By Steeves Tremblay, Provincial Farm Business Management Specialist
Entering into a grain delivery contract is an important business decision – consider the following when negotiating:
Read the contract and ask questions
Elevator staff should ensure you understand what you’re about to sign. If you’re unsure about something, don’t sign until you’ve asked questions and feel informed.
Get it in writing
Any terms and conditions promised verbally should be written into the contract. If it isn’t on paper, it isn’t guaranteed.
Quality and quantity
Know how deductions will be applied if grain of lesser quality is delivered and how the premiums are assessed if grain of superior quality is delivered.
What happens if the elevator is not taking delivery in the timeframe stated in your contract? Is compensation provided?
Access to land
Some contracts grant the grain company the right to access the seller’s land to take possession of the grain. Ensure that timing is not an issue.
Defaults, shortfalls and cancellation
Does your contract include an “Act of God” clause? What are the penalties if you can’t deliver?
You may purchase inputs from the same company you’ve contracted grain to. Defaulting on your delivery contract may affect your input account.
Maintain a Positive Relationship
Speak to your elevator representative if you expect a shortfall. Make it easier for the grain elevator to find alternate sources of grain.
Know your grade
Get samples analyzed by a third party before delivery. This way if your grain is downgraded, you’ll have a solid counter argument.
To assist growers in contract negotiation and interpretation, the Canadian Canola Growers Association (CCGA) collected contracts from the major purchasers of grain and prepared a guide to help growers better understand grain contracts. The guide is available Canadian Canola Growers Association website.