Apr 8, 2015 by Lee Hart

Shaping the new feedmill licensing system

Various players of the Canadian livestock feeding industry are busy adding their two-cents worth (or it might be $2 worth) of comments to a proposal by the Canadian Grain Commission to license feedmills.

Unless Agriculture Minister Gerry Ritz has a change of heart, it looks like the licensing will happen. What the industry is doing now — up to the end of the input period April 9 at midnight — is providing input on how this licensing system will be defined and structured. A feedmill isn’t just the commercial feed maker producing complete feeds, supplements, premixes and feed medications for retail sales. The term also covers feedlots, poultry, dairy and hog operations that may buy feed grains from local farmers, for their own use.

Generally this licensing idea doesn’t appear to be a real popular idea among the feed industry. Maybe the intent was good, but the industry sees it as more record keeping and management, and of course it could be a significant extra cost that in all likelihood will be passed back to farmers producing feed grains.

Jim Smolik, assistant chief commissioner of the Canadian Grain Commission says the objective of licensing is to protect farmers who deliver feed grains to a feedmill or feeding operation and make sure they get paid.

The plan was motivated in part, by two business failures — Puratone Corp. in Manitoba and Big Sky Farms in Saskatchewan in 2012. They bought feed grains, ran into financial problems, and farmers were left on the hook for millions of dollars worth of unpaid feed grains. Apparently Minister Ritz got an earful and asked the CGC to develop some type of licensing system for feedmills, similar to the one that applies to grain companies.

INSURANCE COVERAGE

A key component of the licensing system is for individual feedmills to have some type of bond or security in place that can be used to pay farmers for delivered grains in the event of a business failure. Smolik says the licensing may not apply to smaller “mom and pop” operations, but is asking the industry for input on how to structure the licensing and where to draw a line in the sand, size-wise.

Graham Cooper, executive director of the Animal Nutrition Association of Canada (ANAC) based in Ottawa, says the main concern of his association is whether licensing is needed at all. ANAC represents commercial feed manufacturers and suppliers of major ingredients and commodities, micro-ingredients, animal health products, equipment and other related services.

“Generally we are opposed to the licensing proposal,” says Cooper, noting ANAC is developing a formal position paper for CGC. “We have to ask if this (licensing) is the appropriate reaction to what appears to be isolated instances of business bankruptcy or insolvency.” He agrees some system may be needed to protect farmers against the risk of unpaid inventory, but is an industry-wide licensing system the best?

ANAC is also concerned that, depending on the details of how this licensing system is set up, that it could create an uneven playing field — some “feedmill” operations might need a license and others not. And another consequence of the licensing system — with its potential added costs — could shift the buying patterns of some feedmill operations. He says the feedmill industry feels a bit besieged — recent changes in the Feeds Act require feed mills to be licensed from an operational standpoint and now along comes another licensing proposal related to the financial end.

He says the CGC has been open and eager to work with the industry on a proper consultation system so he is hopeful that a system can be developed with minimal negative impact for all sectors.

Kelly Chambers, manager of the Feed Coalition based in Calgary explained that Coalition members are concerned about the size of operation that would require a license.

The Coalition, initiated by Alberta Barley, Alberta Cattle Feeders’ Association, Alberta Pork, and Alberta Wheat Commission represents the crop and livestock sectors of the feed industry.

Chambers urged all sectors to make their views known before the deadline.

“It’s important to strike a balance between the insurance benefits and the additional costs to feed mill operators and producers,” said Chambers. “To have that balance the system needs input from the entire feed industry.”

Smolik says the CGC will collect input from all industry sectors and then work with that to design the new licensing system. While there is no specific deadline he is hoping the structure of the new licensing system is in place later in 2015.

Lee Hart is a field editor for Grainews in Calgary. Contact him at 403-592-1964 or by email at [email protected]

 

 

 

 

 

 

 

 

 

 

 

 

Lee Hart

Lee Hart


Lee Hart is a long-time farm writer, and honorary member of the Alberta Institute of Agrologists, with many observations on the agriculture industry, who never hesitates to admit he is wrong (should that ever happen.)


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