Agfinity leaves wide swath of unpaid farmers

Back in early October, I penned a column about a grain broker in a financial squeeze leaving an undetermined number of producers unpaid for grain deliveries made many months prior. At the time, I didn’t name the broker as being Agfinity because the owner, Joseph Billett seemed sincere in his efforts to work his way out of financial trouble and pay the money owing.

Naming the company wasn’t going to help get farmers paid. However, it seemed useful to point out the dangers of dealing with an unlicensed buyer. Brokers usually bring buyers and sellers together. This broker was also using grain purchase contracts without the bonding protection of the Canadian Grain Commission.

The Alberta based company is now in bankruptcy proceedings. According to the bankruptcy filings, Agfinity owes more than $5 million to 181 creditors, most of them unpaid farmers. That’s a dramatically higher number of claims than industry observers expected.

As you go through the list of unpaid and unsecured creditors, most are from Alberta communities such as Vegreville, Lavoy, Wetaskiwin, Stony Plain and Beaverlodge. There are also some Saskatchewan producers in locations that include Riverhurst, Eston, Pierceland and Gainsborough. Amounts range from under $5,000 to well over $100,000.

A number of former Agfinity employees are also among the list of creditors. They are claiming for unpaid wages.

Meanwhile, at time of bankruptcy, Agfinity reported assets of less than $163,000. That’s a tiny level of assets when you owe more than $5 million to 181 creditors. Where did all the money go?

Unpaid employees claim they didn’t know the magnitude of the creditor list and they believe money was being channeled from Agfinity to cover personal expenses of the owner with no plan to pay the money back. It will be interesting to see how this plays out. Unsecured creditors would appear to be out of luck unless they can tap into Joseph Billett’s personal assets.

The producer payment protection provided by the Canadian Grain Commission isn’t perfect. Because trading positions can change rapidly, sometimes a company will not have adequate security to cover unpaid producers. In the recent failure of Global Food and Ingredients, security was only adequate to pay 75 per cent of eligible claims.

In the case of Purely Canada Foods, claim information is not yet available, but money is going out to unpaid producers and the Canadian Grain Commission says there will be full compensation.

Unfortunately, many producers always go unpaid because they don’t file claims within the stipulated time frame. To be eligible, a claim must be filed with the Canadian Grain Commission within 90 days of delivery or within 30 days of receiving a cheque.

Sometimes producers don’t expect payment until the last load of a contract is delivered and that can put them offside on time parameters. More often the culprit is deferred grain cheques. If it’s more than 30 days since the cheque was issued, you’re out of luck.

Some producers decry this restriction, but it isn’t practical to maintain the security required to cover the massive number of deferred payments requested by producers.

When the buyer like Agfinity isn’t licensed and bonded, producers can be left with little or no compensation. The warnings are worth repeating because some producers are still unaware. If you aren’t dealing with a licensed buyer, you don’t have payment protection. When you deal with licensed buyers, make sure any non-payment claims fall within the time parameters.