SASKATOON – The market south of the border may be more perilous than some farmers suspect.
“There don’t seem to be any guarantees selling your grain south of the border,” said Henry Boutin, a Manor, Sask., farmer. Boutin found out the hard way that American companies are not necessarily accountable for their actions or decisions.
He shipped 1,088 bushels of what he believed was malting barley to an American company, Johnson Commodities, of Ada, Minn. Samples were sent in advance and germination was approved. A Saskatchewan grain broker, Johnson’s Marketing, (no relation to the American company), handled the transaction.
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Boutin sold the grain for the agreed farmgate price of $1.95 a bushel. Even after the 21 bushels of dockage were removed, he expected to earn more than $2,000.
Instead, after waiting two months for his money, he got a cheque for $632.52. The American grain buyer had classified the grain as feed barley, charged Boutin for the shipping and deducted the Canadian broker’s fee. But Allan Johnson, the Canadian broker, has never received his $108 fee.
Johnson said he has seldom had any trouble with the American companies he sells to, but farmers and brokers should be aware of the hazards.
“We all have to take some precautions when dealing in the U.S.,”said Johnson. “I no longer do business with these people and I’m acting on the behalf of my customers and myself to get the money back and get some answers.”
“Occasionally a car will be rejected after shipping, but not very often,” said Keith Bruch, of the Grains Group office at Saskatchewan Wheat Pool.
Bruch said sometimes the tested sample is different in quality from the actual grain delivered.
Truman Johnson of Johnson Commodities of Ada, Minn., said his company handled more than 520,000 bushels of Canadian malting barley during the summer. “There were only 20 farmers that we rejected their grain. Out of 300 that’s not too bad,” he said.
He felt badly for some farmers who came close on the germination tests but said his company is not set up to market Canadian feed barley.
Some of the rejected barley was of poor quality, testing in the 16 percent moisture range and containing lumps of grain, he said.
“We had to have feed barley trucked another 130 miles and you know who pays for that. The farmer.
“Selling that feed barley down here is not as easy as it sounds. When they (the buyer) find out it’s Canadian grain, they really stick it to you. Canadian durum, for instance, brings $1 less a bushel than American grain and it’s better quality,” said Johnson.
The American company admits it may have imported too much grain too fast and the Canadian broker agrees. Both said they were under pressure to move as much grain as possible before export regulations were changed.
Producer precautions
Industry experts said farmers selling grain into the U.S. would be well-advised to follow certain precautions:
- Malting grain should be germination tested before being shipped.
- Shipping weights should have scale tickets.
- Ship one truck/carload at a time in case the buyer starts rejecting loads and the farmer ends up with a much larger problem.
- Ask in advance what will happen if a load is rejected.
- Ask for references and phone numbers of farmers who have dealt with the buyer or broker.
- Ask the broker or buyer if the company has had any past problems with delays in payment, and establish a payment due date.
- Ask what fees and charges the shipper will have to pay in the event of a grade dispute.
- Get copies of any agreement in writing.
- Check with the trucking company to see who will be responsible for the handling charges and make the trucker sign for the load when it leaves or after it has scaled.
- Get a copy of the shipping manifest from the transport company.
- Use the same border broker each time for reliability.
- Weights are in U.S. measures and conversions should be done before shipping so the buyer and seller are confident in the sales agreement.
- Remember that American maximum moisture content is 13.5 percent versus the new Canadian 14 percent.
- Feed grain cannot be sprouted.
- Wheat will test one or two points less in protein in the U.S.
- Malting barley must achieve 93 percent germination in the U.S.
