By Alice McFarlane

Farm group call for changes to grain contracts

Jun 21, 2023 | 12:10 PM

The Agricultural Producers Association of Saskatchewan (APAS) said farmers continue to be hurt by grain contracts.

APAS wants Agriculture and Agri-Food Canada Marie-Claude Bibeau to weigh in on contract protections after the recent $60 million loss Saskatchewan farmers are absorbing due to the unilateral contract cancellation of a buyer.

APAS President Ian Boxall said this is the second massive financial loss for Saskatchewan farmers contracts in just the last three years. He said APAS continues to engage with partners and levels of government to have grain contract improvements identified.

“When farmers experienced drought and couldn’t deliver product, they had to pay hundreds of millions on buy-out costs, admin fees, and legal costs,” Boxall said. “And now, when a buyer backs out of the contracts, farmers pay again. This needs to change.”

In 2021, APAS surveyed producers, in which 75 per cent of respondents reported difficulties fulfilling the grain contracts. Respondents reported various discrepancies in how these shortfalls were handled, with some having to pay interest of 19 per cent on replacement costs and administrative fees. A further 25 per cent of those who were short could not get in touch with the grain buyers during the growing season to discuss buy-out and cancellation terms.

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In 2022, APAS and SaskCrops, which includes SaskOats, SaskWheat, SaskCanola, SaskFlax, Saskatchewan Pulse Growers, and SaskBarley, commissioned Mercantile Consulting Ventures’ Producer Contract Review which analyzed areas of concern with contracts and identified alternatives to help bring greater balance and predictability.

Boxall said it appears grain contracts are very one-sided and represent a significant financial risk to farmers.

“Producers can incur additional costs when contracts are canceled by buyers, such as added trucking and storage costs and foregone market opportunities,” he said. “As we have often pointed out, Canada seems to be an outlier in its lack of clear and consistent terms governing grain contracts.”

Boxall said the nature of farming involves a lot of risk and uncertainty and the lack of clarity adds unnecessarily adds to this risk.

“At the end of the day, making business transactions more transparent and predictable benefits everyone in the supply chain. It’s time to find a solution to this longstanding problem,” Boxall said.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW