Preventing Another Naber Grain: CGC Hoping for a Fifth Crack at Reform

At least 29 farmers will receive less than 15 cents on the dollar for crops they delivered to Naber Specialty Grains Ltd., the Melfort, Saskatchewan-based specialty crop buyer that went into receivership in June 2015.

The commissioner for the Canadian Grain Commission (CGC), Murdoch MacKay, suggests proposed changes to the CGC’s producer payment security program would have limited the damage in the Naber situation.

Bill C-48, which was tabled but died with the federal election and change in government last fall, would have seen the CGC establish a producer compensation fund financed by licensed grain buyers.

“If a company was to run into financial difficulties, we would take the claims and draw from the fund, and then you could rebuild the fund,” explains MacKay. “It would be less administration, less regulation, much easier, much more efficient, effective and cheaper for grain companies, and ultimately, for producers.”

Originally heard on the June 23 TWORA podcast, Murdoch MacKay discusses the Naber Specialty Grain situation and what could be done to prevent it from happening again.

Under the current system, licensed grain companies must report their liabilities on a monthly basis to the CGC and post a bond or some form of security to cover those liabilities. The cost of this bond gives companies an incentive to under-report their liabilities, as appears to be the case with Naber Specialty Grains.

“When we were reviewing Naber’s on an ongoing basis, I would say Naber was within what they reported to us. What we were able to ascertain, going through all of the information, was that they had enough security,” says MacKay.

The commission is asking producers who are owed money by Naber to submit claims. So far, 29 farmers have come forward with claims totalling around $1 million. MacKay says Naber’s bond was only worth $150,000. RCMP are currently investigating the case.

There have been several attempts in Ottawa to update the CGC’s producer payment security system to provide improved security at a lower cost to the industry. Bill C-48 was the fourth try, notes MacKay.

“It’s been there four times, maybe the fifth is the lucky charm.”

It will likely be up to new leadership at the CGC to maintain it as a priority. The chief commissioner post is currently vacant following the departure of Elwin Hermanson in January. The appointments for both assistant chief commissioner Jim Smolik (who’s served as acting chief commissioner since January) and MacKay also expire in late 2016.

Speaking at a producer meeting during Canada’s Farm Progress Show in Regina, MacKay said the federal government will be opening an application process to the public for all three positions. He also said he plans to re-apply.

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