NFU supports backing out of insurance-based system

After talks between the Canadian Grain Commission (CGC) and Atradius Insurance over an insurance-based system

After talks between the Canadian Grain Commission (CGC) and Atradius Insurance over an insurance-based system protecting grain farmers collapsed, the National Farmers Union (NFU) voiced their support of the decision.

Terry Boehm, chairperson of the NFU Seed and Trade Committee said the existing bond system already provides 100 per cent coverage to farmers but the proposed change would reduce claim periods and farmers would lose five per cent of their claims to Atradius.

“Ultimately the insurance-based plan was going to cost farmers money and didn’t offer the protection that the bonding system offers,” said Boehm.

He suggested, in a press release, that the new deal would have removed CGC from oversight of licensed grain performance and given Atradius “de facto power over the terms of Canadian grain companies’ contracts with farmers.”

CGC’s mandate is to protect the rights of grain producers and this proposed deal would take some of that control that the organization has over regulations, explained Boehm.

A relatively short claim period of 45 days to submit non-payment claims is another area the NFU took issue with. Boehm said in an interview that most farmers are busy and may not have the time to even submit a claim.

“It’s quite difficult for a farmer. I’m a farmer myself. You’re busy during seeding and harvest time and 45 days can go quite quickly between when you deliver some grain and then realize that you’re not receiving payment.”

He suggests a farmer may not realize the issue until 30 to 40 days, which gives little time to fix the problem. Limiting claims to 45 days protects the insurance company from liability but does not help farmers facing issues, he added.

“Agriculture is an extremely intense business, especially during those feeding and harvest moments,” stated Boehm.

“Under the bonding system a farmer has 90-days,” explained Boehm.

Insurance coverage of 95 per cent rather than 100 per cent under the current system also caused the NFU some concern. Boehm suggests taking an additional five per cent fee is unfair to farmers as the insurance company would already be charging a fee.

“Why wouldn’t they pay 100 per cent to the farmer…and why would farmers accept 95 per cent?” Boehm asked.

He feels the current system, with some minor adjustments, is still the best way to serve farmers.

“We encourage the CGC to work on improving the reporting requirements so that the time-lag between company reports and CGC review of their bond security can be tightened up,” said Boehm in the press release. “By going to weekly mandatory reporting along with rolling security assessments for companies, the CGC could ensure there are no gaps in protection.”