A grain broker operating in Western Canada has hit a financial squeeze resulting in a number of producers being unpaid for grain deliveries made many months ago. The broker is not licensed to buy grain and therefore unpaid producers have no protection through the Canadian Grain Commission.

Grain brokers typically arrange deals between buyers and sellers. They are paid for their brokerage service by the buyer or sometimes by both the buyer and seller, but they aren’t the entity actually buying grain.

If they are buying grain, they should be licensed and bonded by the Canadian Grain Commission and then producers would have payment protection as long as claims are filed within the prescribed times limits.

Well, it turns out that some brokers, or at least this particular broker also does Grain Purchase Contracts.

Many cattle feedlots and hog barns regularly buy grain directly from producers without being licensed and bonded. Grain for someone feeding livestock does have an exemption.

In this case, the buyer is a brokerage firm, not a livestock feeder. They seem to be using an exemption in the regulations for feed grains that don’t have a grade. However, that exemption says payment should be made upon delivery.

Back in June, the company posted a blog on its website explaining how it ended up in financial difficulty. I’m not naming the company because the owner is taking full responsibility for the problems and appears to be doing his best to right the ship and get producers paid.

The number of unpaid producers and the amounts owing are not public. For the unpaid producers, there’s little they can do but wait and hope to eventually receive payment. Getting paid seems to hinge on the company surviving.