GrainsWest Fall 2019

Fall 2019 grainswest.com 39 For Geoff Backman, spreading risk and asking the right questions are keys to successful crop marketing. “You can ask ‘what’s your price for wheat?’ or ‘what’s your price for No. 2 with 14 protein?’” said Backman, the Alberta Wheat Commission’s business development and markets manager. “If you ask for the latter, you’ll get comparable results across the board and pricing.” For discount schedules, Backman noted elevators are free to set the discount schedules based on market conditions. If a farmer contracts grain outside what they expect to receive, there’s going to be risk built into the change in discount between the time they sell and deliver. Not surprisingly, the schedule is tied to basis, markets and a grain company’s needs. Adjustments are routinely made until a grain company finds itself competitive again with sellers. Backman urged anyone signing a grain contract to make multiple phone calls to lock in the best price. “Worst-case scenario, you’re going to take the contract you’re offered,” he said. “Your best-case scenario is you take a contract that fits your farm.” For farmers longing to play in an open and transparent process when delivering grain, there’s good news. The marketplace has never seen such a horde of buyers jostling for position. Just ask Wade Sobkowich, executive director of the Western Grain Elevator Association. “It’s a very competitive environment and margins are extremely thin for grain companies,” he said. “They are trying to attract that farmer’s grains through creative means.” He points to newly constructed elevators and port terminals in Western Canada as a positive omen for farmers who now have a distinct advantage in today’s “overbuilt” system. The prices set at the elevator are indicative of what’s occurring on a global trading floor and not in a backroom with surreptitious motives, according to Sobkowich. “Grain companies don’t dictate the prices they pay to farmers,” he said. “It seems that many farmers are persuaded that grain companies do dictate those prices. Any company that doesn’t pay a competitive price doesn’t get the grain.” Similar to Backman, Sobkowich’s advice to farmers is to completely understand what an elevator’s discount schedule is and the quality of the grain they themselves plan to deliver. Beyond that, a farmer must understand the terms of sale as agreed to in the contract well ahead of time. However, issues may still arise. Enter the CGC. Arguments are settled with its holy book, the Official Grain Grading Guide. The Guide, updated every August, sets parameters around all 20 of its recognized crops and serves as the framework to mediate legitimate disputes between farmers and elevators. Only tiffs connected to grade, dockage, protein and moisture are examined, according to Daryl Beswitherick, the CGC’s programmanager of national inspection standards. Of the quarrelsome categories, majority grievances centre on grade and protein. On average the CGC receives approximately 200 annual Subject To requests, a micro-fraction compared to the number of grain deliveries made across the country during the same time span. Why then, if a Subject To is the immutable mediator, are there so few requests for it? “There is a segment where producers are leery of involving the CGC,” said Beswitherick. “[They] don’t want to. There’s an impression that they’ll upset their elevator manager and they won’t be able to work together after that, but I’m not sure why that is out there.” Beswitherick said it’s solely the responsibility of the farmer to know their grain inside-out so as to shield themselves against a nasty surprise at the elevator. The CGC pitches in and does its part to educate, as well. Staff attend many tradeshows throughout the year and make it a point to teach farmers about their rights and obligations for grain deliveries. It also recently created a PR campaign called Know Your Rights to re-enforce such talking points. “Car dealers don’t come to consumers and say, ‘hey what is my car worth?’ Producers should know what their grain’s worth,” said Beswitherick. Another point of financial reference for farmers, the CGC always posts the maximum elevating, cleaning, drying and storing fees online to ensure transparency and avoid price gouging. However, it doesn’t touch the discount schedule since such information is not in its mandate through the Canada Grain Act, according to Beswitherick. If a farmer has issues aside from grading arguments, the CGC also has a dispute resolution wing within its ranks. Those situations, such as a disagreement between a farmer and a grain company concerning discounts in their contract, may be investigated on a case-by-case basis. He believes paying a small price today could mean more money tomorrow. “If you have a full bin and [a Subject To] costs $50, what’s that bin worth?” he said. “You’re marketing millions of dollars of a commodity. Know what you have.” “Car dealers don’t come to the consumers and say, ‘hey what is my car worth?’ Producers should know what their grain’s worth.” —Daryl Beswitherick