A rule that was probably more honoured in the breach than the
observance has been thrown out by the Canadian Grain Commission.
The 13-year-old regulation required grain companies to pay farmers in full for grain within 90 days of purchase, whether or not they asked for payment.
Companies will still be legally required to pay farmers in full, but only when the producer requests payment, whether at time of delivery or later.
The rule being changed shouldn’t be confused with the security regulations that provide farmers with protection for 90 days from delivery or 30 days from payment. Those remain in effect.
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Commission chair Chris Hamblin said the rules being repealed were outdated, ineffective and difficult to enforce.
“Repealing the 90-day payment regulations should result in more marketing and pricing opportunities for licensees and producers, reduce enforcement costs and eliminate confusion between 90-day payment and 90-day security,” she said.
The 90-day payment regulations were introduced in 1989 at the request of the Western Grain Elevator Association.
The idea was to encourage grain to move through the elevator system more quickly by reducing the amount of unpriced grain stored in elevators. That would reduce the amount and cost of security the companies had to post with the CGC to cover money owed to producers. In those days security had to cover one year from date of delivery.
Since then, the grain handling and transportation system has changed significantly. Larger elevators, more rapid throughput and deregulated tariffs enable grain companies to set storage tariffs at levels designed to discourage unpriced grain.
Also, in 1995 the security provisions were reduced to 90 days.
“The needs that the 90-day payment rule were addressing no longer existed,” said CGC spokesperson Paul Graham. “It wasn’t benefiting anyone.”
The commission also heard from producers who want to defer their payments beyond 90 days for taxation or other business reasons.
Graham said that during consultations with industry and farm organizations, there was a consensus to scrap the 90-day rule.
“There was a range of opinions, but I don’t think that there was a huge number of people in favour of maintaining it,” he said.
