The recent rash of business failures in the special crops industry has
people calling for the resurrection of a voluntary insurance idea.
It was a concept proposed years ago by special crops processors who
felt there were flaws in the Canadian Grain Commission’s security bond
approach to risk management.
They devised a voluntary insurance program that would protect producers
against non-payment for special crops deliveries. It was to be funded
by a refundable checkoff of 38 cents per $100 of special crops sales.
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Farmers who wanted to participate in the insurance program could do so
and those who didn’t could opt out.
It would have replaced the Grain Commission’s security bond system,
which has been put to the test in recent months with the demise of
Cancom Grain Company and Naber Seed and Grain.
The voluntary insurance scheme for the special crops industry was
authorized by Parliament in 1998 and was to go into effect Aug. 1,
1999, but the grain commission kiboshed the plan when it found a lack
of producer support for the idea.
The commission hired Angus Reid Group Inc. to survey growers and
discovered only 54 percent of those surveyed said they were likely to
participate.
“It convinced the commission that the plan wasn’t viable,” said
commission spokesperson Paul Graham.
He said it would have failed within two or three years, leaving special
crops farmers with no way to protect themselves against non-payment.
Vicki Dutton owns a special crops processing company in North
Battleford, Sask., and is leading the campaign to bring back the
voluntary insurance idea.
She said the commission’s bond requirements are too onerous for small
processors like herself and not adequate enough for larger main line
grain companies.
And they don’t fully protect farmers because there is no way to
effectively ensure an adequate bond is in place at all times.
Companies would have to be constantly policed and the commission
doesn’t have the resources to do that. Instead, the agency has to rely
on processors to accurately report how much they owe to farmers on a
monthly basis.
“It’s a false sense of security. Growers never know whether that
company they are delivering with is within their bond or not,” said
Dutton.
She said in light of the recent insolvencies in the special crops
industry, the “appetite for grower participation” in a voluntary
insurance program has grown to a level where it would now be viable.
“I think it’s the responsibility of the grain system and the government
of Canada to recognize that what they have is inadequate, it is inept
and to move towards changing it to a system that is predictable,
reliable and certainly insurable.”
Dutton recently unveiled her plans for a revised voluntary special
crops insurance program at the Agricultural Producers Association of
Saskatchewan annual meeting.
APAS vice-president Evans Thordarson said her presentation prompted
numerous questions and no objections from the 100 or so farmer
delegates at the meeting.
He said many of the delegates were “horrified” to hear that there are
many special crops processors operating across the Prairies that are
not licensed and bonded with the grain commission.
Graham said the commission hasn’t received a formal proposal from
Dutton and was “loath to comment” on something it hasn’t seen.
