Grain company security

Under the Canada Grain Act, the Canadian Grain Commission may establish the amount of security to be provided by licensed grain dealers and licensed operators of primary, process and terminal elevators. Security must be provided to cover all eligible liabilities pursuant to the Canada Grain Act and the Canada Grain Regulations. The Canadian Grain Commission establishes the amount of security each licensee must provide. All security must be tendered in Canadian funds.

Security may be provided in the form of:

For primary and process elevators and grain dealers, security covers only producer liabilities. If a licensee refuses or fails to pay producers for grain delivered, eligible producers can make a claim against the company’s security through the Safeguards for Grain Farmers Program.

Bond

You may provide security in the form of a bond. The bond must be:

  • fully executed on bond form CS720 (PDF – 55 kb)
  • in the amount established by the Canadian Grain Commission
  • signed and sealed by the licensee (or licence applicant) and bonding company. If either party does not have a seal, then two signatures are required from that party.
  • issued from an insurance company that is approved by a federal, provincial or territorial regulator:
Jurisdiction Regulator Regulated Insurer Search
Federal Office of the Superintendent of Financial Institutions Search companies
Alberta Superintendent of Insurance of Alberta Search companies
British Columbia BC Financial Services Authority Search companies
Manitoba Financial Institutions Regulation Branch of Manitoba Annual reports
New Brunswick Justice and Public Safety - Insurance Branch of New Brunswick Search companies
Newfoundland and Labrador Digital Government and Service NL Search companies
Northwest Territories Superintendent of Insurance of Northwest Territories Annual reports
Nova Scotia Superintendent of Insurance of Nova Scotia Search companies
Nunavut Superintendent of Insurance of Nunavut Contact
Ontario Financial Services Commission of Ontario Search companies
Prince Edward Island Justice and Public Safety of Prince Edward Island Contact
Quebec Quebec Autorité des marchés financiers (financial markets regulator) Search companies
Saskatchewan Saskatchewan Financial and Consumer Affairs Authority Search companies
Yukon Superintendent of Insurance of Yukon Contact

Irrevocable Standby Letter of Credit or Guarantee

You may provide security in the form of an irrevocable standby letter of credit or guarantee issued by a Canadian bank, caisse populaire, credit union, provincial government, provincial government agency or federal government agency. Letters of credit or guarantee must cover a period of 18 months from your annual licence renewal date. A 12-month coverage period is not enough.

The additional 6-month period is used to determine eligible producer claims and make a demand for payment on the letter of credit or guarantee if a licence is revoked, suspended, or expires. For example, if your annual renewal date is May 1, 2023, letter of credit coverage for that renewal period expires October 31, 2024.

An acceptable letter of credit or guarantee must be in the amount established by the Canadian Grain Commission, specify the correct expiry date, and include the following wording:

This credit is available by payment, against presentation of a certificate signed by an authorized officer of the Canadian Grain Commission stating that loss or damage has occurred by reason of:

  • [licensee] has defaulted in its obligations pursuant to the Canada Grain Act to eligible holders of cash purchase tickets, elevator receipts and grain receipts, for the payment of money or delivery of grain issued by [licensee]; or
  • [licensee] has failed or refused to comply with the Canada Grain Act or any regulation or order issued pursuant to the Canada Grain Act.

Partial payments are permitted.

A standby letter of credit or guarantee must not contain any wording about automatic extension or renewal, provisions for an accelerated expiry date, or cancellation provisions for anyone but the Canadian Grain Commission.

Payables insurance

You may provide security in the form of payables insurance. Payables insurance is consistent with the current security program. To participate, you must provide financial information as part of the application and qualification process. Please contact Licensing and Security for more information about this option.

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