Glacier FarmMedia – W.A. Grain & Pulse Solutions has had its licences temporarily suspended by the Canadian Grain Commission and the company’s owner says the firm is facing “a worst-case scenario.”
The Innisfail company, which has two elevators in Alberta and three in Saskatchewan, had its licences suspended by the grain commission on April 20 until the end of April.
“This means for a limited period of time activities (by W.A. Grain & Pulse Solutions) that would require a licence are suspended, which include in principle purchasing grain from western Canadian producers and trading in grain in reference to CGC grades,” said grain commission spokesperson Remi Gosselin.
In an email, owner Chris Chivilo said W.A. Grain Pulse Solutions has been dealing with a financial issue and had alerted the Canadian Grain Commission (CGC) to its situation.
“We were in constant contact with the CGC over the last couple of months appraising them of a situation with one of our creditors (bank) and were in agreement of the CGC licence suspension to protect producers in case of a worst-case scenario, which is unfolding now,” Chivilo said in an email on April 26, shortly before our May 3, 2021 issue went to press.
He added he hoped to be able to more fully speak about the situation soon.
The grain commission spokesperson declined to comment specifically on what prompted the suspension of licences.
“I can’t get into that only to say at this point we want to give them a chance to manage their finances and they have nine days to do so,” Gosselin said on April 20.
“(On) April 30 we will decide if their licences are reinstated or revoked.”
On Twitter, one farmer in central Alberta said he had been paid for a delivery of pulses to W.A. Grain & Pulse Solutions in February but a cheque for another delivery in March “bounced.” The farmer said that cheque had been deposited the day before the licence suspension was announced and was returned two days later. He said he immediately notified the grain commission.
To be licensed, companies must demonstrate they can pay farmers for the grain they are taking delivery of and post security to cover those liabilities.
If the grain commission revokes W.A. Grain & Pulse Solutions’ licences, farmers owed money by the company will be asked to submit their claims to the commission to access security posted by the company. It’s also possible they might get grain back in-kind, or some of it.
If it comes to that, affected farmers must document their claims with the proper receipts.
In addition, claims are time limited. The grain commission’s payment protection expires 90 days after grain has been delivered, or 30 days after a cheque for the grain has been issued.
The licence suspensions include W.A. Grain & Pulse Solutions’ grain dealer’s licence as well as its primary elevator licences for its facilities at Bowden and Bashaw as well as its three Saskatchewan locations (at Pambrun, Ponteix, and Vanguard).
“The (CGC) order prohibits any movement of grain and that means selling stocks in store, accepting producer deliveries as well as contracting new grain sales unless the grain commission is satisfied there is sufficient inventory to cover outstanding elevator receipts,” Gosselin said.
The grain commission won’t know how much grain W.A. Grain & Pulse Solutions has in-store until it conducts an audit, he added.
Several pulse crop buyers have recently experienced financial difficulties, prompting the grain commission to revoke their licences and pay farmers using companies’ posted security.
It suspended the licences of Canpulse Foods Ltd. and Global Grain Canada Ltd. (and parent company Globeways Canada Inc.) in October, when they were unable to provide security to cover farm liabilities. All the farmers eligible for compensation were covered, the commission said. There was a total of 53 eligible claims for the two companies totalling more than $3.7 million.
When ILTA Grain, which specialized in pulse crops, went out of business in 2019, a record $11.1 million was paid to 222 ‘eligible’ farmers. But another 49 farmers didn’t qualify because of the time limits and collectively lost $1.5 million, which is why the grain commission urges farmers to get paid as soon as they deliver.
Industry observers say pulse crop buyers are generally more at risk of financial problems because most are small with limited resources; there are no futures markets for hedging purchases and sales, and pulse crop prices can often be more volatile. Right now it’s also harder to get the containers used to export pulse crops.
The grain commission could opt to extend W.A. Grain & Pulse Solutions’ licence suspensions or reinstate them with conditions, said the grain commission spokesperson.
“We need to have assurance that they will be able to meet their assurances of licensing beyond April 30,” said Gosselin. “I’ll just leave it at that.”
– With files from Allan Dawson