Condominium storage policy

Effective August 1, 2002

Definition

Condominium (condo) storage refers to space that a producer may own or lease within a licensed primary elevator. (Note: This memo only applies to licensed primary elevators and does not pertain to farmer-owned facilities. These types of situations are not recognized as condo storage and are run as extensions to 'on-farm' storage capacity.)

Using condo storage enables producers to position their grain closer to the market and allows them to initiate a sale at any time from anywhere around the world. Producers are also able to avoid spring road bans and the difficulty of moving grain by truck in the winter from on farm storage bins to a primary elevator.

Background

The Canadian Grain Commission first developed guidelines for condo storage in 1991, but there have been substantial changes to the western Canadian grain handling and distribution system in the last decade.

The following provisions supersede the former 1991 guidelines. Included are the requirements related to the physical structure of condo storage, security provisions, documentation, reporting requirements, and other regulatory requirements.

Requirements of the program

Physical structure of condominium storage

Physical primary elevator condo storage is defined as a separate facility attached by conveyance to the principal and annex houses, or part of the actual principal and annex.

Security provisions

Canadian Grain Commission security provisions do not cover grain stored in space allocated to condo storage by licensed primary elevators.

However, the 90-30 day security provisions, as prescribed by the Canada Grain Act, are applicable once the grain is transferred from condo storage into the general storage of an elevator. Upon the transfer of the grain, elevator operators must issue a primary elevator receipt or cash purchase ticket to the producer of the grain. Security protects grain producers when the elevator fails to pay producers for their grain or return it to them. Time limits exist in which grain producers can make a claim to the Canadian Grain Commission.

Producers must be aware that they are individually responsible for insuring any grain stored in condo facilities.

Documentation, timing of, and type of receipt issued to producers

Upon delivery of grain into condo storage, producers are advised to obtain an acknowledgment of receipt from the elevator operator identifying the delivery as being destined for condo storage. For example, this may be a non-authorized non-Canadian Grain Commission receipt that includes the grain, grade name, weight and dockage of the grain being delivered. It is also advised that each document contain a disclaimer stating that producers are responsible for obtaining theft and fire insurance on any grain being delivered into condo storage.

Licensed primary elevators must not issue authorized Canadian Grain Commission primary elevator receipts upon delivery into condo storage.

Upon transfer of the grain into the general primary licensed capacity, a Canadian Grain Commission authorized primary elevator receipt, or cash purchase ticket, must be issued. A Canadian Grain Commission authorized receipt is needed to verify any claims a producer may need to make in the event an elevator refuses to pay or goes bankrupt.

Licensing reporting requirements

Application for primary elevator licence

Applicants for primary elevator licences are required to report total licensed capacity including all primary, annex, condo and virtual condo storage capacities. It is not necessary to identify or differentiate to the Canadian Grain Commission the portion of the facility capacity that is intended for use as condominium storage.

Licensee's Report of Liabilities to Producers (monthly)

Primary elevator licensees are not required to record the number of tonnes of grain in condo storage, and the corresponding dollar value, as a separate figure on their monthly 'Licensee's Report of Liabilities to Producers'. The condo data is not to be included as part of the overall figure.

Statistics reporting requirements

As of August 1, 2003 primary elevator licensees will be required to submit data on the tonnes of grain in condo storage as a separate figure in their weekly grain handling report that is submitted to the Canadian Grain Commission Statistics Unit. In order to facilitate industry operations, this data will provide a 'snap-shot' of the handling system by relaying exactly how much grain is available and stored within both general elevator space and condo space in a given week.

Regulatory requirements

It is no longer necessary for primary elevators to obtain exemptions from section 60 of the Canada Grain Act to accept deliveries into condo storage.

Section 60 requires that the operator of a licensed elevator receive all grain lawfully delivered, in the order that it arrives, if there is space available, without discrimination. Historically, the Canadian Grain Commission has been granting exemptions to this section due to the sporadic and poorly defined nature of condo storage. These provisions should resolve any confusion.

Annex 1

Virtual storage

The last few years have given rise to the use of virtual condo storage. 'Virtual farmer-owned storage' is defined as a farmer owning or leasing a given quantity of storage among a network of existing farmer-owned storage facilities operated by a single grain company. The farmer may choose to deliver to any one or more facilities within that network without exceeding his or her total owned or leased capacity. This is especially convenient when a producer owns land in two different regions of the province.

A benefit of virtual condo storage space is the producer's ability to initiate the movement of grain within a network of grain elevators simply by making a phone call to the elevator manager. The grain isn't physically moved from the facility it is in, but if there is like grain and grade the elevator will be able to source that commodity for the producer at the alternate location.