The Western Canadian Wheat Growers Association is disappointed with the recent announcement by the Canadian Grain Commission (CGC) that it has discontinued plans to implement an insurance based model to secure grain payments to prairie farmers.
“While we respect the Commission’s decision, we had hoped an insurance-based system would have provided farmers with better coverage at a reduced cost,” says Levi Wood, President of the Wheat Growers. “We are surprised and disappointed the Commission was not able to successfully conclude negotiations on such a model.”
The Wheat Growers support the concept of an insurance model as a means to provide prairie farmers with better coverage and lower costs than now exists under the CGC bonding provisions. In the past, farmers have sometimes incurred substantial payment shortfalls in those cases where a buyer has gone into receivership or otherwise defaulted on amounts owing to farmers.
Under the proposed insurance-based model, farmers would have been guaranteed a minimum payment security of 95% on all grain deliveries. It was also expected that an insurance-based system would lower the overall costs incurred by the industry and ultimately borne by farmers.
The Wheat Growers also viewed an insurance-based model as a vehicle by which individual farmers would eventually be able to elect the amount of payment security coverage they wanted on their grain deliveries to each of their buyers. Such an option would have given every farmer the opportunity to obtain the payment coverage that best suited their needs.
The Wheat Growers will urge the Canadian Grain Commission to continue to explore insurance-based models as an alternative to the existing payment security system.
“Insurance-based models are currently in place in the private sector for deliveries to feedlots and U.S. buyers,” says Wood. “The Commission should consider whether any of these models could be adapted for use on deliveries to licensed grain buyers in Canada.”
