Eligible farmers owed money for grain they delivered to Newco Grain Ltd., of Coaldale, Alta., when it was a licensed grain dealer before May 11, received 95.1 per cent of what they were owed, the Canadian Grain Commission (CGC) said in a news release Nov. 23.
About 144 farmers received approximately $3 million through the CGC’s Payment Protection Program, a CGC official said.
“When a licensed company is unable to pay producers, we work to ensure producers receive compensation,” chief CGC commissioner Elwin Hermanson, said in a news release. “While we license primary, process, terminal and transfer elevators and grain dealers, we do not license companies such as feedlots. Deliveries made to unlicensed companies are not covered by our Payment Protection Program.”
Newco Grain now operates as a grain broker, said Newco president Neil Slingerland when contacted by phone Nov. 23.
Grain brokers are not licensed and bonded by the CGC because they aren’t supposed to buy or sell grain. Instead they bring grain buyers and sellers to gather to make a transaction.
Farmers are only covered by a licensed company’s security for 90 days from the date they delivered their grain, or 30 days from the date they received a cash purchase ticket.
Although the CGC monitors licensed companies and tries to ensure they post enough security to cover what farmers are owed, sometimes payments fall short, Hermanson said Nov. 21 at the Grain Industry Symposium in Ottawa. That’s why the CGC is proposing a compulsory insurance program for licensed companies to replace the existing security program.
Insurance would be cheaper for licensed companies, he said. Now firms must post cash, a bond or letter of credit to match their liabilities, tying up working capital. Current high grain prices add to the burden, he said.
An insurance scheme would also be cheaper and easier for the CGC to administer.
Full details of the plan are yet to be worked out, Hermanson said.