The special crops industry is bracing for a fall shipping season laden with contractual disputes.
Excessive rainfall and cool weather have hampered harvest and crop development in many parts of Saskatchewan and Manitoba.
“We’re anticipating there’s going to be more contractual disputes, maybe on the quality side more than anything,” said Francois Catellier, executive director of the Canadian Special Crops Association.
There are two ways to deal with those quarrels: stand behind the letter of the contract and go after the party in default or take the tack the CSCA is promoting, which is more empathetic.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
“I guess what our board is asking is can we see a little more give and take this year if it’s possible,” said Catellier.
The association is requesting customers, at home and overseas, work to find creative solutions when exporters are unable to execute contracts in a timely or suitable fashion.
“There’s going to be crop out there but it may be difficult achieving some of the qualities they are asking for, so we might as well get the ball rolling. Communication is always a good strategy in these cases,” he said.
Some special crop processors and shippers called on the CSCA to declare force majeure, a clause in the industry’s trade and arbitration rules that frees one or both parties from their contractual obligations in the case of extraordinary events such as flood, war or an act of God.
Those pleas where quickly dismissed at a Sept. 1 meeting of the CSCA’s board of directors. Association president Steve Foster said there was no way the board could consider declaring force majeure because it is based on an extraordinary event causing a lack of product.
“That is not the case here. There is product available. It’s just potentially the quality may not be there.”
Foster said everybody in the industry was expecting a huge crop and an early harvest and were taken aback by the turn of events. The potential shortfall of top quality product and the amount of crop still standing in fields is causing “all kinds of panic” within the industry.
“Guys are going to be short and chasing (product,)” he said.
One thing that could potentially exacerbate the problem is act of God clauses, which relieve producers of their obligation to deliver in case of weather disasters. It forces processors to scrounge product from somewhere else to fulfil contracts they have with their customers.
“That’s why you’re seeing fewer contracts out there that are act of God,” said Foster.
