Farmers Facing Steep Costs As They Look At Having To Buyout Forward Pricing Contracts

Farmers have been busy with the harvest, but the impact of the drought has meant the volume of grain going in the hopper this year is not what it normally is.

Shaun Dryland is Chair of the Saskatchewan Pulse Growers and says many producers are harvesting 50 per cent or less of what a normal crop would be.

"I know on my own farm I'm probably 20 per cent of what an average crop would be on my farm. And a lot of people you know, as part of normal practice would have contracted a percentage of what they expected to produce as contracted for a price to you know, secure movement for Fall. Whether it be for cash flow reasons or for bin space or you know, any number of reasons. So what would be normally be a standard practice, has turned into kind of an issue this year, where it normally wouldn't be."

The issue is that because of the drought a lot of farmers simply don't have the grain to meet those commitments.

Dryland says those farmers now have to look at buying back part of that contract for the grain they can't deliver.

"In theory, the buyout could be like $17-$18 a bushel. The case with pulse crops is most of them would have an "Act of God" clause, but even that puts producers at risk because they're still obligated to sell as much as they can of that contract in normal cases. And a lot of times that will leave the producer without any seed to put in the ground for next year."

He says they've heard from a number of farmers that the costs depend on the commodity and the type of contract you have.

"So it's really variable across the board, some of them are very steep. On another case, the penalties are already being waived or the admin fees are already being waived. So it's really a broad range of situations."

Sask Pulse along with a number of other Saskatchewan grower organizations is calling on the Western Grain Elevator Association and its members to work with farmers to reduce penalties and eliminate administration fees on the contracted but undelivered grain for this year.