The Canadian Grain Commission revoked the licences of Purely Canada Foods on August 27 and has since received claims from unpaid producers against the company.
Lonny McKague, Commissioner with the Canadian Grain Commission, says they’ve received a number of inquiries from producers but not a lot of claims yet. He couldn’t provide details of the total amount owed to affected producers due to an ongoing audit, but did say the amount Purely Canada owes is significant.
McKague also says it’s too early to determine whether the security is enough to cover all money owed to producers who did business with the company. “We have a good record of having enough security to provide full coverage for a lot of claims over the years. In fact, I think out of the last 29 company failures we made payments to producers of eligible liability in 22 of the 29 failures, and then some of the other failures we pro-rated to the producers.” said the Commissioner.
Producers who have futures contracts with Purely Canada Foods and planned to deliver grain after August 27 “would not fall into any security with the Canadian Grain Commission within the Canada Grains Act”, according to McKague. Producers are advised to seek legal counsel on what that means to them for their individual contracts.
As part of the process of obtaining a primary grain elevator or grain dealer license from the CGC, as per the Canada Grains Act, a company must provide security in the form of a bond, a letter of credit, or payable insurance with the amount determined by the Canadian Grain Commission based on the licensee’s obligations for payments to producers for their grain. McKague also says the CGC “has the authority to demand additional security throughout the terms of the license, if (the CGC) determines the amount initially fixed has become insufficient.”
The CGC also explained the process of getting compensated from a producers’ perspective: “producers are eligible for compensation paid from the licensed company’s security for a maximum of 90 days from the date of their grain delivery. If they wait longer than 90 days to exchange their primary elevator receipt or grain receipt for a cash purchase ticket or cheque, they are not eligible for compensation. Once producers receive a cash purchase ticket or cheque, they are eligible for compensation paid from the licensed company’s security for 30 days from the date it was issued, or until 90 days from the date of grain delivery. The lesser of these two time periods applies.”
Any farmer that did business with Purely Canada are asked to immediately contact the Canadian Grain Commission by emailing compliance-conformite@grainscanada.gc.ca or by calling 1-800-853-6705.