GrainsWest Fall 2019

Fall 2019 Grains West 38 requested a “subject to inspector’s grade and dockage determination,” commonly called a Subject To, from the Canadian Grain Commission (CGC). After both parties agreed to a statement of facts, off went the sample to Winnipeg for analysis. Results arrived back at the elevator a few days later. The Grain Commission sided more so with Hames, arbitrating the sample at 16.3 per cent—still above what he tested, but certainly lower than the elevator’s declaration. Afterwards, he and the elevator staff came to an amicable agreement when the manager agreed to average his entire 500-tonne delivery as dry. “When our hired man brought the next bunch of peas in, the company didn’t back down,” said Hames of a subsequent contract. “I found that disappointing they weren’t willing to agree that their tester was a little bit off. It wasn’t like my peas were testing 17, 18 per cent.” If the situation sounds familiar, that’s because it is. Delivery disputes are common, and beauty is often in the eye of the beholder, or perhaps prober, when it comes to a grain sample. Hames implores fellow farmers to determine their grain’s quality with pinpoint accuracy before hitting the highway. “I can’t stress enough that good harvest samples are your best weapon or way to mitigate or help yourself from having trouble,” he said. “Once you’ve unloaded, you’re in a tough negotiating point. If you have a discrepancy on grade or you don’t feel they graded it properly … you don’t want to unload a bunch of grain. You don’t have as much of a position especially when the company dumps it into their 3 red spring bin and you wanted 2. They can’t bring it back.” Other obvious factors to be looked at when in contract talks include dockage, drying charges, shrink and the ever- changing discounts. Most contracts have off-spec adjustments on grade and protein. Companies review old and new crops, not knowing what adjustments may be made ahead of time and are equally unaware of what market reaction will be. There are multiple types of contracts with fixed price and fixed basis, both deferred-style contracts, being the two most popular. Spot contracts exist and certain elevators allow fixed basis to be permitted within them, allowing farmers to defer setting the value of the contract beyond the delivery date. Discount and premium schedules apply where proteins are lower or higher than expected. Contracts almost always come with a quality expectation, as well. As market conditions change, so do the schedules, which would already be agreed to in a contract. “They won’t lock it in ahead of time and this is the really frustrating part, but sometimes it works in our favour,” said Hames on discounts. “Sometimes the schedule gets better, sometimes it gets worse, but the point is you do not know what that is going to be until you deliver.” The schedule for barley is virtually static since the crop is so straightforward. It’s with wheat that niceties become more complex than canola. Wheat spreads usually come with different discounts every tenth of a protein point. A 13.5 per cent protein level will price out differently than a 13.6 and typically the spreads cover every number from 11 to 15. The schedules are living documents and never the same year-over-year, either, since every crop year is likewise never the same. Due to market vagaries, Hames has witnessed a rise in the number of farm business consultants helping people to effectively market their grain. “It does help with the second voice to give you the reality, less emotion and more, ‘this is what the market is telling us,’” he said. It’s the sole responsibility of a farmer to be aware of their rights and obligations when it comes tomaking a grain delivery, according to the CanadianGrain Commission. Photo:Courtesyof theCanadianGrainCommission FEATURE