Starting Aug. 1, 2021, western Canadian canary seed growers will have the same payment protection as exists for 20 other grains regulated under the Canada Grain Act.
The Canadian Grain Commission (CGC), which administers the grain act, announced June 9 canary seed will be added to the act when the new crop year starts.
In addition to payment protection, canary seed growers will benefit from the same rights, services and protections as they do on other regulated grains, including:
- The right to have their canary seed assessed for grade and dockage following official grading standards at time of delivery.
- The right to dispute their grain’s assessment at a licensed primary grain elevator at the time of delivery through the Canadian Grain Commission’s (CGC) Subject to Inspector’s Grade and Dockage service.
- Access to no-fee quality assessments through the Canadian Grain Commission’s Harvest Sample Program.
Why it matters: Although canary seed is a small crop some growers have recently collectively lost several millions of dollars after buyers went under before paying them.
Adding canary seed to the grain act has been discussed for years, but until recently canary seed growers either opposed the idea or were ambivalent. That changed in 2019 when ILTA Grain experienced financial problems.
After the smoke cleared 227 ‘eligible’ farmers got the $11.1 million ILTA owned them thanks to the CGC’s payment protection program, which requires buyers to post security to cover farmer liabilities. (There have been cases where company security was insufficient to cover all that farmers were owed.)
However, ILTA’s court-appointed monitor PricewaterhouseCoopers, reported 44 farmers were owed $2.1 million for canary seed, but they were not compensated because the CGC program only applies to grains regulated under the grain act.
“What really got the industry as a whole in support of this was the ILTA failure in 2019 and then in 2020 we had Canpulse fail and there was some canary seed involved in that as well,” CGC chief commissioner Doug Chorney said in an interview June 9.
Some individual canary seed growers lost $100,000, Kevin Hursh, executive director of the Saskatchewan Canary Seed Development Commission (SCSDC), said in an interview June 9.
“It was a big loss… a big deal for the individual grower,” he added.
In response the SCSDC brought a resolution to its 2020 annual meeting proposing canary seed be added to the the grain act making it eligible under the CGC’s payment protection program, Hursh said.
“The vote was very decisive in favour of formally asking the commission and the federal government to include canary seed under the Canada Grain Act,” he said.
Before then a lot of growers were comfortable with canary seed being unregulated, Hursh said.
“There was always some concern that you would have (CGC) grading factors that nobody thought we needed because the crop trades quite freely now without official grading factors,” he said. “The (CGC) commissioners assured us they could put grading factors in place that wouldn’t be disruptive. And from what we’ve seen that’s what happened.
“But I do see standardization of dockage removal… There were growers who would complain from time to time that standard procedures for dockage determination were not being followed and now there will be standard procedures for that.”
In addition to consulting growers the CGC spoke with canary seed buyers.
“The impression was the industry, from all perspectives, thought this was a positive step,” Chorney said.
“We consulted broadly through the standards committee. It was the right time in the judgment of the commission to move this forward and I am really proud of the fact that we accomplished that and we will protect producers in the future.”
Most canary seed buyers are already licensed by the CGC, he added. Now those companies will be obliged to report what they owe farmers for canary seed delivered to them.
Canary seed is the largest-volume grain that isn’t protected under the grain act, the CGC said in a release.
Adding and removing crops under the act is done through cabinet order, but it takes time, Chorney said. The industry has to be consulted, he said.
Canada accounts for 65 per cent of global canary seed production and about 80 per cent of total exports.
Most canary seed is used to feed birds, but in 2015 it was approved in Canada for human food, the same year it was granted Generally Regarded as Safe (GRAS) status in the United States, Hursh said.
Canada produced an average of 146,600 tonnes, the last six years.
Almost 98 per cent of Canadian canary seed production occurs in Saskatchewan, Hursh said.
Manitoba seeded just 5,120 insured acres in 2020 and the five-year average was just 3,940 acres, crop insurance records show.
Around 1,000 farmers grow canary seed in Saskatchewan and annual production is worth about $100 million, Hursh said.
Canada’s biggest canary seed markets are Mexico and Europe with sales to Colombia and Brazil, he added.
In 1993 the CGC compensated about three dozen farmers not paid for canary seed they delivered to Klemmer Seeds of Rosetown, Sask., before it went broke.
The move was controversial because Klemmer Seeds wasn’t licensed by the CGC and canary seed wasn’t a regulated grain and ineligible for the CGC’s payment protection program.
Then CGC chief commissioner Milt Wakefield denied allegations of political interference. He argued the compensation was justified based on the outcome of an earlier lawsuit. Farmers successfully sued the CGC for losses suffered after Econ Consulting went broke in the early 1980s without paying them for their grain. However, Econ was licensed and bonded by the CGC, but its posted security was insufficient. The court found the CGC negligent in not ensuring Econ had the necessary funds.
The grain involved was also regulated under the grain act.
See more at the Canadian Grain Commission website.