It’s an understatement to suggest that this was a hard year for crop producers and grain buyers in Manitoba.
An “epic drought,” as one provincial cabinet minister described in August, left some producers across the province without enough grain to fulfil their contracts with buyers.
With yields down across the board, there has been a financial impact throughout the entire value chain. That’s why KAP encourages producers to talk directly with their buyers.
Relationships are essential to the agricultural industry; this is never truer than in a year where producers have struggled.
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As reported in the Sept. 30 issue of the Manitoba Co-operator, on Aug. 10, KAP asked Western Grain Elevator Association members to consider removing, not forgo, ‘administrative fees’ (read: contract penalties) as they settle unfulfilled grain contracts.
Administrative fees can be an effective way to keep producers from backing out of their obligations when commodity prices rise, but given the widespread drought, some producers clearly cannot fill their contracts.
Through consultation with producers and industry, KAP arrived at a balanced position in what is a difficult situation for both producers and buyers.
There’s no question that producers and buyers need to honour the contracts they signed. Plus, buyers have already sold the contracted grain into international markets, and they have obligations to meet.
Producers have voiced concerns that these fees are a significant challenge to their financial viability. This is a situation where buyers can help lessen the financial burden on producers as they manage the impact of an unprecedented drought.
With drought conditions affecting producers in all sectors and every region of Manitoba, KAP’s focus has been on education and advocacy to ensure that the right information, support and tools are available. A crop-marketing seminar is in the works to help producers understand their options and obligations as they make business decisions in the years to come.
If producers have questions about grain contracts, contact KAP by visiting kap.ca.
For more content related to drought management visit The Dry Times, where you can find a collection of stories from our family of publications as well as links to external resources to support your decisions through these difficult times.
