Farmers leery of offending grain buyers

The following is an exchange between farm marketing consultant Brenda Tjaden-Lepp of FarmLink Marketing Solutions and Elwin Hermanson, chief commissioner of the Canadian Grain Commission at the recent Canada Grains Council meeting in Winnipeg over how farmer and grain buyers determine fair value.

Tjaden-Lepp:  “It boils down to this party wants to sell high and this party wants to buy low. There’s nothing wrong with that, but there’s a hesitancy to talk about that on the driveway.

You’re not getting a lot of people asking for recheck samples because they know if they submit it, they’re never going to get another trucking premium or grade upgrade from that guy. That’s a regularly reported issue from the growers we’re working with.

“We’re running into a lot of challenges in just understanding what the contracts mean — what they look like and getting performance.

And there’s nobody to go to for dispute resolution. So on your list on 10 things under the grain act, there’s nothing about markets there, nothing about contracts, nothing about price transparency. Is that simply a reflection of today’s government’s attitude about this industry — that markets are working fine and everybody does great business together?… It seems to me the grain commission is in a perfect position to apply some muscle or oversight. Is there any acknowledgment of that coming out of Ottawa when you have your discussions about how to reorganize for the future?”

Hermanson: “The way the act is constructed and will be constructed, we are focused on the grain quality assurance side, not the commercial contacts. And I guess if you want your government involved in the commercial contract side for grain, you could do that, but then you start to wonder if they should be involved in all sorts of contracts for all kinds of things. Not only the current government but previous governments have not thought that’s the direction they want to go — Big Brother…

So at the current time, when commercial contracts are in dispute the Canadian Grain Commission does not get involved because it is not a breach of the Canada Grain Act. Where there is a breach of the Canada Grain Act we will involve ourselves and will move heaven and earth to resolve an issue.

On the point about producers being reluctant to use the ‘subject to grade and dockage’ provision in the act we hear that quite a bit. And that’s the producer’s call. But it’s a competitive world and if the industry decides because a producer wants to use that instrument to make sure they get a fair price… I think there is a commercial risk for those entities that is equal to or greater than the risk of the producer using that particular instrument.

When I think back to when I was farming, it was not a bad thing to say to a grain buyer — and oftentime the grain buyer would raise it — ‘you know this durum has some colour in it and I just don’t know how to grade this, why don’t we send a sample off to the grain commission?’

That happened a few times in our operation. It wasn’t a dispute. It was a way to assess proper value on that grain. The more we can have that frame of mind — and maybe with your customers, you can encourage that and perhaps we can encourage that approach to the issue (and) I think we’ll all be better off.

It shouldn’t be a negative — ‘if you’re not going to trust me I’m not going to buy your grain anymore type of a response.’ That’s unfortunate if that happens.”

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