Security on Grain Sales/ WHY/

[TOM4CWB]

Pardon,

You said: "The CGC didn't get into contract disputes and offered no protection to the seller..."

I have had the CGC resolve disputes on graded grain receipts... when payment was disputed and quality was in dispute.

These two issues are connected... and most often the CGC's main reason for existence.

If the CGC is not fighting for growers... I question the usefulness of their existence.

A grower; up against a Billion Dollar plus graincompany... we obviously know who the underdog is.

SO now we are going to change the CGC so it is not responsible to growers...

Why do we need the CGC at all... if we are on our own!

I can get quality specs...see if my grain meets end user requirements.

60mmt of wheat in the USA... gives a very good indication of what a commercial and responsible value chain looks like... and how it operates.

1.) NO Variety Declarations signed.... Presampled... quality pre-determined before delivery.

2.) Fair average Quality grading,.. based on a futures #2 grade... 330 falling number which many times CGC/CWB grade our Canadian produce as feed wheat in western Canada. Eastern Canada uses different grade quality specs; much like the US uses.

3.) Bonded warehouses.

If a grower does not like the spec or Quality determination... then they are free to go to a different grainco and retest... and determine if a fair quality assessment was provided in the first place.

Charlie,

You said:

"AgClearing was not proposed as a 100 % replacement for bonding. Others have suggested as in the federal minister but the program has to get started first/prove itself to the grain supply chain. It may provide additional security for some transactions and in other cases (sales to non CGC licenced buyers) may be the only source of protection."

THe CGC legislation I saw in December... totally removed the CGC from all producer security responsibilities.

Has something changed since then I don't know about?

[padron]

I understand the CGC has addressed "settlement" disputes in respect to grade, etc. but they have never played a role in "contractual" disputes like delivery delays, credit. Clearing will provide its clients with formal representation and a bona fide dispute resolution and arbitration procedure which does not currently exist in today's cash commodity marketplace. It will level out the lopsidedness of the billion dollar grain company and the individual producer.

The CGC was never responsible to growers. It has, and always will be, responsible to government. It "serves" producers as well as elevator companies, end users, etc. And it will continue to do an outstanding job managing Canada's grain quality standards and high export reputation. Producer security was never it's best thing.

[TOM4CWB]

Pardon,

Here is the present CG Act Object:

"13. Subject to this Act and any directions to the Commission issued from time to time under this Act by the Governor in Council or the Minister, the Commission shall, in the interests of the grain producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets."

Here is the proposed new Object:

"13. Subject to this Act and any directions to the Commission issued from time to time under this Act by the Governor in Council or the Minister, the Commission shall

(a) establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada to ensure a dependable commodity for domestic and export markets; and

(b) protect the interests of grain producers with respect to deliveries to elevators and grain dealers, the allocation of producer railway cars and the binding determination of grade and dockage of grain by the Commission."

Please explain why the producers interest on quality and grade determination... has been removed.

THe US uses Fair average quality.

Canada has had a hybred... but for instance on Canola grading has been maintained as a simple quality standard that benefits grain growers.

Will this change?

I can see green counts on Canola being done differently... after the amendments have been past.

Am I WRONG?

Pardon... the CGC has always had an obligation... to work through payment and security issues... If I had the proper graded grain receipt... and brought forward the lack of payment within 90 Days of the issuance of the cash ticket.

Why would you claim otherwise?

[charliep]

I wouldn't speak for Padron but I have never considered this as a 100 % replacement for licencing and bonding. Similarly, there may also be other products such as Agricorp model in Ontario that will assist farmers/agribusiness in managing transaction risk.

What I am asking farmers to do is to read about, ask questions and have an opinion on the clearinghouse as a potential risk management product.

A case in point today is the CWB malt barley CashPlus program. A major change in this program is that contracts have been made enforceable on both the selector and the farmer (realizing there is an act of god clause for the farmer). From the farmer side, you have a committed delivery opportunity as long as you meet the minimum quality specifications. Who will enforce this contract or enforce dispute resolution?