian Grain Commission, said Bruun.
Because hemp is not included in the Canada Grains Act, CGP did not have to post a bond. He said the CGP case also differs because it is more difficult to assess the value of hemp compared to traditional grains.
Bruun also teaches his class about warning signs that could tip farmers off. In his opinion, CGP’s difficulty obtaining planting seed last spring was an early red flag.
