Options sought to replace crop buyers’ bonds

Prairie pulse growers’ and general farmers’ groups plan to look for new ways to ensure farmers are paid for grain deliveries once the bonding requirement for grain buyers is no longer mandatory.

The provincial pulse growers’ and general farmers’ organizations in Alberta, Saskatchewan and Manitoba, as well as the Canadian Federation of Agriculture and Canadian Special Crops Association, said Monday they’ve retained a consultant to help them review other options “so that farmers are not exposed to serious financial risks when delivering grains, oilseeds, pulses and special crops to elevators and other purchasers.”

The groups said their move follows the federal government’s introduction last year of Bill C-39, which includes a proposal to amend the Canada Grains Act to end mandatory bonding as a licensing requirement for grain companies.

Under the current system, licensed grain companies must post bonds or letters of credit as security to cover unpaid purchases of Prairie farmers’ grain. From those bonds, farmers are able to recover some or all cash owed to them if a company licensed by the Canadian Grain Commission can’t or won’t pay for grain that farmers have delivered.

Using currently available information and analysis, the groups said they will work with consulting firm Scott Wolfe Management to evaluate a range of possible options including, but not limited to clearinghouse models or security-based, insurance-based or fund-based mechanisms.

The groups said they’re working on applying for funding for this project. “Once dollars have been secured, there will be avenues for producers and the grain trade to have input into the process,” they wrote in a release Monday.

Alongside the CFA and the CSCA, which represents processors and exporters, the provincial groups involved in the project include the Agricultural Producers Association of Saskatchewan, Alberta Pulse Growers, Manitoba Pulse Growers Association, Saskatchewan Pulse Growers, Alberta’s Wild Rose Agricultural Producers and Manitoba’s Keystone Agricultural Producers.

The federal government said last December that by ending the producer payment security program, it can reduce grain system costs that are ultimately borne by farmers, and may also remove a “barrier” for new entrants into the grain marketing industry.

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