Keystone Agricultural Producers views the option for a fund-based model of producer payment security introduced through Bill C-48 as a step in the right direction to addressing the problems with the current system – but stresses that farmer involvement and oversight is required to ensure such a fund serves the needs of producers.
Under the proposed amendments to the Canada Grain Act contained in the bill that was introduced last week, a fund can be created by the Canadian Grain Commission to provide compensation to farmers if grain buyers default on payments for grain purchased.
This fund could replace the current bonding system the CGC has in place, and is an alternative to the insurance-based option the CGC has explored.
“We are pleased the federal government moved so quickly after negotiations failed on an insurance-based option,” said KAP president Doug Chorney. “KAP is eager to work with CGC, as well as other stakeholders, to develop a fund-based system that is comprehensive and transparent.”
The federal government has indicated money for the potential fund would not come directly from farm sales in the form of a check-off. It would instead be paid by licensed purchasers and typically included in the basis [price] they offer to farmers – something that Rob Brunel, chair of KAP’s Grains, Oilseeds and Pulses Committee, is not entirely comfortable with.
He told members of the committee who met today that a direct check-off to farmers to create and maintain the fund would be more transparent than collecting money from grain buyers who will pass the cost onto farmers.
“As a solution to this, I strongly advocate that the rates the CGC would charge grain buyers is made public, so farmers can calculate what basis they’re getting before the rate is added on,” he said.
Brunel also called for the establishment of an advisory board, with farmer representation, that would oversee the fund to ensure both transparency in management and responsiveness to changes in the grain industry.
Chorney said another important point is the inclusion of feed mills in the program.
“The current bonding system does not include feed mills, and those selling to feed mills are very vulnerable. When a major feed mill filed for creditor protection several years ago, Manitoba farmers lost hundreds of thousands of dollars – so you can see it’s imperative these sellers are protected,” Chorney said.
KAP urges the federal government to hold in-depth consultations with farm groups and work with them to develop the mechanisms of the fund.
