More on Hudye Farms...

[Fransisco]

From this weeks Agriweek

<b>Belling the bully</b>
The courts as the last hope for fair treatment

Hudye Farms Inc. of Norquay, Sask. and two associated companies have filed a statement of claim in Saskatchewan Court of Queen’s Bench against the Canadian Wheat Board seeking compensation and damages of more than $50 million arising from a wheat delivery which the Board alleges contained an unregistered variety.

Hudye entered into a Grainflo contract in late 2009 for 8,625 tonnes of CWRS spring wheat for delivery in March and April 2010. Deliveries began in April 2010; all but 1,206 tonnes were accepted by the Board. A short time later Hudye was advised that 122.5 tonnes of the wheat contained 23% of an ineligible hard red spring variety called 606/Granite. Notwithstanding that only 122.5 out of 8,625 tonnes (1.4%) were allegedly contaminated, the Board declared the producer to be in default of the entire contract. It cancelled all of Hudye’s delivery contracts and assessed damages on the entire 8,625 tonnes, including the 1,206 tonnes never delivered.

The Board applied a penalty of $6 per tonne or $51,750. It demanded the return of $37,305 in on-farm storage payments due Hudye and refused to pay another $43,031 specified by the contract. The Board also charged Hudye additional storage charges of $43,276 which it claims were incurred at Thunder Bay and St. Lawrence terminals. Milling-quality wheat not accepted under the contract was sold to a hog operation at an additional loss of $52,000.

The Board has imposed virtually impossible conditions that Hudye Farms must meet in order to sell its 2010 wheat. It requires that it be notified “well in advance” of any proposed delivery. Each truckload must be binned separately, tested for unregistered varieties at Hudye’s expense and held until test results are received. Hudye has not been able to find an elevator willing to go through these procedures.

The Board did not stop there. The Hudye interests include Hudye Soil Services, a crop input retailer. In October the Board issued a notice to grain elevators throughout eastern Saskatchewan warning that Hudye may attempt to deliver more wheat containing ineligible varieties. The suit contends that issuing the circular the Board damaged the reputation of Hudye Soil Services as well as Hudye Farms and violated its own purported privacy policy (which states in part that “Farmer information is used only for the conducting business with them and is not shared with other parties”).

The suit also claims the Board breached its fiduciary duty. The concept of fiduciary obligation holds that an entity in the position of control over the property of other parties has a responsibility to protect such interests. The Board admitted that it was readily able to blend the small amount of ineligible wheat into larger shipments to below the statutory tolerance, establishing that it ultimately did not suffer a significant financial loss.

The lawsuit seeks recovery of $247,699 plus interest for loss of income and additional expenses, legal costs incurred as a result of the Board’s actions, damages of $25 million on account of harm to its reputation from defamatory public statements, $10 million in damages from breach of fiduciary duty and $15 million in exemplary and punitive damages.

[Fransisco]

also from agriweek...

BACKGROUNDER
November 29 2010

Since 1999, Hudye Farms and Hudye Soil Services, with others, have operated a research and demonstration project known as “Field of Dreams”. Its aim is to identify cropping practices capable of producing much higher yields of wheat and canola than normally seen with targets of 120 bushels per acre of wheat and 75 of canola. In 2010, the most adverse growing season in the history of the region, the top yield achieved for wheat was 84.6 bushels per acre and for canola 61.2. Average yields for Saskatchewan this year were 37.4 and 35.1 bushels.

The trials compare different varieties and management practices as well as the performance of new crop protection products on farm-sized quarter-section fields. Nothing is done that cannot be duplicated on any well-managed farm. Detailed records are kept and posted on a web site. The project has helped thousands of farmers across the west to increase their yields and profitability. But it is also how Hudye got in trouble.

The project occasionally includes tests of varieties not normally grown in western Canada. In 2009 one of these was 606/Granite, a hard red spring wheat originating in Germany and fully registered as a red spring milling variety in eastern Canada. Claims for 606/Granite include exceptional straw strength and they appear true. Hail which destroyed adjoining standard spring wheats in 2009 did almost no harm to the 606/Granite. The variety is widely grown in eastern Canada, the U.S. and Europe and is accepted by flour millers everywhere as a high-end hard red milling wheat. In any rational regulatory environment it would be readily accepted as a proper variety for the prairies.

Designating which varieties of wheat are worthy enough to be grown in western Canada is the responsibility of the Canadian Grain Commission. The stupidity of the statutory grade standards is not the fault of the Commission, because even the determination of acceptable varieties is a rigid bureaucratic procedure. There is little or no movement to terminate or overhaul this ludicrous system. The only concession ever made was the elimination of KVD (kernel visual distinguishability) as a grading criterion in 2007. That led to the variety declaration system, which is a half-measure that completely defeats the purpose of the KVD rule. Few western wheat growers dare to grow non-designated varieties.

The handling of infractions of the statutory grading system is the sole purview of the Wheat Board. The Board can unilaterally and arbitrarily set any terms and conditions of delivery contracts that it wants. Nobody who wants to grow and sell high-grade wheat on the prairies can do so without signing these contracts. Producers in the Board’s designated area do not have the choice of dealing with an alternate buyer who might have more reasonable contract conditions. The Wheat Board not only sets but also unilaterally interprets and enforces its contract conditions.

If the Wheat Board were an actual business corporation instead of a quasi-government bureaucracy, Hudye would be a customer. A competitive business would earnestly try to work out any problems in such a way as to keep Hudye’s substantial business. There is no better opportunity to strengthen customer and business relations than a knotty problem. The Board gets all the business of every western wheat and barley grower by law, so does not need to bother with such incidentals. There is no system of appeal, review or adjudication of Wheat Board decisions. There is no precedent anywhere in Canadian law or business practice that would make legitimate what the Board does every business day.

It happens that a facility does exist to rein in the irresponsible and abusive bullying of the Board. It was established in the important ‘gag order’ legal case in which a court ruled that the minister ‘responsible’ for the Wheat Board not only has the authority but also the responsibility for oversight. In the next 15 minutes, if he wanted to, agriminister Ritz could order the Board to reconsider the Hudye case and settle it in a fair and reasonable way. Alas, the Harper government has turned completely lilly-livered on Wheat Board issues.

The Wheat Board’s treatment of Hudye, besides being autocratic and not subject to any appeal or review, is savage to the point of being sadistic. The Board must get its moral guidance in these matters from Victor Hugo, whose Jean val Jean received a life prison sentence for stealing a loaf of bread to feed his children.

The Board is proud of saying that it is controlled by western farmers. What a farce. No farmer would ever do to another farmer what the Board has done to Hudye.

[Jay-mo]

I'm no CWB fan but were Hudye's trying to pass off an illegal variety as hrsw?

[Jay-mo]

Ok, so the variety, in name, is not registered, but it meets all the standards anyway?

What a mess!

[agstar77]

Try delivering an unregistered canola variety or flax variety , that has some gmo trait but otherwise is identical to existing varieties. What would happen?

[agriman]

Careful not to miss the point. It is not about 606 wheat or how closely it resembles authorized CWRS. It is about the Wheat Board as (a) the sole and arbitrary designer of contract terms that Hudye and all of you have to sign, (b) Its sole and arbitrary ability to intrerpret them, and (c) its exclusive decision as to how to deal with contract infarctions. There is no requirement that contract terms must be reasonable, no oversight, no appeal, no alternative. What happened to Hudye can happen to almost anyone. The CWB monster has to be brought to heel. Anybody who doesn't think this is a fair and just system should be encouraging Hudye.

[gregpet]

Agstar, would this unregistered canola or flax variety be readily accepted by crushers? Probably not. So why confuse this with a variety of wheat that is accepted and milled currently. No problems. Can you actually not comprehend this or is it just a case of having the CWB blinders on?

[wmoebis]

Nor am I trying to justify the CWB but.

A contact is a contract. If you signed a contract with say Canada Malt for Metcalf barley then 3/4 the way through delivery you mixed in Copeland you would be in breach. Even tho they are both reg varieties. Most elevator employees would not see the mix however the trained eye of selectors and inspectors can detect. If mixed it could wreck a whole shippment/sale of varietal specific malt not just your delivery.

[jdepape]

There is a reasonable test that the CWB appears to have failed.

- The contract was for 8,625 tonnes.
- They delivered all but 1,206 tonnes.
- The CWB identified only 122.5 tonnes was out of contract spec.

They could have blended this and it was going east anyway (where the variety is accepted).
There is no commercial reason to declare the whole contract in default.
The CWB never even accepted the final 1,206 tonnes even though they hadn't even seen it.

Applying a penalty on the whole contract amount, the recalled storage charges and the refusal to accept the final amounts on the contract is just punitive and appears vindictive.

Either there's something more to this story that we don't know, or the CWB is being malicious for no apparent reason.

[wmoebis]

The way our system works is, In a bulk handling system all grain is binned according to type and grade even sometimes protein or moisture.

This grain may have been binned separately but all would be binned together with the contract. It would appear that grain buyer or inspector suspected a non reg variety admix. He would have held bin 'suspect, non registured varieties' and sent a sample for a test. The wheat would have already been mixed with rest of contract, but no other wheat would have entered bin (hopefully). We can't bin each load separate. So once confirmation came back the whole bin is then contaminated. You can't go in and scoop out 122 tonnes off top of the sylo.
He would be out of scope on his contract and the CWB and the grain company would not want to risk more non reg variety entering the facility and system which may contaminate more bins. That's just good buisness practice.

When a mill buys wheat from anyone even an Eastern seller, they may request an certain variety or in the case of the CWB they know what varieties and milling properties will be in that contract, that is why we have grades and variety designations. Then if they want to mix other varieties or even classes for a certain order, they can contol how much is added to meet that order.

However if there is other classes or varieties already mixed in, they will not get the same quality of end product and will be in default of thier contract with thier buyer.

All wheat can be milled just like all barley can be malted it is the desired end product that is at risk by admixing other classes, varieties,protien moisture dackage or any other degrading factor.

I don't know all the circumstances and realize mistakes happen but if anyone intentionally mixes classes or varieties on contracts that is not right and if they get caught they should be punished twice as hard. Once for doing it and once for getting caught.

This is exactaly why we have the CFIA, ISO, CGC and all other safe guards in place. I say thank goodness the system worked and this admix was found out and stopped before some miller got what he didn't order and we screwed more markets.

[ajl]

So Granite wheat resists hail. We NEED this variety registered immediately as it hails on our farm every year.

[seabass]

I think your right John. There's probably more to the story or it is just retribution for past misgivings. If not the CWB is an ignorant animal.

[agriman]

I can tell you that this is a case of unbridled
Retribution. Hudye is too big of an operator for
the wheat boards comfort level. He has to be cut
down to size, just as the young man in the
YouTube video must not be allowed to get a
toehold. The wheat board is the new Stasi.
Hudye deserves your support, not your second
guessing.

[bucket]

Can someone explain how blending out 122 tonnes of unregistered hrsw is any different than blending out fusarium infected feed wheat into a milling grade??

The cwb promotes the practice every year, and bypasses CGC regulations in doing so.

[TOM4CWB]

Bucket,

Or what about the tens of thousands of tonnes of winter wheat that gets blended into our CWRS every year.

At the very worst... the CERS registered variety could easily have been blended as a contrasting class like CPS or CWRW to meet spec for CWRS shipment.