Saskatchewan Ag Groups Call on Grain Elevators to Work with Farmers

Saskatchewan producer organizations are calling on the Western Grain Elevator Association (WGEA) to give farmers a break on forward contracts in the wake of drought-reduced production.

The organizations – representing more than 44,000 producers in the province – want WGEA and its members to work with farmers and eliminate contract administration fees and reduce penalties for what has turned out to be a disastrous 2021-2022 growing season.

Historically, farmers have been encouraged to contract some grain for fall delivery. That makes it possible for grain companies to develop their own marketing plans and benefits growers by allowing them to pay bills that come due in the fall, manage storage space, and secure a reasonable margin. In most years, production losses due to hail, flood or drought, are generally localized enough that it doesn’t influence commodity prices.

However, this year’s extreme drought, heat and wind have significantly reduced harvestable grain and substantially increased commodity prices. Many farmers’ yields across the Prairies will be well below their crop insurance coverage and they will be unable to deliver on even modest grain contracts, according to an Agricultural Producers Association of Saskatchewan release Tuesday.

The traditional intention of administration fees is to deter farmers from cancelling contracts when they have the grain but want to take advantage of a higher cash price. However, when the farmer has no grain to sell, the deterrent is ineffective. “For some, the financial implications of this drought will be devastating, and penalties will worsen the situation for growers,” the release added.

“Farmers have worked hard to build strong relationships with grain companies, and they value those relationships and commitments,” said Matt Enns, Chair of SaskBarley. “We expect that the good faith we have built with buyers will be reciprocated when times are tough.”

Bernie McClean, Chair of SaskCanola, said if grain companies are unwilling to work with farmers to find solutions, it could severely impact the economic stability of a large proportion of grain operations in the province.