The special crops industry is sticking with a producer security system overseen by the Canadian Grain Commission.
Industry participants have been exploring schemes since Naber Seed and Grain Co. Ltd., a licensed and bonded Saskatchewan pulse processor, went out of business in 2002, leaving farmers on the hook for $900,000 in unpaid eligible claims.
After reviewing the situation, a committee consisting of the three prairie pulse grower groups and the Canadian Special Crops Association has determined a modified status quo is the best option.
“With time being of the essence we should try to work within the current act and regulations,” said Garth Patterson, executive director of Saskatchewan Pulse Growers.
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The committee concluded the commission represents a good neutral third party that has the power of an act and regulations at its disposal and it would be difficult to duplicate that kind of clout.
Patterson said they plan to meet with grain commission representatives on Nov. 2 to discuss ways the system can be tailored to better meet the needs of the special crops industry.
Processors don’t like the bonding requirement. They complain it is far too onerous, tying up an estimated $200 million in much-needed capital.
Producers say the licensing system is deeply flawed. For all practical purposes it is a voluntary system and when they do deliver grain to a licensed facility they are not always fully protected.
One idea the committee plans to bounce off the commission is replacing the current bond requirement with some form of third party insurance.
Francois Catellier, executive director of the Canadian Special Crops Association, said that would address the primary concern of processors and exporters by freeing up capital to reinvest in their businesses.
Insurance premiums would be less expensive than bonds and he envisions a cost-sharing approach to the proposed new system.
“Everyone along that value chain is going to have to pay, including the farmer.”
Catellier said developing a new producer security system will be a lengthy process. In the meantime, the special crops group wants the grain commission to live up to its existing mandate by forcing all processors to become licensed. That would create a level playing field for special crops firms.
“We’re asking the grain commission to do their job.”
Regis Gosselin, director of corporate services with the grain commission, said that’s not as easy as it sounds because there is no consensus from the industry to support that kind of rigid enforcement.
“You can say we’re going to crack down but if a farmer continues to do business with an unlicensed operator, you can’t prevent that from Winnipeg.”
Gosselin said an insurance-based security program is a workable solution for the sector, but he warned producers that every scheme is subject to faults.
“It would be a new product. It’s not something that is available at the moment.”
Regardless of what system is picked, the best piece of advice to farmers remains the same: get paid as quickly as possible and cash the cheque right away, said Gosselin.
