Canadian Grain Commission sows help for producers

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This article was published 06/01/2020 (2280 days ago), so information in it may no longer be current.

For more than 200 Western Canadian pulse producers, the role of the Canadian Grain Commission in protecting producers’ rights and ensuring the integrity of grain transactions has probably been appreciated more than usual over the past few months.

That’s because the CGC’s regulatory regime has ensured that they’ll be receiving about $11 million in unpaid invoices after pulse handler ILTA Grain Inc. was put under creditor protection in July 2019, resulting in unpaid invoices to farmers.

B.C.-based ILTA sought and received creditor protection after experiencing disruption to its international trading business resulting in reduced revenue and increasing inability to service and repay its sizable debt load. As of its filing for protection under the Companies Creditors Arrangement Act (CCAA), it had assets of $224 million and liabilities of $152 million.

Among those liabilities was close to $14 million it owed to farmers who had delivered their grain to ILTA facilities but were never paid.

Grain handlers in Canada have to be licensed by the Canadian Grain Commission, and as part of the licensing criteria companies must provide some form of security to ensure payment to producers. ILTA secured an insurance  policy from Atradius for a maximum of $12 million, making $92,340 in annual premium payments.

But when the CCAA filing took place, there was a challenge by Atradius to the manner in which available funds were being distributed. HSBC and Farm Credit Corporation were the primary secured creditors that were owed a total of $135 million. Several of the companies facilities were sold off to handle that secured debt.

In its filings on the case, PWC, the court appointed monitor, made it clear that the $3 million owed to unsecured creditors would likely not be realized.

Eventually, the insurance issue was hammered out and the CGC was able to enure that 100 per cent of the eligible claims will be paid totalling $11 million. 

It is the largest compensation process the CGC has experience in its history, going back to 1912.

“The Canadian Grain Commission is committed to ensuring Canadian grain producers are fairly compensated for their deliveries,” said Patti Miller, chief commissioner and deputy head of the Canadian Grain Commission in a prepared statement. “The ILTA Grain Inc. situation has been a difficult one for everyone involved, and we are very pleased to be able to deliver over $11 million in payments to producers who were owed money.”

Of the 271 claims that were made, 222 were deemed eligible. Remi Gosselin, a spokesman for the CGC, said ineligible claims were likely as result of producers failing to make claims within a prescribed time period after grain is delivered. As well, cheques that grain handlers send out in payment for grain received must be cashed in a certain period of time. (Some farmers defer payment for tax reasons.)

Among the ineligible claims, only three were from Manitoba farmers. Of the ineligible claims, some were related to canary seed deliveries, but since that is not a commodity regulated by the CGC, no insurance payments were forthcoming in those cases.

Gosselin said it’s testimony to the role the CGC plays in the grain industry

“We have never seem something on this scale before,” he said. “It is certainly something we are proud of.”

In the past 35 years there have been 24 licensed grain handling business failures and the CGC has been able to provide compensation to producers amounting to 94 per cent of the total claims over the years.

“We vie for 100 per cent each time but unfortunately that is not always possible,” Gosselin said.

“Producers tend to do business with companies that are licensed and secured with the CGC program.”

martin.cash@freepress.mb.ca