VICTORIAN Mallee grain grower Trudy Ryan says a desire to create a viable grains industry for young people is behind her fight for improved security for farmers when writing grain sale contracts.
As part of that she is looking at potential solutions such as insurance programs and trusts to stop the problem of non-payment in the event of insolvencies.
“We want to attract young people to farming, but we are telling them to just send a truck out the farm without any real security,” Mrs Ryan said.
“If the equity was sent out as cash, rather than grain, you’d just about have it in an Armaguard vehicle, yet as it stands there is very little security of payment in real terms.”
Mrs Ryan, who farms at Manangatang in Victoria’s northern Mallee, moved a motion at last week’s Victorian Farmers Federation (VFF) conference to continue to support reforms within the grains industry.
Her resolution was for a working group to be set up between the VFF, the Victorian State Government and other industry parties to tackle the issue of trader insolvencies and non-payment to growers.
She said her local area had been hit hard by trader insolvencies, such as Convector Grain, in recent years and while there has been progress in terms of lowering risk, such as some companies moving to shorter payment terms, she felt more needs to be done.
In particular, she is unhappy with the performance of banks and insolvency administrators.
“When a grain company fails, growers are left particularly vulnerable and the banks and administrators have not helped that.”
She said banks had the controlling interest in the liquidation of companies and unsecured creditors, such as growers, were left in the cold.
There have been industry initiatives, such as the personal property securities register (PPSR) and purchase money security interests (PMSIs), set up to protect growers from insolvencies, but Mrs Ryan said although well-meaning, they had not worked in practice.
“A lot of the issue boils down to securities and retention of title and PMSIs can only work if you retain title of the grain, which many grain buyers will not accept.”
Mrs Ryan said the working group could look at the systems used in other countries.
“A system such as the Illinois Grain Insurance Fund, where all grain traders and grain sellers pay a contribution to the fund, which pays growers up to a million dollars in the event of an insolvency meaning they are not paid, could potentially work here.”
She also raised the possibility of using trusts for the grain while payment was processed as another solution.
“I’m the first to admit we don’t have a definitive answer as yet, but we do know that we need to do something.”