RCMP investigate Naber Specialty Grains

Farmers will get 10 to 15 cents on the dollar

RCMP are investigating Naber Specialty Grains Ltd. after it was placed in receivership owing farmers more money than it has posted in security.

“We have uncovered what appear to be irregularities in producer liability reports provided by Naber Specialty Grains Ltd. to the Canadian Grain Commission and as a consequence security posted by the company to compensate grain producers will be insufficient,” acting CGC chief commissioner Jim Smolik said in a news release June 1. “We are consulting with the RCMP’s Criminal Operations Section to review possible violations of the Canada Grain Act.”

The shortfall, and the fact that this is the second insolvency for a grain company run by Todd Naber, has renewed questions about the CGC’s producer security program.

“If farmers aren’t being protected by the CGC’s producer payment security that needs to be addressed,” Keystone Agricultural Producers’ (KAP) president Dan Mazier said in an interview June 6.

A year ago, the CGC issued a news release saying any farmer owed money for grain by Naber Specialty Grains should make a claim. Last week the CGC repeated that message.


Farmers will only receive 10 to 15 cents on the dollar based on Naber Specialty Grains’ $150,000 in security, Rémi Gosselin, the CGC’s manager of corporate information, said in an interview.

And that doesn’t cover what’s owed to farmers for canary seed, which isn’t covered by CGC security.

“We referred the matter to the RCMP for a number of reasons,” Gosselin said. “Firstly, the magnitude of the company’s outstanding liabilities to producers at the time of receivership… might have been understated in reports to the grain commission. There were delays in providing documentation to producers when restructuring efforts were underway and also Naber Specialty Grains’ refusal to cease accepting grain deliveries as explicitly directed by the grain commission and irregularities observed by the receiver.”

Following complaints about slow farmer payments the CGC audited the firm in March 2015, revealing a lack in internal controls. The CGC ordered Naber Specialty Grains Ltd. to pay farmers more promptly.

In April 2015, the CGC instructed the company verbally and in writing not to take delivery of any more grain. However, later that month a CGC official observed the company receiving grain. Discrepancies in grain inventories, which did not reflect liabilities submitted to the CGC in monthly reports, were also found, Gosselin said.

“When changes were not made and a detailed producer plan, as promised, were not forthcoming the (company’s licence) was not renewed (May 8, 2015),” he said.

Naber Specialty Grains Ltd. went into receivership June 18, 2015.

Not the first time

This wasn’t Todd Naber’s first insolvency. On June 11, 2002 the CGC pulled Naber Seed & Grain Co. Ltd.’s operating licence the day after it went into receivership. One hundred and twelve farmers were owed approximately $1.9 million. But the firm only had $1 million posted with the CGC. Farmers received just 51 per cent of what they were owed.

When Naber Seed & Grain Co. Ltd. failed in 2002 then chief commissioner Chris Hamblin said the CGC needed to improve its monitoring.

Fourteen years later it still appears the CGC needs to do more, said KAP president Dan Mazier.

“If a company is bonded by the CGC and farmers are only going to get 10 per cent of what they are owed, something is wrong,” he said.

The CGC is considering other options, including insurance- or compensation fund-based models, but any changes require legislative amendments to the Canada Grain Act, Gosselin said.

Bill C-48 would have given the CGC that authority, but it died when the federal election was called last year.

“We monitor companies based on the monthly reports they (licensees) supply,” Gosselin said. “We check up on them by conducting periodic audits and requiring annual audited financial statements. As long as companies play by the rules it works well. And most companies play by the rules.

“The CGC is constantly reviewing and strengthening our risk management tools to monitor licensees’ liabilities on a monthly basis between audits. And we are going to continue to carry out field audits. We are currently increasing our audit capacity.”

Producer security

In 2007, former agriculture minister Gerry Ritz suggested the CGC drop its producer security because it was expensive and often failed to cover all of what farmers were owed. But the record showed, despite some major shortfalls, the CGC’s program had worked for many farmers and was relatively inexpensive.

A 2009 study showed the program cost $9 million a year or about 23 cents a tonne based on covering 40 million tonnes of grain. Almost $8 million of it is a cost to grain companies, but was assumed most of it is passed back to farmers. CGC administration was estimated at $1.4 million a year.

Farm groups, including KAP, argued the CGC should have a producer protection program, but consider alternatives.

“Over the past 10 years security has been adequate,” Gosselin said. “In the last 10 years we’ve realized on the security of five licensees and the CGC recovered about $4.54 million. We were able to compensate close to 200 producers and most of them were paid everything they were eligible for. The average payout during this time was 93.9 per cent.”

The CGC’s message: get paid for your grain as soon as possible.

“Even with the strictest of controls we have to rely on people to be honest and accurate in their reporting,” Gosselin said.

About the author


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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