The Canadian Grain Commission’s (CGC) producer security program will fully compensate all eligible farmers owed money for grain they delivered to Canpulse Foods Ltd. and Global Grain Canada Ltd., but weren’t paid for.
“The Canadian Grain Commission is committed to ensuring producers are fairly compensated for their deliveries,” CGC chief commissioner Doug Chorney said in a news release March 2. “Our Safeguards for Grain Farmers Program plays a key role in protecting producer rights, and we are very pleased to be able to fully compensate producers using the security held through this program.”
The CGC suspended the licences of Canpulse Foods Ltd. and Global Grain Canada Ltd. and their parent company Globeways Canada Inc. on Oct. 31, 2020, when the three grain companies were unable to provide security as required under the terms of their licences.
Under the Canada Grain Act licensed grain companies must post security to cover money owed to farmers for delivered grain.
Why it matters: Canadian farmers benefit from payment security under Canada’s grain regulation system.
If a licensee fails to meet its obligations, farmers are eligible for compensation within 90 days from the date of their grain delivery, or within 30 days from the date a cash purchase ticket or cheque was issued to them based on the lesser of these two time periods.
For example, if a farmer gets a cheque 89 days after delivering they have just one day to get a cheque and cash before their protection expires.
That’s why the CGC urges farmers to get paid on delivery or very soon after.
Farmers who haven’t sought payment within 90 days, or cashed their cheque within 30 days, are ineligible for compensation through the CGC if a grain company fails to pay them.
That’s what happened to six farmers owed money by Canpulse Foods Ltd.
Global Grain Canada Ltd., has a primary elevator at Plum Coulee, Man., and Canpulse Foods Ltd. has one at Kindersley, Sask.
The two companies are interrelated through a common controlling interest with Globeways Canada Inc., headquartered in Mississauga, Ont.
The CGC received 40 eligible claims involving Canpulse Foods Ltd., totalling more than $3 million, Remi Gosselin, the CGC’s head of communications, Corporate Information Services, said in an interview March 3.
There were 13 eligible claims for farmers dealing with Global Grain Canada Ltd., worth nearly $700,000.
“It would’ve been a different story with Global Grain if producers hadn’t gone to retrieve their grain,” he said. “We would’ve had a lot more claimants. That was significant in and of itself. At the time we weren’t sure if the company had returned the majority of inventory to producers, but it appears those who held outstanding primary elevator receipts were able to retrieve grain and that was honoured by Global Grain.”
The majority of grain retrieved — about 5,579 tonnes — was Canada No. 1 pinto beans, Gosselin said.
Farmers also retrieved about 134 tonnes Canada No. 1 black beans.
Often when grain companies run into financial trouble their assets, including stored grain, are frozen and usually end up sold with the returns going to secured creditors. The CGC maintains if farmers haven’t been paid for their grain they remain the rightful owner.
And while the CGC’s Safeguards for Grain Farmers Program often covers 100 per cent of what eligible farmers are, it’s not guaranteed. Even though the CGC monitors licensed grain companies to be sure they are posting enough security to cover farmer liabilities sometimes it’s insufficient.
That’s why over the years Western Canada’s grain industry has discussed other protection options, including insurance and fund-based programs.
The current security program is sure to be assessed during the grain act and grain commission review currently underway.