Plans For Insurance Payment Security Program Dropped

Plans to improve the Canadian Grain Commission's program for making sure farmers get paid for grain they deliver have fallen through.

For the last several years, the CGC has been working on implementing an insurance-based producer payment security program to replace the current bond-based system.

However, negotiations between the CGC and the only qualified insurance provider that came forward - Atradius Credit Insurance - have now ended.

"The farther we went into it, the more difficult it became and we finally realized there were some requirements on both sides that we weren't going to be able to accomodate, so we had to formally break off discussions," says Chief Commissioner Elwin Hermanson. "It's unfortunate, but in our view, to provide producers with a product that would serve them, and from Atradius' point of view, it just didn't happen."

The negotiations were confidential, but he says the cost of the program was not the main obstacle.

"Not so much the cost, it was more eligibility and I can't go into details, but it was about providing something for the industry that would be fair to all licensees and would provide adequate protection for producers," says Hermanson.

The commission is once again considering all options for improving on the status quo, he says.

"We are open to trying to put a better product in place, whether that will be an insurance program, we'll have to review that. If it is, it will likely be different than what we were proposing to try to accomplish with Atradius. Whether it takes some other format, or even improving what we have now, that has not yet been determined," says Hermanson. "We're not going to make any rash decisions. We have to stand back, evaluate this and look at the options going forward."

In the meantime, the bond-based payment security program remains in place, so licensed grain buyers are still required to have adequate security in place to offset liabilities.

Source: PortageOnline