Pulse Growers Associations to Replace Bonding

[charliep]

The following is an article quote from this week's Manitoba Cooperator.

Begginning quote.

"Options sought to replace crop buyers' bonds
FBC staff 7/21/2008 6:10:00 PM



Related ItemsMore News by TopicCrops Prairie pulse growers' and general farmers' groups plan to look for new ways to ensure farmers are paid for grain deliveries once the bonding requirement for grain buyers is no longer mandatory.

The provincial pulse growers' and general farmers' organizations in Alberta, Saskatchewan and Manitoba, as well as the Canadian Federation of Agriculture and Canadian Special Crops Association, said Monday they've retained a consultant to help them review other options "so that farmers are not exposed to serious financial risks when delivering grains, oilseeds, pulses and special crops to elevators and other purchasers."

The groups said their move follows the federal government's introduction last year of Bill C-39, which includes a proposal to amend the Canada Grains Act to end mandatory bonding as a licensing requirement for grain companies.

Under the current system, licensed grain companies must post bonds or letters of credit as security to cover unpaid purchases of Prairie farmers' grain. From those bonds, farmers are able to recover some or all cash owed to them if a company licensed by the Canadian Grain Commission can't or won't pay for grain that farmers have delivered.

Using currently available information and analysis, the groups said they will work with consulting firm Scott Wolfe Management to evaluate a range of possible options including, but not limited to clearinghouse models or security-based, insurance-based or fund-based mechanisms.

The groups said they're working on applying for funding for this project. "Once dollars have been secured, there will be avenues for producers and the grain trade to have input into the process," they wrote in a release Monday.

Alongside the CFA and the CSCA, which represents processors and exporters, the provincial groups involved in the project include the Agricultural Producers Association of Saskatchewan, Alberta Pulse Growers, Manitoba Pulse Growers Association, Saskatchewan Pulse Growers, Alberta's Wild Rose Agricultural Producers and Manitoba's Keystone Agricultural Producers.

The federal government said last December that by ending the producer payment security program, it can reduce grain system costs that are ultimately borne by farmers, and may also remove a "barrier" for new entrants into the grain marketing industry."

End quote.

http://www.manitobacooperator.ca/issues/ISArticle.asp?id=87265&issue=07212008&story_id=&PC =FBC

[TOM4CWB]

Dear Charlie,

I note there is no call in this news release to "Replace Bonding" as a security system could still turn out to be least cost and most effective using a bond/insurance based system of our grain buyers.

I am told the Agricorp model in Ontario actually is much more stringent in accepting new grain buyers than the present CGC bonding system... so if that criteria is the measure of need for our industry... we have a superior system now.

Change for the sake of change... has never been a good reason to force folks to take less at a higher cost!

We have a very un-level playing field... because the CGC takes no grain assets into consideration for licensed grain dealers... yet allows grain inventories value to be counted as assets in primary elevators that are licensed.

If this issue alone were resolved... the pressure for change to the bonding structure would radically change.

Grain Inventory values must be resolved... no matter what system of security is in place!

Saying we need no regulation... is akin to saying we need no regulation on banks/deposits/loans either.

A good process is now being developed to give unbiased analysis... I will keep you updated!

[TOM4CWB]

Here is the actual news release:

"Groups Looking for Producer Payment Security

Solutions that work for producers & the trade a top priority



For immediate release

July 21, 2008



Winnipeg – Organizations representing Western Canadian farmers, processors, and exporters are working together to look at all options for producer payment protection in light of proposed changes to the Canada Grains Act that would remove mandatory bonding of grain buyers.



In 2007, the federal government introduced Bill C-39, which includes a proposal to eliminate mandatory bonding as a licensing requirement. Suitable alternatives for farmers and the trade will be sought so that farmers are not exposed to serious financial risks when delivering grains, oilseeds, pulses and special crops to elevators and other purchasers.



Utilizing currently available information and analysis, the groups will be working with Scott Wolfe Management, a consulting company, to evaluate a range of options that may be available to the industry, including but not limited to:



- Security-based mechanisms;

- Insurance-based mechanisms;

- Fund-based mechanisms, and

- Clearinghouse models.



This project is supported by the following partners: Agricultural Producers Association of Saskatchewan, Alberta Pulse Growers, Canadian Federation of Agriculture, Canadian Special Crops Association (representing processors and exporters), Keystone Agricultural Producers, Manitoba Pulse Growers Association, Saskatchewan Pulse Growers, and Wild Rose Agricultural Producers.



A funding application for this important initiative is currently underway. Once dollars have been secured, there will be avenues for producers and the grain trade to have input into the process.



- 30 -



For more information, please contact:



Yvonne Rideout, KAP General Manager & Project Manager

(204) 697-1140 or yrideout@kap.mb.ca



Rob Brunel, KAP VP & Chair of the Grains, Oilseeds & Pulses Committee

(204) 447-7104 or rpbrunel@inetlink.ca


Lenore Kowalchuk
Communications Officer
Keystone Agricultural Producers"

[Burbert]

Insurance is the obvious way to replace bonding. An insurance policy with a high/high premium, lots and lots of fine print would be excellent. A huge deductible is in order to keep cheaters at by would be helpful. Then the right to deny, deny, and deny claims is very very important. A crack team of lawyers must be on retainer to deal with each and every lawsuit filed against the insurance companies. Oh did I forget to mention we need brokers and agents too.... **Yup its time to start growing pulses on our farm. With this sort of innovation coming down the pipe, it'll be better than raising pigeons on the farm.

[parsley]

"Then the right to deny, deny, and deny claims is very very important."


Should be lots and lots and lots of CWB staff available to do that job, and they are fully experienced in denying, denying, denying Western farmers export licenses.


Parsley

[parsley]

For Immediate Release

Barley Growers Directors “Endorse” efforts to look at all options for Producer Payment Security

July 24, 2008 - Airdrie, AB: The Western Barley Growers Association (WBGA) endorses the efforts of organizations representing Western Canadian farmers, processor’s, and exporters who have proposed working together to look at options for producer payment protection in light of proposed changes to the Canada Grain Act.

In response to the press release of July 21st from the Agricultural Producers Association of Saskatchewan (APAS), the WBGA board of directors endorsed a policy to collaborate where appropriate with these organizations in their evaluation of options. Identified as a possible option in the APAS press release were “clearinghouse models”. Considerable effort has already been expended by the WBGA with financial and technical support from the Private Sector Risk Management Partnerships (PSRMP) program in the evaluation of a clearinghouse option for producer security.

The evaluation of the clearinghouse option, and the related information generated by the WBGA, will be available to the organizations, if requested. The WBGA believes that a clearinghouse option has considerable merit.

Market research demonstrated 70 % of farmers supported clearing and would clear a portion of their spot and forward sales.

However, the WBGA recognizes that there may be other options that are complementary and together offer the industry a comprehensive set of tools.

“The objective is to create tools for contractual and settlement security that the industry can endorse and get behind while offering the broadest and most efficient industry security”, stated Jeff Nielsen, president of the WBGA.


For more information, please contact:

Doug McBain – Past President WBGA
403-816 0645