2021 is a year many in the ag sector would like to forget, the widespread drought resulted in a loss in production that left many farmers having to pay significant penalties on unfulfilled grain contracts.
Marlene Boersch of Mercantile Consulting Venture has released a report looking at the issue around grain contracts.
Boersch was one of the presenters last week during the APAS AGM.
She says the current contracts are heavily tilted in favor of the buyer.
"So our recommendation is simplify the terms, concentrate very much on the contract fundamentals. Do away with a lot of the noise, tighten up the remedial actions and fees, to have more clarity and transparency."
She notes we also need to define both parties' responsibilities so that they are very clear.
Boersch looked at Australia's system where the contract actually states fixed tonnages but clearly outlines when the pricing happens and how damages are calculated if the contracts aren't fulfilled.
As part of the recommendations, the report suggests a collaborative approach to ensure that the rights of all parties are protected in grain contracts and a move to a standardized contract.
"Mercantile recommends that leadership on this issue come from the producer, buyer and government levels in the forming of a committee in charge of designing or adopting the fair, clear and reasonable terms of a standardized contract. This standardized contract would then be used across the industry. This committee would also be tasked with reviewing the terms of the contracts on a regular basis (annually), monitoring compliance and resolving any disputes that may arise."
The "Producer Contract Review" was commissioned by APAS, SaskWheat, SaskBarley, SaskOats, SaskFlax and the Saskatchewan Pulse Growers.
You can view the full report and all of the recommendations here.