Do You Know What A Shortfall Permit is?
By Bill McKellar, Chief Elevator Inspector, AgriCorp
There appears to be a concern within the grain industry of a need for a
system in Ontario to ensure users have a constant supply of grain (corn, soybeans, and canola) to meet their needs.
Their only recourse is to import the grain. Also from time to time there may be marketing opportunities missed
because sufficient owned grain is not available.
In Ontario the current grain regulations permit licensed grain dealers to move grain for which they do not hold
title. It is called a Shortfall Permit.
When a grain dealer has a contract to supply a user or meet a marketing opportunity and does not have sufficient
owned grain; the grain dealer can apply to the Chief Inspector for a shortfall permit. This permit allows the grain
dealer to use stored grain and replace it with dollars at 100% of the value on the day of the transaction. This
way the grain dealer can complete the transaction and the owners of the stored grain are protected should the grain
dealer default. The Chief Inspector monitors the market value of the grain and may require the dealer to deposit
additional security if the price increases.
This process can be put in place quickly. The grain inspector will verify the amount and fill out the necessary
permit, which will be approved once the letter of credit or bank draft is received. The cost to the dealer for
this permit is $150.00.
The present legislation restricts the permit to 30 days, except during the period between September 15th and December
5th when the permit can run until January 5th of the next year. The 30-day certificate can be renewed. Once the
grain dealer is back in position and verified by the grain inspector the security will be returned to the dealer.
This permit ensures a constant supply of Ontario grain to meet marketing requirements, while at the same time the
grain owners are protected under the Grain Financial Protection Program.
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