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Farmers in the Swift Current area could have a tougher time getting a good price for their crops this season after the licence for a local elevator was not renewed.
This month, Monette Farm Group applied for creditor protection. Its court filing says it’s one of the largest private operations with feedlots, breeding operations, and grain operations across North America.
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One of its assets under Monette Seeds Ltd. is an elevator in the Swift Current area. The company has chosen not to renew the licence to operate the elevator, and it will lapse as of May 1, according to the Canadian Grain Commission (CGC). The notice mentioned the filing for creditor protection.
The CGC also directed producers who are owed money for grain deliveries to contact its safeguards program, and for producers with open contracts to contact the court-appointed monitor.
Jeremy Welter, a vice-president with the Agricultural Producers Association of Saskatchewan (APAS), said the licence not being renewed means the elevator isn’t bonded or covered by the CGC, and it shouldn’t be buying grain from farmers.
He said that elevator has a 9,140 tonne capacity, and while that’s not huge, it’s not insignificant either.
Welter said the loss of a buyer in the area can have some pretty bad repercussions in terms of competition.
“The more buyers you’ve got in the marketplace when you’re selling the product, the better for you. It adds competition and hopefully, what that does is, is increase the prices that are on offer for the grains that you’re selling,” he explained.
For producers in the area, Welter said the extra option in the market probably made a real difference.
He said it’s entirely possible there are still open contracts and that there could be a significant number of contracts signed for crops that are yet to be planted this year.
Welter said he hopes Monette or someone else independent will be able to get the elevator up and running again.
“Ultimately, that has not been the case in the last number of years, with a number of much higher profile mergers as well as certainly some smaller players being bought out,” he said.
Monette Farms Group said in a news release that it blamed challenging conditions like cost pressures, commodity markets and higher interest rates.
Welter said with those factors, as well as production potential with weather changes, there will be a much tighter squeeze on farmers the next couple of years.
“We’ve seen prices for fertilizer skyrocket, we’ve seen chemical inputs do the same thing, fuel’s obviously going up, machinery is getting more expensive by the year. These are some pretty serious concerns,” he explained.
A letter sent to landowners from Monette CEO Darrel Monette, said the filing isn’t a liquidation or bankruptcy, but a procedure to create a restructuring plan.
The creditor protection application involves restructuring hundreds of millions in debt after a credit agreement matured earlier this month.
Monette said in the letter that farming operations will continue during the restructuring, and lease agreements and rent obligations remain.
— with files from farmnewsNOW
Editor’s note: this story has been updated to reflect that the company chose not to renew its elevator licence
