What if Receiver comes in on Sask Pool

[rain]

What would happen with over delivered CWB grain in storage at a Sask Pool, or Ag Pro grain Facility.

Lets assume the wheat has been contracted to the CWB but the the pool has allowed, or taken delivery of 100% of the contract.

I would think this grain would be safer for producers then nonboard grains and oilseeds.

Am I correct.

[melvill]

I was at an info meeting on licensing and bonding and other security related issues sponsored by the Can. Grain Commission (CGC) a week or so ago.

CWB grain delivered to elevators that has been sold is okay. That grain goes into trust for the CWB. Even if the grain has been sold but the cheque has been deferred, the cheque goes into a CWB trust.

Non-CWB cheques that have been deferred longer than 90 days aren't covered by grainco bonds.

I think producers who have over delivered grain should talk to the CGC about this situation. At the meeting, the CGC said that grain stored in producer owned or leased condos "should" be okay but they kept using the word "should" instead of "will" and I felt a little nervous about that.

If the over delivered grain is not in a produce owned or leased condo, there may be problems especially if it has been in storage for over 90 days. The grainco bonds don't cover anything in storage for longer than 90 days.

Best to contact a CGC Commissioner. Albert Schatzke is the one that was at the meetings and he seemed very approachable. His phone number is (204)983-2732. If you can't get hold of him go to the CGC web site at www.grainscanada.gc.ca and look up the name of the Assistant Commissioner that is the closest to you. The Assistant Commissioner's job is to deal with producers.

[melvill]

Forgot something. The CWB trusts that deferred cheques go into is protected from bankruptcy trusties.

[melvill]

Another mistake in my first post. Deferred cheques only have 30 days of protection after the date of issue not date deferred to. The way around this is to ask the grainco for a certified cheque, which is a very unusual request. It'll probably get you lots of frowns from the company.

Best thing to do is go to http://www.grainscanada.gc.ca/pubs/factsfarm/factsfarmers8.htm and read "Reduce Risks When Selling Your Grain"

[rain]

Unless the rules have changed in the last few years a certified cheque just means there was enough money to cover the cheque the day it was written. It does not mean there is enough money to cover that cheque the next morning.

From past experience I can tell you that sometimes a certified cheque is not worth the paper it is written on.

[TOM4CWB]

Rain;

There was a SWP meeting in Lloydminister a couple of days ago.

The top SWP folks told us that CWB grains never become the property of SWP (SWP is simply an Agent of the CWB), therefore the CWB/Farmer retains ownership, and this grain is not considered an asset of SWP.

I had verbal conformation from Albert that my condo CWB graded CWRS #1 #2 wheat at SWP that is CWB grain, and cannot legally be sold as non-board wheat, therefore it cannot be at risk of being confiscated by any action against SWP or Agpro.

[rain]

Tom what would you do if you had any non board grains with the Pool right now?

[TOM4CWB]

Rain;

I have always tried to leave speculation out of the loop when dealing with grain co's.

There are much better futures/options alternatives to controling price risk, than leaving the grain sitting somewhere, whether in a bin or at the elevator.

For me, there has never been any question, I therefore , price and immediatly cash the cheque.

But then I am not one that likes surprises!

[rain]

Does anyone know how big of bond the pool has?

[TOM4CWB]

Rain;

The primary elevator operator is allowed to use grain stocks that they own, as an asset against outstanding liabilities... therefore is the grain elevator has remained current on paying for grain, and does get paid for all sales of grain that are shipped... there is little to be concerned about.

I know Agpro has never shown any signs of insolvency, in my personal experence... they have remained current on paying bills, and run a tight financial ship, with tight cash flow control. These indicators are a good sign, that other than refinancing issues, SWP/Agpro management is efficient and using accepted financial management techniques.

I have not heard of any major losses from export default on grain payments recently, other than the CWB sticking SWP/Agpro a few years ago with a bad credit sale... which I am sure has been dealt with, financially, long ago.

As far as I am aware, it is impossible to find out how much any Grain Co has pledged in letters of credit, or bonds, to the CGC.

So the level of bonding coverage question is considered commercially sensitive, private info, not for disclosure to anyone.

Having your bank do a credit check, if your bank id different than SWP/Agpro's can reveal a little info, so all the best... in your conquest of credit info!

[wedino]

Anyone with grain that is in storage at SWP & was delivered without quota(over & above contract call) should haul it home immediately. Same goes for non board grains whether in storage or in condos(cash it out or haul it out). Not worth the hassle to deal with receivers or bond cos. My understanding is that this is happening at the Pool, the result of the meetings this week. Could some of the downward pressure on canola this week be a result of farmers selling what they had in storage at the Pool?

Anyone that has prepaid for inputs at the Pool is well advised to take delivery or get the cash.

I think the perception of the Pool going under has fried them. Even if they can pull off the financing deal they are trying to sell, who will deal with them when there is the constant fear of them going broke.

[rain]

I hear you wedino, I feel take the Money and run. You can buy a call or do what ever but the risk of leaving it there is just to much in my opinion.

[rain]

http://www.hursh.ca

Farmers Worry About Grain in Sask Pool Condo Storage
Officials with the Canadian Grain Commission and the Canadian Wheat Board are being peppered with calls regarding grain that farmers have in condo storage in Saskatchewan Wheat Pool facilities. A large amount of grain is in condominium storage and it does not have the same protection as grain actually delivered into the system. For instance, the licencing and bonding provisions of the Canadian Grain Commission do not apply to grain in condo storage. What can producers do? Well, they can take re-delivery of their grain, although this will mean extra handling and transportation costs. In many cases, they can sell their grain out of condo storage.
On canola, with prices dropping, that may not be an appealing option. Producers can also switch grain in condo storage to primary elevator storage and then it becomes like a regular delivery. However, if a lot of non-board grains are switched to elevator storage, the Pool’s liability will increase and then its bond with the Canadian Grain Commission may become inadequate. While no one wants to create undue concern, farmers may want to investigate their risks if they have grain in condo storage at Sask Pool facilities. I’m Kevin Hursh.

[TOM4CWB]

Larry;

Considering what the CWB Act says in Section 69:

69. Any contract or agreement for the sale, purchase, or transportation of wheat or wheat products in contravention of this Act or of any regulation or order is void.

R.S., c. C-12, s. 43.


"62. (1) Notwithstanding any other statute or law, the Corporation may authorize any person with whom the Corporation enters or has entered into an agreement relating to the handling or receipt of grain for the Corporation, to borrow from any bank on the security of grain delivered to and received by that person, and to give security on that grain...

(2) In case of default by a person described in subsection (1), the bank shall sell or dispose of the grain referred to in that subsection to the Corporation only, and the Corporation shall take delivery on the terms of the agreement from the bank in lieu of that person..."

I cannot see how the CWB could loose a farmer's CWB grain, as long as the CWB Agent is really and actually a CWB Agent! Even if the elevator lied about the Agency status, the CWB still under Section 69 has the right to confiscate the wheat (barley), how in the world have we got to the stage that we are at in this topic?

Is the CWB trying to destroy SWP/Agpro?

Why hasn't the CWB specifically spelled out these legislative rights farmers have under the CWB Act, and reassured our industry that CWB grain is safe from confiscation in case of insolvency or bankruptcy?

Some shareholders and management at SWP/Agpro should sue the pants off the CWB Directors!

Instead the CWB legal staff just tell the directors they cannot comment, thus making SWP/Agpro even deeper in problems with financial stability!

WHy hasn't the CWB clarified these issues?

[TOM4CWB]

Sorry for the delay, Tom.
I wont comment on why the CWB hasn't clarified the condo issue but I do know that the Pool's condo's are treated differently than other grain companies and that you may want to take up with them.

The CGC's answer is that non-board grain stored in Condo is NOT covered by the bond held as security.

I know of farmer owned terminals that set up a separate company to protect the condo holders if the parent company failed.

If i ever need an expert on the Act, I'll be sure to call you Tom! Amazing what you learn when you have a passion for what you believe in!!