A Saskatchewan producer survey has revealed the depth and breadth of forward contract pain in the province following one of the worst droughts in memory.
The Agricultural Producers Association of Saskatchewan (APAS) on Tuesday released preliminary results from its producer survey on their experiences with grain contracts in 2021.
Of the respondents, 75% were unable to fulfill their grain contracts because of the drought that covered significant areas of the province. The survey also found producers unable to fulfill their contract this fall due to historically low yields are paying penalties and administrative fees between $20,000 and $300,000 to grain companies.
Many of the respondents also said the interest on their unpaid contracts was as high as 19%. Additionally, 25% of respondents also said they had trouble contacting the grain buyers resolving issues arising from production shortfalls, and many of the respondents said they will not be working with the same grain company in the future or will not be signing a contract again.
Even more dire, some respondents included that they are facing bankruptcy due to drought and contract shortfalls.
“When Mother Nature has already given producers a tough year, contract provision made production problems even more serious,” APAS President Todd Lewis said. “We developed this survey to get more information about producers’ individual experiences with the grain companies, so we can develop ideas around improving provisions in future contracts. It’s in the mutual interest of both producers and grain companies to develop a more workable system.
The survey collected results from August 26 to December 1, and more than 200 Saskatchewan producers completed the survey.Click here to see more...