The Farmers’ Advocate office in Edmonton is reminding agricultural producers to deal only with licensed and bonded dealers and distributors when buying farm implement equipment in Alberta.
Several Alberta dealers went out of business in 2000 and left many of their financial obligations unfulfilled. At the time, dealers were required to post only a $25,000 bond, an amount that proved too little to cover everyone affected by the closures.
The Alberta Farm Implement Board has doubled the required bond to $50,000 for dealers and $100,000 for distributors. The increase came into effect Jan. 1, 2003.
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While the bond increase hasn’t prevented dealers and distributors from becoming bonded, changes in how those bonds are provided has been making the process more difficult.
“I’d say that better than 90 percent of all dealers are licensed and bonded, but as a result of changes to the insurance industry, some of the dealers have had trouble getting bonds,” said Dean Lien, Alberta’s farmer’s advocate.
Bonds protect consumers in case dealers or distributors fail to fulfil such obligations as warranty service or parts for the required 10-year period.
John Schmeiser, executive vice-president of the Canada West Equipment Dealers Association, said one difficulty dealers face is with multi-store operations, which now have to provide $50,000 for each store they own.
“The way the bond used to be in Alberta is that a four-store operation would need just one bond,” Schmeiser said.
The bonds are provided by insurance companies that have become more cautious in their business since the Sept. 11 terrorist attacks caused big payouts.
“A number of the bond providers decided to put a more stringent guideline in place before they issued a bond to a dealer.”
In Saskatchewan, rather than a bonding system, distributors pay $25 per year into the Agricultural Implements Compensation Fund. Dealers pay $100 for their licence.
Farmers who feel they have suffered a loss due to warranty problems or delay in repair service may apply to the Agricultural Implements Compensation Board for a maximum of $5,000 compensation from the fund.
“If a farmer feels he was wronged, he can make his case in front of the farm implement board in Alberta or the agricultural implement board in Regina. The board can issue an award to that farmer,” Schmeiser said.
“In Saskatchewan, it comes out of this fund; in Alberta, it comes off the performance bond the dealer has to post.”
CWDA president Jim Keating called the recently renewed Saskatchewan Agricultural Implements Act “an excellent act,” and said the changes are “very positive and necessary.”
In Saskatchewan, the penalty to dealers for operating without a licence was increased to $10,000 from $2,500. Unlicensed dealers in Alberta face a $25,000 fine under the Farm Implement Act.
Don Brooks at Saskatchewan Agriculture said that farm implement dealers feel the Saskatchewan Act works well. He added that the government looked at the Alberta system, but rejected it.
