© Justin Crann
Lyle Stewart, Saskatchewan's minister of agriculture, said the time is now to tap in to some of the province's abundant water supply.
With farmers’ cash flow close to a standstill, Saskatchewan’s agriculture minister is asking financial institutions to be lenient.
“It’s (about that) time producers are going out to arrange lines of credit to operate their farms on for 2014 and they haven’t had good cash flow,” said Agriculture Minister Lyle Stewart on Thursday. “They haven’t got the lines of credit paid down from last year the way they would’ve liked to because of the transportation bottlenecks and so that’s a major issue, as well as just loan repayments.”
He wrote to all financial institutions in the province urging them to be flexible with farmers who haven’t received money because their grain isn’t getting to market.
“I thought it’d be good to get a note out to the institutions to just sort of corroborate the stories they’ll be hearing from their farm customers and verify that this is actually the situation and ask the financial institutions … to work with producers regarding cash flow requirements,” said Stewart.
“I think the financial institutions will do this. I think we’ve already heard back from a couple of them that are proactively doing it.”
He said rail issues are part of the problem with the grain transportation crisis, factors which are “beyond their control.” Banks recognize producers need more time to get the grain transported so they can be paid, he added.
The issue is serious as spring approaches.
“There’s lots of issues with storage. A lot of this grain is in temporary storage in fields and it’s subject to some damage if it doesn’t get moved in a reasonable length of time. Producers usually like to have grain out of piles or out of bags before spring break-up,” said Stewart.
“As well, it’s creating a very wide basis, which is a market signal from the grain elevators to the producers that the elevators really can’t handle much grain so they widen the basis, which really means the price is lower.”
Flexibility from financial institutions will help farmers not taking the wide basis and “panic sell product.” If they wait for a narrower basis, they will receive higher returns for the products.
“The weather’s just starting to warm up a little bit more now to the point where the railways will no longer be able to use the excuse it’s too cold to run trains,” said Stewart. “Hopefully movement starts to pick up.”
He added another issue is the province is heading into “spring break up.” That time of year is hard to move grain out of fields.
“It’s very important that we’re able to move grain in the winter months,” said Stewart. “It just hasn’t happened this year the way it should.”
Follow Lisa Goudy on Twitter @lisagoudy.