Grain commission plans to include feed mills in the producer payment security program
A buyer for one of the largest feed mill operations in Western Canada is pleased the Canadian Grain Commission intends to expand its producer payment security program to include mills.
Ken Richmond, purchasing manager for Masterfeeds, thinks it will make it easier to source grain.
“We tend to buy as much grain as we can from the farm versus the line companies. There is a bit of a savings,” he said.
However, some farmers are reluctant to sell grain to feed mills in the wake of high profile business failures such as Puratone and Big Sky Farms, where growers were not paid for the grain they delivered.
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“Puratone was a bad one. It stirred a lot of people up,” said Richmond.
He believes growers would be more likely to do business with feed mills if the grain commission expanded the producer protection program.
“It should give us access to more farm grain,” said Richmond.
Feed mills are exempt from licensing because they were not part of the commission’s quality assurance mandate.
Commission spokesperson Remi Gosselin said it is considering cancelling the exemption based on feedback from producers and farm groups upset about the Puratone and Big Sky failures.
The commission has begun consultations with mills, grain growers, producer groups and current licensees about incorporating feed mills into the producer payment security program.
The tricky part will be determining the cutoff because the commission doesn’t want to license all mills.
“Maybe farm-to-farm feed mills might be exempt, but the larger commercial facilities purchasing grain from farmers directly might be required to be licensed,” said Gosselin.
“The intent is not to license mom and pop feed mill operations but more operations that are commercial and buy directly from farmers.”
There are 220 commercial feed mills operating in Western Canada, which would be added to the 160 elevators that the commission now licenses.
Current licensees pay $280 per month for a full-term license and $358 per month for a short-term license. Gosselin doesn’t know what feed mills would pay, but that would be a good starting point for discussion.
Security requirements would be based on a review of monthly liabilities. Feed mills would be required to post a bond or provide a letter of credit, cash deposit or payables insurance.
Richmond doesn’t think the fee and bond requirements would be too onerous for Masterfeeds, which operates 10 mills in Western Canada.
“We’re a big company. That little thing isn’t going to chase us away, I don’t think,” he said.
Stakeholders have until April 9 to submit comments to the commission, which will then analyze the feedback and develop proposed licensing requirements.
The regulations will be subject to a second round of consultation through the Canada Gazette process.
“I would suspect it would probably be another 12 to 18 months before feed mills are licensed,” said Gosselin.
