Falling commodity prices, tight credit, pinch Prairie farmers
Last Updated: Monday, December 29, 2008 | 8:48 AM MT
CBC News
Tightening credit and a precipitous drop in commodity prices are hurting some Prairie farmers who have signed contracts for their products, only to discover buyers are no longer interested.
This fall, Bruce Osiowy of Abernathy, Sask., learned that a grain company in Winnipeg was not going to honour a contract to buy his yellow peas.
"It amounted in my case to $50,000. It was $50,000 that I needed — I was counting on it," he said.
After the grain company said there was a problem with the quality of the product, Osiowy sent samples to the Canadian Grain Commission, where no problems were found.
Osiowy said he is considering a lawsuit to try to get the money.
Allan Wagner, who operates a small grain company near Saskatoon, said he knows many producers who have encountered the same problem as Osiowy.
"[Customers] just keep believing that the price is going to continue to drop. So why buy today when I can buy tomorrow for less?" he said.
Farmers who have cultivated good relationships with their customers do better in a challenging economic environment, he said.
Wagner said he picks his customers carefully, so his contracts have been honoured.
The problem reaches overseas to where Vancouver-based special crops broker Mark Tycholiz says volatile markets, tight credit and depreciating currencies are hurting international buyers.
Buyers in India, Pakistan and China are unable or unwilling to honour their contracts, he said.
Germain Dauk, chairman of the Canadian Special Crops Value Chain Round Table, said he would like to see Ottawa extend credit to some international buyers.
"It's not always the price volatility," said Dauk. "It's the whole issue of credit. Because a lot of these companies just can't get the credit to buy the product from Canada, turn around and sell it. There's a delay there and they need the financing and the financing just hasn't been available to some of these people — and so that also contributes to the problem."
