Farmers retrieve beans from Global Grain in wake of insolvency

That will cut the amount of security money needed to cover what farmers are owed

Many farmers who were owned by Global Grain Canada of Plum Coulee have gotten their goods back.

The Canadian Grain Commission (CGC) is still tallying how much farmers are owed, but CGC spokesman Remi Gosselin said in an interview Nov. 20 that figure has come down as physical stocks of edible beans are returned to farmers.

“We do believe the company has returned the majority of their inventory back to producers who hold primary elevator receipts,” he said.

Gosselin couldn’t specify the volume, but said “it’s significant.”

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Why it matters: The more beans farmers retrieve from the elevator means fewer farmers will have to rely on the posted security to be made whole.

On Oct. 30 the CGC suspended Global Grain’s license, and that of two related companies — Globeways Canada Inc., and Canpulse Foods Ltd., located in Mississauga. Ont. and Kindersley, Sask., respectively — after being notified the firms no longer had security to cover money owed to farmers.

All three companies were placed in receivership Nov. 19, Gosselin said.

Meanwhile, the CGC has access to $1.25 million in security from Global Grain, $6.5 million from Canpulse Foods Ltd. and $50,000 from Globeways Canada Inc.

The latter was not doing much direct business with farmers, while the former had not been buying much grain from farmers during the three months before the CGC suspended its license, Gosselin said.

Growers would likely have preferred to see the company remain solvent and another potential buyer in the market, but Manitoba Pulse and Soybean Growers Association executive director Daryl Domitruk said getting the beans back makes “… a potentially bad situation a little better.

“Given the circumstances it was fortunate that a lot of growers, apparently, were able to retrieve their beans,” he said. “That’s going to be helpful to the sector.”

Domitruk said he couldn’t confirm just how many bushels were retrieved, but said that anecdotally it appears to be a substantial amount.

“We know there were line ups of trucks at Plum Coulee,” he said. “There obviously are some people in the system that were being good actors. I think that’s helpful for the industry.”

The CGC has long contended grain sitting in elevators that hasn’t been paid for remains the property of the farmers who delivered it. That’s spelled out in the definitions part of the Canada Grains Act: “The holder of an elevator receipt is entitled to the delivery of grain of the same kind, grade and quantity as referred to in the elevator receipt.”

However, failed grain companies’ secured creditors have argued stored grain is just another asset to be liquidated to cover what they are owed.

With Global Grain it appears the beans were retrieved by farmers before it went into receivership.

“Our view is that if producers delivered grain to an elevator, but they had not been paid for it, it’s their’s,” Gosselin said.

Last year the CGC was preparing to put the issue to a legal test after another pulse crop buyer, ILTA Grain, went into creditor protection, while owing farmers millions of dollars for their crops.

“That matter was never settled, but what happened there sort of tweaked producers to their rights as to grain in inventory.”Gosselin said.

The best way to ensure farmers get paid for their grain is to request payment upon delivery Gosselin said.

CGC security only applies for 90 days after a farmer receives an elevator or grain receipt. Farmers have just 30 days of protection after getting a cheque, but within that 90 day period.

“Let’s say for example you are on day 89, you’ve got one day left to cash a cheque to remain eligible,” Gosselin said.

If the cheque is cashed on day 91 and bounces the farmer is ineligible for security payments, he said.

“We have tremendous respect when the Canadian Grain Commission gets involved in these things,” Domitruk said. “We’d advise growers to heed their advice. It’s better to heed their advice than to learn the hard way.”

About the author

Reporter

Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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