Canadian farmers have raised concerns about knock-on effects from drought conditions that have led to customers going bankrupt before making payments for produce.
What's happening?
Some farmers in Canada are facing the longest drought since the infamous Dust Bowl of the 1930s. Changing temperatures have caused stunted crops to grow since 2021 and low commodity prices, resulting in grain-buying firms going out of business and farmers unable to rely on insurance payments.
While there is some financial protection from the federal Canadian Grain Commission, according to Insurance Journal, the CGC is allegedly not enforcing a crucial law: reporting unlicensed companies to the Public Prosecution Service of Canada. By law, only licensed companies can buy crops directly from farmers, and some unlicensed companies have slipped through the cracks.
The CGC is also making it more difficult on farmers by requiring they post about non-payment within 90 days, and some have alleged that the organization has not consistently verified that licensed firms have proper security.
According to Insurance Journal, "Discovering that some failing companies, such as Agfinity, are unlicensed, has alarmed farmers, as has finding out that some licensed companies are not fully insured." Agfinity allegedly delayed a $75,000 (Canadian) payment to at least one farmer, who had to keep "being a pain in the ass" until they finally paid the sum, with interest, before declaring bankruptcy, Insurance Journal reported.
The CGC told The Cool Down that "If a company does not meet licensing requirements, the CGC will revoke or suspend their licence." And according to Insurance Journal, "the agency must complain to the Public Prosecution Service of Canada, which then decides whether to take action."
Insurance Journal reported that the CGC hasn't made a complaint about unlicensed companies to the Public Prosecution Service of Canada in a minimum of seven years, according to a CGC spokesperson Christianne Hacault — which likely is due to most being licensed, but it also raises concern on the heels of reports that a company like Agfinity was operating while unlicensed.
In a statement to The Cool Down, the CGC also said that "licensed grain companies must provide payment security to the CGC to cover money owed to producers for grain deliveries" and that "the CGC audits licensees to monitor that the reports have been completed properly and determine if security is sufficient based on the assessed level of risk to producers."
Why is protecting farmers important?
Canada is the No. 1 and No. 3 producer of canola oil and wheat in the world, respectively. On top of changing temperatures and climate disasters, the country's farmers are also expecting tariffs to impact their sales.
"Where do we cut our expenses? Or how do we get more revenue to do the things we need to do?" Canadian farmer Bill Prybylski told Insurance Journal. Prybylski is going to have to rely on a line of credit to keep his farm in Saskatchewan afloat until the next harvest in the autumn.
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Southern Saskatchewan farmer Cherilyn Jolly-Nagel also told Insurance Journal that the current situation "has fully exposed that we are not secure."
With the lack of protections, lack of law enforcement, and low commodity prices, the farmers' risk of bankruptcy keeps rising.
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Definitely 🙁 What's being done about protecting farmers?
The CGC is consulting with farmers to improve its protection systems and its bylaws. However, it would be further improved if Canadian farmers had other options like paid climate leave, snow-resistant solar panels, and extreme weather survivors groups to keep more businesses afloat despite impactful weather events.
If you want to learn more about how climate issues are affecting where you live and how you can be a part of the solution, check out The Cool Down's guide.
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