A decision by the Canadian Grain Commission (CGC) to discontinue discussions over an insurance-based model for grain payments to prairie farmers has left the Canadian Wheat Growers Association (CWGA) unhappy.
A press release by Levi Wood, president of the CWGA states the group wants better coverage at a reduced cost. “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 exist 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.”
Jim Smolik, assistant chief commissioner with the CGC said the group has been working with different associations such as the CWGA to find a model that works for everyone. They had recently undertaken a request for qualifications in which Atradius Credit Insurance was picked.
There were four main goals when negotiating a plan with Atradius:
● Reduce costs to the industry
● Have a clear payment model
● Reduce overall cost
● Reduce administrative burden
“It was really complicated. We were trying to make it better than what we had,” explained Smolik.
He says planners must now go back to the drawing board in the planning process and prairie farmers will have to rely on the current plan until a new one can be set with a different company. Atradius was released from their contract with the CGC.
“A lot of groups were banking on the fact that it would be cheaper,” said Smolik.
“We need to look at this again and think about what our options are,” he added.
The CWGA wants to give farmers more options stating that “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. “
Wood recommended the CGC consider different models that are already implemented in the United States in the private sector for deliveries to feed lots.
Smolik said there is still the current insurance option for farmers but the CGC has to look at what they can do next.